Economic expert James Wood provides SLC housing forecast

James Wood, director of the University of Utah’s Bureau of Economic and Business Research, said during an economic forecast presentation in early February that he expects real estate sales and new housing construction starts to find a bottom in 2009 with a trough in prices following.

“I think we will probably see a little bit more weakness this year in the median price of homes sold, but by the end of the year and into next year, we will begin to see some stabilization in this market,” Wood said.

To help predict what to expect for the future, Wood compared today’s real estate market to the situation Salt Lake faced in the 1970s. During the ’70s, home sales climbed for several years before hitting a peak but then took four years to establish a trough. Wood compared that housing cycle to the one we’re in today, which saw its peak in 2005. With three years of declines behind us, Wood is predicting just one more year of sales decreases.

“I expect it’s going to be similar to what we had in the previous cycle, where it was a four-year down,” Wood said. “So we’re probably in for another weak year, but I don’t think it’s going to drop like this last year.”

So far, sales have already dropped 44 percent compared to the total 55 percent decline seen in the 1970s cycle, he said.

Report: Housing affordability up in Utah

Housing affordability was up in all major metropolitan areas in Utah during fourth quarter 2008, the result of both lower home prices and cheaper mortgage financing, according to The National Association of Home Builders/Wells Fargo Housing Opportunity Index, which measures the percentage of new and existing homes sold in a given area that are considered affordable to those earning the median income.

The index reported the biggest quarterly affordability gain in St. George, where the percentage of affordable homes increased from 33.8 percent to 41.7 percent. The Provo-Orem metropolitan statistical area saw the second-biggest gain, with 53.3 percent of homes sold considered affordable, compared to the previous quarter’s 48.2 percent. The Salt Lake MSA came in third with affordability increasing from 55.3 percent to 58 percent. Finally, the Ogden-Clearfield MSA had the state’s smallest quarterly affordability gain but remained the state’s most affordable metro overall, according to the index. During the fourth quarter, 69.6 percent of Ogden-Clearfield homes were considered affordable, up from the previous quarter’s 67 percent. The HOI does not track affordability in the Logan metro area.