Top of Utah home prices decline as inventory shrinks, report finds

Jun 13 2011 - 9:25pm

OGDEN -- Home sales prices declined and inventory levels shrank in Davis, Weber and Morgan counties, bowing to a soft market, according to a new report from the Northern Wasatch Association of Realtors comparing data for April 2011 and 2010.

The median sales price for Davis County homes in April, the most current month for which figures are available, was $179,000, down 10.1 percent from the same time last year, according to an NWAOR report.

The median sales price for Morgan County was $220,000, a reduction of 20 percent, and $135,000 in Weber County, a drop of 11.5 percent from April 2010, the report states.

Overall, the median sales price for homes in Utah was $170,481 in April, a decrease of 6.9 percent from the year previous, the report states.

The drop in prices is because of bank foreclosures and sellers who are increasingly motivated to engage in short sales and are willing to negotiate with buyers in the soft housing market, said Bob Hill, president of Northern Wasatch Association of Realtors.

Prices may be down, but buyers in Davis, Weber and Morgan counties have fewer homes from which to choose.

"There is not as much inventory," said Hill, adding some potential sellers are reluctant to put their home on the market fearing they won't a get a fair sales price.

There were 9.4 percent fewer homes for sale in Davis County in April compared to a year ago, the NWAOR study indicates. Inventory was down 32.7 percent in Morgan County and 13.4 percent in Weber County during that period, the NWAOR study states.

Overall, home sales in April were down 19.9 percent in Davis County, 27.3 percent in Morgan County and 30.6 percent in Weber County from a year ago, the study says.

Hill expects Northern Utah home sales to increase as the national economy improves and more jobs are created. Some individuals will likely have to relocate outside of the area for employment opportunities, requiring them to sell their homes quickly at reduced prices that benefit buyers, Hill said.

"The seller's solution is to negotiate (a lower sale price)," he said.

Also, homes were on the market 38 percent longer in Davis County and 14.4 percent longer in Weber County in April compared to the same month in 2010, according to the NWAOR report.

However, Morgan County saw a 9.7 percent decrease in the time that homes were on the market.

In addition to motivated sellers and a significant dip in median sale prices, the availability of a federal tax break also makes Northern Utah a home buyers' market, Hill said.

For example, if a homeowner makes $50,000 per year and pays $5,000 in mortgage interest, they would pay taxes on only $45,000 of income, the NWAOR report says.

The lowering of the national mortgage interest rate to 5.11 percent on a 30-year fixed mortgage is also advantageous to buyers, the report says. The Utah Housing Corp. also offers 100 percent financing for qualified, first-time home buyers.

Gary Boyer, loan manager for the Ogden branch of Republic Mortgage, said he's received more loan applications for new home construction in the last two weeks than the last six months. Many people are anxious to build because the weather has improved and the inventory of existing homes for sale is low, Boyer said.

"They are watching the interest rates and trying to take advantage of lower rates," he said.

Bob Keel and his wife, Christy, who purchased a bank-owned three-bedroom fixer-upper in April at 985 27th St., Ogden, for $58,000, said the time was right to buy a home.

"It is kitty-corner to an apartment we were renting from my wife's grandmother," he said. "The house allows us to stay close to her. It wouldn't have happened if it wasn't a good deal."

Katrina Rico, who sold her home at 831 Benford St., Ogden, because her husband, a soldier in the Army, was transferred to Anchorage, Alaska, said the house was on the market from February 2010 to April 2011.

The home was eventually sold on a short sale and didn't generate a profit, likely because of the economy, Rico said. "Everyone was scared to buy homes because they didn't know if they were going to have jobs," she said.

Looking ahead, Hill said the housing market in Weber, Davis and Morgan counties seems to be rebounding.

"I hope that property value appreciation will stabilize at 3 percent or 4 percent a year, allowing consumers to buy larger homes or smaller homes as their needs dictate, so they can adequately plan on the equity in their real estate."

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