Forget all those national headlines you've been reading about the Great Housing Slump.
It's a sellers market in the Salt Lake area - the inventory of houses up for sale is the lowest they've been in 14 years, and existing home values are up 4 percent over a year ago but - thanks to lower interest rates - 22 percent more affordable.That's the upbeat report the Salt Lake Board of Realtors presented at its annual economic forecast breakfast Monday morning.
Speaking on residential real estate, Randal K. Eagar, 1992 board president, said 7,628 single-family homes were sold over the board's Multiple Listing Service in 1991, 16 percent more than the 6,576 sold in 1990 and the most houses sold in a single year since 1978, when 9,983 changed hands.
"We enter this new year with the best of all possible conditions," Eagar told the gathering of Realtors in the Little America Hotel.
Eagar said lower interest rates have made the dream of home ownership possible for many Utahns who were shut out of the market only a year ago.
"At the beginning of 1991, it took an average monthly income of about $3,000 to afford a home selling for $83,300 at 10 percent interest," he said. With this same income, and rates having dropped to 8 percent, that same family can now afford a $102,000 home with the same payment - a 22 percent increase in affordability."
On the commercial real-estate front, outgoing board president Douglas P. Richards was "encouraging" but not nearly so upbeat as Eagar. He termed the Salt Lake commercial real-estate market "so-so" but noted that the past two years were stronger than most years in the 1980s. He also noted the local market is holding its own in a national context.
"All in all, Salt Lake City has outperformed many national marketplaces in the commercial real-estate area," he said.
The strongest performer commercially was apartment buildings,Richards said. Commercial real estate is traditionally defined as apartments, industrial properties, retail and office space.
"With such a strong reported (rental apartment) occupancy rate and low vacancy rate there has been a dramatic increase in rental rates this past year and a dramatic increase in investors' interest in the apartment market," Richards said.
He cited Apartment Association figures that indicate a continual drop in local vacancies for the past three years - from a high of 9.8 percent in 1989 to a low of 3.1 percent in November 1991.
Citing lack of funding as the most formidable problem for commercial real-estate developers, Richards said, "Some would say commercial funding is not just difficult, it is impossible to obtain."
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GRAPHIC
Residential Real Estate
Local housing increased in value all through 1991, especially in the fourth quarter, when the average price of homes sold in the Salt Lake area was $88,329 -- nearly 7 percent higher than the $82,836 of a year earlier.
Average selling price is expected to rise 5 percent to 6 percent this year, according to the Salt Lake Board of Realtors, and the number of home sales is projected to maintain a strong 10 percent to 15 percent increase through 1992.
Inventory of for-sale listings has dropped dramatically over the past few years, down a record 36 percent from 24,000 listings in 1986 to 15,200 in 1991 -- the lowest number since 1977. This means, the board says, that sellers are likely to find buyers more quickly.
The once depressed condominium market is also making a strong comeback, with a 28 percent increase in number of sales and a 7 percent increase in average selling prices.
COMMERCIAL REAL ESTATE
-So far, sales of industrial properties in the 1990s has improved over the 1980s, the Salt Lake Board of Realtors reported. In 1991, the vacancy rate for industrial properties was just under 7 percent for buildings with fewer than 100,000 square feet of space and slightly more than 8 percent for those containing more than 100,000 square feet.
-Sales of retail properties continue to be strengthened as large national retailers such as Shopko, Wal-Mart and Toys R Us enter the local market, the board reported. This year, additional major retailers are expected to open new stores in the area, continuing the trend. The most challenging area of retail real-estate marketing, said the board, continues to be smaller strip centers, but that segment is also projected to improve over the next few years.
Office space vacancy rates are still high in this market, the board said, in both the downtown (18 percent to 19 percent vacancies) and suburban areas (23 percent to 25 percent vacancies).