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Transcript of UTAH HOUSING MARKET 2007gardner.utah.edu/bebr/Documents/studies/Utah Housing...8 1 4 199 7 2 00 0 2...
UTAH HOUSING MARKET2007
JAMES WOODBUREAU OF ECONOMIC AND BUSINESS RESEARCH
DAVID ECCLES SCHOOL OF BUSINESSUNIVERSITY OF UTAH
November 2007
RESIDENTIAL CONSTRUCTION PERMITS ISSUED IN UTAH: 2007 RETURN TO VOLATILITY?
0
5,000
10,000
15,000
20,000
25,000
30,000
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
Total Res. Units Single Family
DECLINE IN SINGLE FAMILY BUILDING PERMITS - 2007(Year-over January through August Comparison)
-760UTAH COUNTY
-177Kaysville
-137Clinton
-181Spanish Fork
-185West Valley
-190Herriman
-233Riverton
-267West Jordan
-268Draper
-585Lehi
-26WASHINGTON COUNTY
-140WEBER COUNTY
-577DAVIS COUNTY
-1,226SALT LAKE COUNTY
SINGLE FAMILY PERMITS ISSUED IN SEPTEMBERSource: Construction Monitor.
-62.6%4381,171Total
-36.4%82129Washington
-67.3%34105Davis
-70.3%124417Weber
-60.5%68172Utah
-62.6%130348Salt Lake
Percent Change
September2007
September2006
CHANGE IN UNOCCUPIED NEW HOMESSource: NewReach.
915
222
72
132
216
273
2nd Qtr 2006
134.3%2,144Total
70.3%378Washington
219.2%233Weber
178.8%368Davis
164.4%571Utah
116.5%594Salt Lake
% Chg.2ND Qtr 2007
CHANGE IN EXISTING HOME SALESSource: WFRMLS
-46.9%1,3912,619TOTAL
-48.4%204396WEBER
-39.7%237393DAVIS
-47.9%282539UTAH
-48.3%6681,291SALT LAKE
% CHG.SEPT2007
SEPT2006
LISTING FOR EXISTING HOMES FOR WASATCH FRONT COUNTIESSource: WFRMLS.
37.4%21,02516,507Total
3.8%2,3782,291Weber
41.2%4,9313,492Utah
28.4%10,8618,457Salt Lake
25.9%2,8552,267Davis
% Chg.20072006
PERMITS ISSUED FOR CONDOMINIUMS/TOWN HOME UNITS IN UTAHSource: Bureau of Economic and Business Research, University of Utah.
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
PERMITS ISSUED FOR NEW APARTMENT UNITS(January through August)Source: Bureau of Economic and Business Research, University of Utah.
679.4%26534Davis
31.3%1,161884Total
-84.9%16106Weber
-77.8%1463Washington
-100.0%04Wasatch
-23.9%284373Utah
0.0%00Tooele
0.0%00Summit
91.4%582304Salt Lake
% Chg.20072006
FIVE YEAR PERCENT INCREASE IN OFHEO INDEX FOR WESTERN STATESSource: OFHEO
50.8%U.S.
20.2%COLORADO
53.0%UTAH
57.0%NEW MEXICO
62.2%MONTANA
64.3%WYOMING
64.4%IDAHO
67.7%WASHINGTON
70.9%OREGON
89.5%NEVADA
90.1%CALIFORNIA
90.8%ARIZONA
MEDIAN SALES PRICE OF EXISTING HOME IN SALT LAKE METRO COMPARED TO U.S.National Association of Realtors
Salt Lake $233,100 U.S. $223,800
$0
$50,000
$100,000
$150,000
$200,000
$250,000
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
Salt Lake MSA U.S.
MEDIAN SALES PRICE OF EXISTING HOME IN WASATCH FRONT COUNTIES - 2007Source: WFRMLS
5.0%Total Jan.- Sept.
-2.5231,000September
0.0%237,000August
-1.3%237,000July
2.2%240,000June
2.1%234,850May
0.0%230,000April
4.5%230,000March
0.0%220,000February---220,000January
% Chg.Median Price
PERCENT CHANGE IN AVERAGE SALES PRICE OF HOME IN SALT LAKE COUNTY 1955-2007
-15%
-10%
-5%
0%
5%
10%
15%
20%
1955
1958
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
PERCENT CHANGE IN OFHEO INDEX FOR UTAH
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006
Percent Change
THREATS TO OWNER OCCUPIED HOUSING
Extent of OverbuildingHousehold Growth Rates at 3%
Utah Demographics20 to 29 years olds
Possibility of National RecessionDemand Constrained by Lending GuidelinesSubprime Debacle
Vacancy Rate and Average Two BedroomTwo Bath Rent in Salt Lake County – 1997 to 2005 rents up 6%, bold.
(Source: Equimark)
6.5%$8245.10%2006
3.3%$8513.20%2007
1.6%
2.1%
-3.4%
-0.4%
2.4%
3.3%
0.1%
0.5%
6.6%
8.9%
% RentIncrease
$7746.50%2005
$7628.30%2004
$7469.90%2003
$77210.90%2002
$7757.10%2001
$7576.30%2000
$7337.70%1999
$7326.80%1998
$7285.30%1997
$6834.30%1996
Avg. Rent
Vacancy RateYear
IMMIGRATION AND DEMAND FOR AFFORDABLE RENTAL UNITS
Utah’s foreign born population is about 200,000; about 85,000 are estimated to be illegal.Each year the foreign born population grows by about 10,000 people and 2,500 households.PUMS shows that 57% rent or 1,425 of additional households.75% of these renter households are from Latin America and Africa.Assuming that these households are very low income the immigrant demand each year for affordable rental units is nearly 1,100 units.If high levels of overcrowding then demand might drop to500 units.
WHAT ABOUT LOW INCOME RENTERS?
Rental subsidy programs provide assistance for about 39,000 households: LIHTC (19,000), HUD (16,000), RD (1,500), Public Housing (2,500).
Estimated 103,000 VLI and ELI renters Estimated 65,000 VLI and ELI renters with no assistance; 7% of Utah Households
DETERIORATION OF AFFORDABILITY FOR MODERATE, LOW AND VERY LOW INCOME HOUSEHOLDS - 2007
Opportunity for Ownership Has DeclinedHousing Prices Unlikely to DeclineImmigrant Population Increase Demand for Affordable HousingLoss of Construction Jobs in 2008New Rental Housing Less Than 1% of InventoryRental Rates Increasing and Vacancy DecliningWorsening Crisis in Rental Housing
UTAH ECONOMY AND HOUSING
(1) DESPITE SINGLE-FAMILY TROUBLES UTAH’S ECONOMY IN STRONG EXPANSION.
(2) LIKELY SINGLE-FAMILY HOUSING HAS BEGUN SEVERE CONTRACTION.
(3) CONDOMINIUM/TOWN HOME STARTS WILL GAIN SHARE; UP TO 20% OF RESIDENTIAL.
(4) APARTMENT SHARE PROJECTED AT 10% OF RESIDENTIAL CONSTRUCTION; INVENTORY INCREASING BY <1%.
(5) MODERATE AND LOW INCOME AFFORDABILITY DECLINING; FEWER OWNERSHIP OPPORTUNTIES PLUS UNFAVORABLE RENTAL MARKET CONDITIONS.