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Is There a Housing Bubble?
The sizeable increases in prices over the last five years raises the question of whether a housing price bubble in building. A 48 percent increase in five years is extraordinary. But this increase must be set in the context of the four years of declining housing prices. For 16 consecutive quarters housing prices declined in Salt Lake County. That was a unique period in Salt Lake County’s real estate history. There had never been more than four quarters of declining prices. The return of prices to pre-recession levels should not be confused with a housing bubble.

The price recovery has been aided and abetted by the historically long stretch of low mortgage rates, a necessary condition for the recovery Figure 4. Other factors, however,were at play as well, demographics and jobs. From 2010 to 2016, Utah was the third fastest growing state in terms of population change, surpassed by only North Dakota and Texas. And Utah has consistently been in the top five states in employment growth over the same period.

A housing bubble also carries some special characteristics that currently are not present in the Salt Lake County and Utah housing markets. Housing bubbles are preceded by rapid increases in debt. Prior to the Great Recession household debt in Utah increased by 35 percent in three years. Much of this increase was driven by mortgage refinancing, second mortgages, and home equity lines of credit. There is no sign of a build-up in debt in Utah. Household debt levels have returned to sustainable pre-recession levels.

A housing bubble is also characterized by lack of affordability.For example, in the Salt Lake Metropolitan Area in 2007 the median income household was able to afford only 30 percent of the homes sold in the county. Hence the Wells Fargo housing opportunity index stood at 30 for Salt Lake. Certainly it was a sign that housing prices had become untethered from normal economic relationships, housing prices and household income. Currently the housing opportunity index for the Salt Lake Metropolitan Area is 70; that is the median income household could afford 70 percent of the homes sold in the county in 2016, a sign of an affordable housing market. A housing opportunity index number of 50 or above denotes an affordable market.

Welcome to our Blog!
Utah's Extraordinary Growth in Jobs and Population

Salt Lake County’s Housing Shortage

2020 Single-Family Home Prices up 11.8%

Growing Concern for Housing Affordability

Utah's 2021 Economic Forecast

Outlook for Mortgage Rates

Salt Lake County Housing Forecast for 2021

Median Single Family Home Prices in Salt Lake County increase to $378,000 in 4th quarter 2019

The Gamble of Overpricing Your'e Home

Salt Lake County single-family home median price reaches $330,000

Most Salt Lake County Homes Sell for Under $350,000

Median Single Family Home Prices Reach $327,000 in Salt Lake County

Is There a Housing Bubble?

Predictions for 2017: Total Residential Home Sales

Q 4 Housing Report

2016 Forecast for Salt Lake area Housing Market

Local Home Sales Data 4th Quarter 2015

Mistakes people make when selling a home

Save for down payment or buy a home now?

Salt Lake Home Sales Climbed 16% in the First Quar

Salt Lake County housing market positive for 2015

FHA Mortgage Insurance Premiums Reduced by 0.50%

Salt Lake Housing Prices Returning near 2007 Highs

Salt Lake home sales in 2013 are highest on record

Condo sales at a 7 year-high

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