May 31, 2012

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Article

Foreclosure Sales Remain Significant in Utah Housing Market

Heather Stewart

May 31, 2012

In Utah, about one in five home sales is of a property that is in some stage of foreclosure, according to RealtyTrac, an online marketplace for foreclosure properties. RealtyTrac’s first quarter 2012 foreclosure sales report shows that foreclosures and bank-owned properties represented 22.65 percent of all home sales in the state—up nearly 6 percent from the same quarter last year.

“Foreclosures are a big part of the market,” said Cal Musselman, president-elect of the Utah Association of Realtors. “We’ve taken it on the nose for the past few years, and we know there’s more foreclosures to come.” However, he noted that there has been a slight downtrend in the number of new foreclosures coming on the market.

More significantly, said Musselman, is the fact that inventory levels are finally starting to fall. Statewide, there is a 6.9-month supply of homes on the market, while in Salt Lake, there is only a five-month supply. According to Musselman, anywhere between six and seven months is considered a healthy inventory level.

“Our supply hasn’t been this tight since 2007,” he said. “Pent-up demand has really reared its head in the past two months. Buyers have finally come off the fence.” According to Musselman, pending home sales are up 18 percent year to date.

Because of increasing demand and tightening inventory levels, Musselman said Utah “has the ability to take on foreclosures and still maintain a healthy market.”

Musselman is regularly seeing multiple offers on homes now, particularly on those priced at $300,000 or lower. Several markets are heating up, he said, including Salt Lake, Weber/Davis and St. George. “Buyers have just come out of the woodwork in the past couple of months,” he said.

The average sales price for homes in some stage of foreclosure in Utah was $149,060, and there were 2,161 of these sales during the first quarter, according to the report. Bank-owned homes cost about 24 percent less than the market average for non-foreclosure homes in the state.

While foreclosed and bank-owned homes are continuing to depress home values, Musselman said the tightening inventory levels will eventually cause values to begin climbing again. He expects to see “smooth, gradual increases in equity” over the next little while.

Nationally, sales of homes that were in some stage of foreclosure or bank owned accounted for 26 percent of all U.S. residential sales during the first quarter, according to the RealtyTrac report. This is slightly up from 25 percent in the first quarter of 2011.

For more information about the RealtyTrac first quarter 2012 foreclosure sales report, visit http://www.realtytrac.com/content/foreclosure-market-report/q1-2012-us-foreclosure-sales-report-7213">www.realtytrac.com/content/foreclosure-market-report/q1-2012-us-foreclosure-sales-report-7213. 

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