While we work with shutters day in and day out, as a company dependent on the housing market it is something we watch closely. This should be true not just of companies tied to the housing market like ourselves but of individuals as well. Knowing market conditions can help you make wise decisions as an individual that can impact your family both short and long term. If you haven’t been keeping tabs on market conditions and the housing recovery we’ve done your homework for you and have provided a quick update on both national and Utah conditions.
The last five years has seen the housing market across the nation experience one of the toughest stretches in the last one hundred years. This difficult stretch began with home prices peaking in 2006 and a subsequent descent in late 2006 and 2007. In 2008 the housing bubble burst when home prices were way too high and too many loans were given to those who were not truly qualified for mortgages. With changing market conditions and unqualified mortgages there was a ripple effect into financial markets. This is now known as the subprime mortgage crisis. Despite being different from state to state this series of events not only had a devastating impact on the housing market (see the graphic below) but according to many economists was a big, if not the primary reason for what many dubbed The Great Recession that occurred in the United States from 2007-2009.
Slow National Housing Market & Economic Recovery
With all this in mind it is refreshing to see a couple of the stories noted below as the housing market is finally starting to show signs of a healthy recovery from the 2008 burst. This is not only good for the economy as a whole but for home buyers and home owners, where a healthy housing market facilitates both buying and selling.
To point, data from as recently as January shows new home sales reaching their highest point since mid-2008 (again, see graph to right), which, as described above, was at the end of the initial collapse. This recent data even came as a surprise since much of the country, particularly the Northeast, has endured a brutal winter. The article from USA Today points out that the January numbers came as a surprise due to the fact that 2013 saw increased home prices and mortgage rates as well as the harsh winter which had slowed some of the recovery. While these numbers could be adjusted in the future and are just a piece of the puzzle it is encouraging to see the continued recovery of the market as a whole.
Utah Housing Market Recovery and Low Unemployment
Generally speaking the Utah housing market was not affected nearly as bad as many other states during the past five years. While this doesn’t mean that Utah hasn’t had a tough five years, it could have been much worse. So while there is good evidence the recovery is making strides there is still a ways to go.
Some of this evidence can be seen when analysts state that they believe that the housing market in Salt Lake Valley has fully recovered. While not all areas are seeing such trends, prices and home sales in both Salt Lake County and Utah County are on the rise. This is in part due to good employment growth which leads to home sales. Many of the numbers cited show that key housing metrics are well on their way to returning to 2006 type numbers. All of this can further be attributed to a decline in the volume of foreclosures and negative equity situations across the state of Utah.
Utah also has an above average consumer confidence with one index showing increases over the last four months to an index of 96.8. By comparison, a recent national consumer confidence index recently decreased to 78.1. The article notes that Utahns are confident due to a recovering housing market as well as Utah’s well above average unemployment rate of 4.1 percent, as of February 2014. The nation as a whole is at an average of 6.6 percent. This puts Utah as the fourth lowest unemployment rate in the nation behind only North and South Dakota (energy) and Nebraska.
Neither nationally nor here in Utah is the recovery complete. While there is optimism and positive indicators at both levels, the housing market and the economy as a whole is still trying to reach pre-recession type growth and health. As a home buyer or owner staying up to date on market conditions will help you make wise financial and investment decisions as the recovery process continues.