There’s a lot of anecdotal evidence bouncing around the web among real estate agents that the bottom of the barrel has come and gone in Salt Lake City. Everyone wants to believe that better times are just around the corner, but rumors abound that property values could drop another 30% before the worst happens. What’s more, a market overflowing with inventory and filled with foreclosures and short sales is driving down property values throughout the Salt Lake area.
According to a real estate agent quoted in the Realty Times Market Conditions, Salt Lake experienced a decline in home sales of about 26% between 2007 and 2008. As of March 2009, there were 8,372 residential homes for sale in Salt Lake County. salt lake. The median price was $284,400 and the median list price was $385,217. There is simply too much inventory for the number of homebuyers.
People are cautious to buy and also cautious to sell. In the New York Times article, “In the Grip of Indecision,” Laura M. Holson writes, “For many homeowners who bought at the top of the market, admitting what now appears to have been a mistake is painful and could prevent you from selling, even though the decision may be smart.” Often homeowners will avoid selling until it is too late. Foreclosures and short sales are reducing the value of your neighbors’ properties because appraisers use foreclosure and short sales prices to determine the value of their homes.
Although people are hesitant to buy right now, it is unquestionably a good time to enter as a first-time homebuyer in Salt Lake City, or to buy a larger and more expensive home. The number of homes in the higher price range ($500,000 or more) are spending more time on the market. KSL reported a wave of foreclosures in St. George, UT. The article was about a person who was able to buy a $2.8 million property for $800,000. Although high-end offers abound, homes priced in the first-time buyer range still move faster. Now FHA loans total $320,000 in Salt Lake County so more people can buy.
Perhaps the most prudent thing, however, would be to rent. Many people moving to the Salt Lake City area are moving their items into a storage shed and renting a furnished property until the market picks up. In this way, tenants do not have to move their things several times. Corporate housing is furnished apartments where typically all rent, furniture, housewares, linens, and utilities are included at one flat rate. This will typically save the customer money on the cost of staying in a hotel, while still offering all the convenience of having a kitchen, laundry room, and twice the square footage of a hotel room.
The rental offers peace of mind while you wait for the market to recover. There is no hard evidence that we have bottomed out in real estate. If you bide your time, you may see a better return on your investment.