Report shows Greater Salt Lake housing market poised for recovery

(Salt Lake City, UT—May 7, 2010) The housing market is improving in the greater Salt Lake area, according to a recent report by Metrostudy, a national housing data and consulting firm that conducts a count of 100 percent of all new housing units in subdivisions within the market area each quarter. During the first quarter of 2010, the Greater Salt Lake market started a total of 1,360 new homes, which is a 66% increase when compared to 1Q09, and an 8% increase from last quarter (4Q09).
New home closings totaled 1,327 during the first quarter of 2010, 19% fewer than last year at this time and 32% fewer than last quarter. “While closings have slowed in recent quarters, there is evidence that progress is being made on building new homes, which is primarily a function of the market becoming low on finished vacant inventory,” said Eric Allen, director of Metrostudy’s Salt Lake City division. “Buyers are being pushed into building a new home as there are fewer finished homes to choose from.”
Annual new home starts for detached homes have increased to 3,637, a 42% increase compared to 1Q09. “New home closings remain above starts, which has been good for reducing inventory,” said Allen. There have been 4,567 new homes closed over the past year, an 18% decrease compared to 1Q09, but only 2% fewer than last quarter’s annual pace.
Finished vacant home inventory has decreased 50% since last year at this time to a current level of 867 homes, a 2.3 month supply. “Detached finished vacant inventory in the Greater Salt Lake market is at record low levels which haven’t been seen since prior to 2005, which bodes well for new production,” said Allen.  Model home inventory has decreased 29% since last year to 206 homes.
“The attached market continues to face headwinds as financing for new projects becomes more difficult to obtain,” said Allen. Annual new home starts for attached housing has decreased 35% since last year at this time with a total of 1,598 units. Annual attached closings have decreased 22% since last year for a total of 2,355. Continuing the positive trend of detached homes, though, finished vacant inventory of attached homes has decreased 25% to 951 units, a 4.8 month supply.
Regarding lot inventory, only 635 new lots were delivered to the Greater Salt Lake market in 1Q10, compared to the 1,191 lots that were delivered last year at this time. Vacant developed lot inventory for detached homes has decreased 6% since last year, leaving a total of 24,609 lots on the ground, which translates to an 81.2 month supply. With a decrease in lot inventory and an increase in starts activity, the supply has decreased 41.6 months since the peak in 1Q09. Vacant developed lot inventory for attached units has decreased 6% from last quarter to 5,607. At the current pace of absorption, this equates to a 42.1 month supply.
“Perhaps the largest questions affecting the housing market and its recovery are the impact of foreclosures, job growth, and the effect of the tax credit expiring, which at this point cannot be determined,” said Allen.  “The homebuyer tax credit has generated some demand; however this may foreshadow the possibility of weaker than expected demand as buyers may have been stolen from the future. Even so, with finished vacant inventory and vacant developed lot inventory on the decline, and new home starts picking up, it appears that the Greater Salt Lake market is poised for a stronger recovery relative to other markets, due to improved underlying fundamentals.”