Tuesday, September 25, 2007

Real Estate Markets are a changing.

Logan Real Estate Market Conditions

The Real Estate and Mortgage market is changing. Nationally, there is housing slump, and the recent "Mortgage Meltdown" of subprime loans has caused that slump to worsen. The question is, "What will happen to the Logan Utah real estate market?"

Some Facts:

* Less people are now able to qualify for real estate loans than just a few months ago. During August, I personally had two transactions where "pre-approved" buyers were unable to obtain home loans. A few months ago these deals probably would have closed. It is much harder for people with poor credit and hard to trace income to get mortgage loans. This has had some impact on us locally.
* The housing market traditionally slows down in Cache Valley during the winter months. Over the past three years there has been an average of 96 (26%) more homes sold a year during the third quarter vs. the fourth quarter.
* The number of homes on the market peaked the last week of August to 505 single family homes. This is the greatest amount of inventory in 2007 to date.
* There were less homes sold in Cache County (135) in August of this year than August of 2006 (160). Year to date (through august) there has been more homes sold in 2007 than 2006.

On the positive:

* The economy in Cache Valley is still growing and Cache Valley is a place where people want to live.
* Mortgage interest rates are still very low, and it is possible that they will drop lower before the end of the year.
* Utah Real Estate appreciated at a much slower pace during the nationwide housing boom (nearly dead last from Q3 2001 - Q4 2004), our market had catch up to do and rapid appreciation has come much later (1st exceed the national average during the 4th quarter of 2005), and hasn't been as extreme as it was for many national markets.Our rapid apprecation came when interest rates weren't at the insanely low levels and was driven by a booming economy.
* Cache Valley hasn't really had an extreme appreciation (Our highest appreciation was the 1st quarter of 2007 at 10.2%.) and so there shouldn't be needed correction. Our average home prices are now significantly lower ($198,511) than Salt Lake (296,018) and Utah (292,254) counties. Our average housing cost is much less than the state average, and many will move here just because it's less expensive.


Times and markets are changing in the Real Estate World. There are natural corrections that need to happen in the real estate world to make up for the accelerated growth and appreciation. Much of the country will correct for a time. Salt Lake and Utah counties may even see some correction. As for Logan Real Estate, we have not had the extremes and will likely not feel major corrections. The recent mortgage industry changes will effect short term home sales. For the next few months I don't think we'll see much appreciation in Cache Valley, but home prices are not going fall. By spring, real estate prices in Cache Valley will likely pick up, and at paces exceeding national averages.