The question I ask in the title “When will prices of Salt Lake City homes rise again?” is a question I am constantly asked and not an easy one to answer.
Right now interest rates are at all time lows and they have been for the last couple years. Yet the demand for housing remains low in most areas, supply is high and prices have been falling for over 4 years in the Salt Lake City real estate market.
Salt Lake City real estate values are affected by many factors. Some of the obvious factors are supply, demand, interest rates and unemployment.
Right now supply is high due to the bad economy which has created high mortgage default rates causing housing inventory to rise and prices to fall leaving many home owners upside down on their homes, owing more than its worth. The upper end has been hurt even more due to the unwillingness and inability for many home owners to move up.
Over the last couple years, the U.S. government has had to buy mortgage backed securities, big packages of home loans, in order to keep this train rolling due to lack of interest from outside buyers such as China. As a result, it has become more difficult for buyers to qualify for a mortgage.
If you think about it, it makes sense. If interest rates are at all time lows, and there aren’t many buyers for mortgage backed securities, those who have the money will play it safe, especially when they are using the U.S. tax payer dollars and running up a huge national debt in order to make it happen.
As a result, the number of home buyers has decrease due to tighter restrictions on loans, higher credit requirements to qualify and lack of alternative/creative financing such as zero down and stated income loans.
So my answer to the question, “When will prices of Salt Lake City homes rise again?”, is when housing inventory drops and when federal policy and banks, mortgage brokers and credit unions start to make it easier to qualify for a home loan and offer alternative financing.
Kevin Coyle
SLC Homes
M: (801) 243-0699
