House prices on Wasatch Front continue to improve in third quarter

By Jasen Lee

SALT LAKE CITY — Housing prices in northern Utah are showing improvement, a new report shows.

According to the Salt Lake Board of Realtors, home prices in Salt Lake County showed double-digit gains in this year's third quarter.

For the July-September period, the median single-family home price in Salt Lake County increased 11 percent to $218,000, compared with a median price of $197,000 in the third quarter 2011.

The third quarter marked the second consecutive quarterly price increase in Salt Lake County. Home prices in the second quarter increased 6 percent year over year.

"Salt Lake City ranks among the top 25 major U.S. cities showing the biggest home-price increases," said Donna Pozzuoli, president of the Salt Lake Board of Realtors. "In fact, this year is the first time in five years Salt Lake home prices have made a comeback."

Among the ZIP codes experiencing the largest percent increases in median home prices during the third quarter were 84123 in Kearns, which jumped 21 percent to $208,500; 84124 in Holladay, up 17 percent to $295,000; Canyon Rim's 84109, which climbed 13 percent to $284,900; 84093 in Sandy, up 12 percent to $306,950; and West Jordan's 84081, which rose 11 percent to $227,000 during the period.

Meanwhile, Utah County saw its third-quarter median sales price rise a little more than 6 percent to $205,000, with the Davis County median price increasing 8.42 percent to $206,000 and Weber County climbing nearly 8 percent to $151,000 for the three-month period.

Pozzuoli said the recent price increases are the result of low inventory levels. In the third quarter, there were 3,938 homes listed for sale in Salt Lake County — the lowest third-quarter inventory level since 1997.

The declining inventory was one of the major factors pushing sales prices higher during the quarter, said Jim Wood, director of the University of Utah's Bureau of Business and Economic Research.

After area prices dropped about 25 percent during the recession, "we're getting some of that back this year," Wood said.

"Higher prices will bring more houses onto the market," he explained. "We're in that period when the market sends a signal to homeowners that would like to sell that things are improving."

The historically low interest rates are "phenomenal," Wood said, and should help in the continued growth of the Wasatch Front housing market.

"When you have interest rates at (3.25 percent), it's going to stimulate demand," he said. "We're on the way back."

The report also showed that although a majority of cities across the Wasatch Front saw home prices increase, there were a handful that experienced price declines, including 84004 in Alpine, which was down 7 percent; Provo's 84601, down 5 percent; and 84065 of Riverton, which fell 2 percent.

The number of single-family homes sold in Salt Lake County in the third quarter reached 2,982 sales — a 12 percent increase compared with the same period last year. Single-family homes in the third quarter were on the market for an average of 81 days before being sold, down from 120 days in last year's third quarter.

Condominium sales in the third quarter showed impressive sales gains by jumping 29 percent over the same time last year.

Wood said the uptick began last quarter as inventories decreased enough that some properties began receiving multiple offers, which prompted higher eventual sales prices. That trend has helped stabilize the local housing market and push prices upward for the first time in a long while.

With current rates so low, the area housing market could experience the first double-digit increase in years in 2012, which bodes well for 2013 as well, he said.

"If interest rates stay in the 3.5 percent range, next year we'll see another 7 (percent) to 10 percent increase in prices," Wood predicted.

Traits of People With High Credit Scores

To have a high credit score, individuals tend to keep revolving balances low to their available credit, not max out credit cards, and consistently make payments on time, according to the company behind the FICO credit score.

FICO recently released findings from a study about the habits and behaviors of those who have the highest credit scores — 785 or greater. These high-credit scorers tend to qualify for the best mortgage rates, saving thousands of dollars over the life of a loan. 

Nationwide, 25 percent — or 50 million people — are considered “high achievers” with their credit scores.

“High achievers” tend to exhibit some of the following behaviors, according to FICO: 

• 96 percent have no missed payments on their credit report. For any who have a missed payment, it occurred, on average, about four years ago. (Payment history makes up 35 percent of a person’s credit score.) 
• They tend to have a well-established credit history and rarely open up new accounts. On average, the oldest credit account was opened 25 years ago. Overall, according to FICO, these “high achievers” tend to have credit accounts that are at least 11 years old.
• They’re not always debt-free: They average about seven credit cards, including both open and closed accounts, and have an average of four credit cards or loans with balances. One-third of “high achievers” have balances of more than $8,500 on non-mortgage accounts. The remaining two-thirds have total balances of less than $8,500. 
• About 1 in 100 have a collection listed on their credit report. What’s more, 1 in 9,000 has experienced tax liens or even a bankruptcy.

"While people with a high FICO Score are not perfect, their consistently responsible financial behavior usually pays off over time," says Anthony Sprauve, credit score advisor for myFICO. "In a challenging economic period, the fact that we all have a chance to be high achievers is very good news. The lesson from these high achievers is that it's never too late to rebuild and score high."

Source: FICO

Morgan Stanley Makes Bold Prediction on Housing

Investment firm Morgan Stanley has high hopes for the housing market’s recovery this year and next. 

"We expect to see 2012 end with an increase of 7 to 9 percent for the year in aggregate home prices after considering seasonality effects for the remainder of the year, with the possibility of a 10 to 12 percent increase on the bullish side and a 4 to 6 percent increase as the bear case," according to Morgan Stanley analysts in its latest Housing Markets Insight report. "We view the bear case outcome to be relatively less likely."

Morgan Stanley analysts say that home shoppers need to have more access to credit in order to finance their home purchases to keep the housing recovery strong. A tight lending environment has kept many would-be buyers out. 

"Recent actions by the Federal Reserve, the commitment to keep interest rates lower for longer as well as the launch of an open-ended QE3, convince us that this low mortgage rate environment and the demand response for housing are likely to prevail for an extended period — well into the future," the Morgan Stanley analysts conclude.

Source: “Morgan Stanley Declares Housing Out of the Woods,” HousingWire (Oct. 1, 2012)