One thing that is consistent about Utah real estate is that there will always be conflicting reports related to the status of the local markets. You have a group of economists who say that the bottom will continue to fall out of the market while other groups say the real estate market will bounce back in 2012. I wrote a long article recently related to where home values in Utah are headed in 2012, and the conclusions I presented are still pretty spot on.

The Salt Lake Board of Realtors just published a report that states that the sales of existing home sales in Salt Lake County will rise in 2012. I smiled to myself but decided to read more about the topic. I mean, the Board of Realtors calling for an increase in existing home sales? Isn’t that like a kis who sells pest control door to door telling you that an infestation is coming and you need their services?

But in reading their report, it makes sense and there are several reasons why. First, they are basing the increase in demand on the improvement in the labor market, which is expected to grow by 30,000 jobs locally. Second, existing home sales locally have been trending upward when compared to the same month in the previous year. From August 2011 until the end of the year, there was an increase each month in this metric. Finally, the report shows that foreclosures in Utah have decreased in 2011, with the number of foreclosure notices down 28% to 5,400.

Taken together, the data does show that selling your home in Utah should be easier in 2012. Unless there is another bubble collapse in say government debt or currency because of QE3, then the local housing market should gain some steam. But that does not mean that home values will rebound.

In this same report, they show that home prices have declined in 2011 for the fourth consecutive year because of downward price pressure from foreclosures and short sales. The Board of Realtors also believes that home prices could stabilize by the second half of 2012. I don’t think they will. In my previous article about this, we examined the significant number of foreclosures in Utah that still need to clear the system. Until those foreclosures are flushed out of the system, it is highly unlikely that we will see any type of climb in home values.

The Bottom Line

I think people will start getting back into the market in 2012. I read that seven in ten homes sold in Salt Lake County were considered affordable when tied to the state median household income of $57,000. Remember that was the average, so there are lots of us who make less and lots who make more, so there are homes that are much more economical and can be bought on less income than that. There are also some great deals on homes in the 4,000+ square foot range.

So if demand starts to rise, even slowly, the foreclosures and short sales that are continuing to put downward pressure on home values will start to clear the system. Once we return to the foreclosure rates we had before the crash, then pricing should start trending back up. But don’t expect it to increase at the same pace it was in say, 2004. Some economists believe that inflation will begin to hit us in earnest in the next couple of years, which will increase interest rates on mortgages, which will put more downward pressure on home values to keep them affordable.

My advice for you? Find the right house at the right price when the time is right for you. Don’t try to time the market because it will rarely work. Set your priorities on the home you want, do your homework, and get the right loan for your family. With loan limits and home values sitting where they are, I suggest you look at an FHA loan if you don’t have 20% down right now. If you have saved your cash and have 20% down, then look for a Utah mortgage company that can offer you the lowest rates and reasonable fees. Good luck!

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