Where would home sales be, if we never had a housing boom?

Despite what Realtors might tell you, home sales in Cache County Utah are down. With the way things are looking, 2010 will likely be the worst year for home sales in Logan since 2002. Home sales this year actually started off close to average, thanks to the home buying tax credit. But, compared with the past five years, home sales during the second half of the year have been pretty dismal.

While home sales are way down from the past five years, they really may not be that far from where they would be if there never was a housing boom. If there weren't hundreds of unqualified buyers and investors buying homes they shouldn't have bought, where would home sales be now?

This graph shows us home sales in Cache County since 1997. The Logan Real Estate boom really started in about 2002. Annual home sales in 2006 were more than double what they were in 1999. And while Cache County is growing, it certainly didn't double over the course of 7 years. Over the past decade growth in Cache County has averaged less than 3% per year. If home sales increased at a gradual, 3% level each year from 2001's home sales levels, we would have had about 913 home sales this year. About 50 more sales than we will actually have based on my projections.

Now the question is, what does this mean for the future? Because home sales were so much higher than normal levels during the boom, will they be less than "normal levels" during the recovery?

They could be less. There are now a lot of potential buyers less likely to want to buy because of what they saw happen to peers who lost equity. There are also good numbers of people who bought at the peak of the housing market, and have faced short sale or foreclosure. These people will not be able to buy for years.

I think the answer to this question really has very little to do with what happened in the past, but has lots to do with how the economy recovers. If the Logan Utah economy recovers, then we should see, a slow but steady increase in sales of Logan Utah Homes. If the economy digresses, and is hit harder, then home sales will probably continue to fall.