Real Estate Info for Salt Lake & Davis County

You have likely heard all sorts of conflicting reports about the current state of our real estate market. It is true the local real estate market in 2009 continued its adjustment process begun in early 2008. Rather than trying to address the various media reports you may have heard, I prefer to just look at the data and see what the data reveals about local real estate activity in Farmington over the past year. Click on the thumbnail to see a copy of the full report for calendar year 2009.

One thing that stands out is the clear impact the federal home buyer tax credit made on home sales activity toward the end of the year as closed sales for the last quarter of the year were nearly double over the same period last year (50 vs 29). This late surge pushed calendar year sales in Farmington just over 10% higher than 2008 reported sales. This increase in activity, however, did not reverse the overall downward pressure on average & median sale prices.

Median sale prices were down just over 6% for the year in 2009 when compared to 2008. Although the tax credit helped with overall sales activity, it is important to remember the tax credit originally targeted first time homebuyers (although the recent extension of the credit now provides a component for existing homeowners). Most (but not all) first time homebuyers purchase properties priced below the median price point in a community. Generally, it is move up buyers who push median price points higher. This is especially true in Farmington where the average and median prices are some of the highest in Davis County. In terms of geographic activity, 40% of sold homes in Farmington in 2009 were located west of I-15, up from 32% for 2008.

There was a significant surge in average and median sold prices in December which is the result of two sales in excess of $750,000 at the end of the year. Without those two sales, the average sale price in December was $292,950 and the median sale price was $255,000. December’s adjusted median sale price is 26% below the peak monthly median sale price ($343,900) which occurred in September, 2007. It is, however, 11% higher than the lowest reported monthly median sale price of $228,589 which occurred in May, 2009. Has the market hit bottom? The current data seems to suggest it’s possible the market stabilized during the third quarter of 2009. We’ll need to see data after the current homebuyer tax credit expires in April, 2010 to make a definitive assessment.

Overall inventory levels in Farmington remain elevated with eight months of inventory currently on the market. Although elevated above “neutral market” parameters, inventory levels have decreased substantially in the past six months. Inventory levels had reached double-digit levels earlier in the year. This will be an important metric to watch going forward to see how much of this inventory reduction was the result of the tax credit & seasonality versus an actual balancing of supply and demand levels.

Mortgage interest rates remain at historically low levels and the credit markets have recovered from the near devastation of a year ago, the flow of capital into real estate has recovered somewhat, although the number of mortgage product options for buyers has been reduced. It will be interesting to watch interest rate levels as the new year proceeds. If the Federal Reserve believes inflation may begin taking root, they have made it clear they will use their fiscal policy tools (read interest rates) to keep inflation under control. Increases in interest rates can have a significant effect of buyer purchasing power (I will be doing an upcoming blog post on this topic). Most analysts are projecting relatively stable interest rate levels through the first half of 2010. I hope you find this information helpful. Feel free to email me (cfrazer@remax.net) with any questions you may have or if there is a particular topic you would like me to cover in my blog. I am always looking for new topics that would be of interest.