Bob Gledhill - Utah County Real Estate

Recent Evolution of Utah County Real Estate

Driven by good in-migration and the addition of more than three hundred software and dot com companies, the 1990's went through a housing shortage in the early part of the decade; Provo Homes, Orem Homes, and all Utah County homes were experiencing such rapid price escalation that loan qualifications became difficult because appraisers were having trouble finding sold comparables high enough to justify the new prices. By the mid 90's a construction boom caught up with demand. Land price escalation carried good price increases thru the end of the decade. In the early 2000's Provo Real Estate, Orem Real Estate, and Utah County homes in general developed a little bit of inventory surplus, which slowed price appreciation. In spite of the inventory, homes sold in the first half of the decade increased from 3,636 in 2001 to 5,527 in 2004. There were modest price gains, but we called it a flat market. During this same time period California and many states were having unreasonable price escalation. In 2004 and 2005, I was telling my California friends and relatives that their real estate was overvalued and would need to make a mid '90s type downward adjustment. I tried to convince them that Utah was way undervalued and would adjust upward, and be a wise investment. As it turns out, California and other states have dropped, but the average sales price in Utah County has increased from 193K in June 2005 to 270K in June 2007. Utah County real estateseems to move more conservatibely than most areas, and has never had to have a downward adjustment. Some sellers may have thought they adjusted down, but in reality they just had to be more realistic in pricing rather than reaching up to a price they thought their neighbor got, and ignoring some of the advantages the neighbors house may have had. Increasing land and construction costs have made it significantly more expensive to build a new home than to buy a home less than five years old which would also have window coverings, landscaping, building permits, impact fees, etc. already paid. Land price increases in Utah County have been dramatically higher than existing homes. The evolution of luxury homes above $500,000 has been interesting. In the 1970's and 80's, real estate insiders all agreed that if someone built a home worth more than $500,000 they would never be able sell it at fair market value, they would have to sell it at a large loss or keep it. There were few homes in that price range and few migrating into Utah who could afford over $500,000. The locals who could afford the more expensive homes, wanted to design their own homes. The mid 90's brought change. The more traditional old world designs began to have more universal appeal. People of substance became more able to locate anywhere they wanted with the fax and computer advances and lower air fares. Many started choosing Utah County for safer neighborhoods, better schools, and a more wholesome environment. Companies also began transferring people who could afford that price range, more locals could afford this price range who didn't want to wait a couple of years or more to find the land, design an appropriate home, and go thru an often long and painful construction process. The MLS didn't start tracking homes sold over $500,000 in Utah County until 4 months in to the year 2000. 39 were sold in 2001, but 368 in 2006. The rate has increased in 2007, but the more interesting number is homes over $1,000,000. More homes sold for over a million in 2006 (41) than the half million number 5 years earlier. The highest residential price reached in Utah County is 8 million dollars. Salt Lake County and Park City have more very high ticket home sales than Utah County, but interestingly average and median prices in Salt Lake and Utah Counties have gone back and forth and been very, very close in the last few years. Those of us in Utah County could list a good number of safety and life style advantages to living in Utah over Salt Lake County, and I don't just mean college football. The million dollar plus sales started primarily in the Provo Riverbottoms with a few on the hillside. Alpine has become a very close contender, and some have also sold in Sundance, Mapleton, Highland, Lindon and Orem. There are also some high end neighborhoods in Pleasant Grove, Springville, Woodland Hills and Elk Ridge. Building a million dollar plus home in other parts of Utah Couty might not be an ideal investment. We are selling more and more Utah County residential and commercial properties to California buyers, who have discovered they can collect about twice as much rent per dollar spent on Utah County real estate as compared to California. The number of properties sold during the first quarter of 2007 is similar to 2006 and well ahead of 2005 and earlier. In 2007 Utah County home inventory has increased, but prices have remained stable. These numbers are based on statistics published by the Utah County Association of Realtors thru Spring 2007. Over 90% of home sales are handled by this association but there are some private sales. Utah is a non disclosure state, sales prices are NOT turned into the county, and property tax is not determined by purchase price, but by random valuations made by Utah County which are high, low and on rare occasions correct.