A run-up in home prices continues to spread across the nation and shows no signs of slowing, as some Utah cities, like St. George, witness double-digit price increases.
For the 12 months ended June 30, home prices in the Beehive State climbed 8.91 percent, ranking Utah 31st in appreciation among all states and the District of Columbia, according to a quarterly report by the U.S. Office of Federal Housing Enterprise Oversight.
As recently as the fourth quarter of 2003, Utah ranked dead last in house-price appreciation.
In St. George, home prices for the year ended June 30 soared a whopping 28.34 percent, beating out cities like Honolulu (25.22 percent), Las Vegas (26.91 percent) and Los Angeles (25.12 percent).
In fact, St. George ranked No. 17 among 265 U.S. metropolitan areas in terms of appreciation, the only Utah city to break the top 20.
Dave Wecker, principal broker of St. George GMAC Real Estate, was surprised to learn St. George's house appreciation outpaced cities like Las Vegas and Los Angeles.
"We had anticipated that we would catch up over a longer period of time," Wecker said. "Quite frankly it makes it very difficult for us to know where it is going to end. Because we have been kind of a sleepy community for so long, our prices haven't appreciated in the last 10 years anywhere near as they have the last year. It's kind of like catch-up now."
Yet Wecker said a flood of new residential developments in the coming year could ease demand.
Salt Lake City ranked No. 127 in total price appreciation among U.S. cities, showing an average price gain of 9.13 percent. Logan placed at No. 174 at 6.25 percent. The Ogden-Clearfield area ranked at No. 185 with a 5.77 price gain. The Provo-Orem area placed No. 204 at 5.16 percent.
Jeff Thredgold, president of Thredgold Economic Associates in Salt Lake City and economic consultant to Zions Bank, said it is no surprise that St. George led the state in house-price appreciation.
"You're talking about a market that has had 7 percent to 10 percent job growth in the last year, which makes it one of the strongest economic performers," Thredgold said. "Utah's economy is doing well. We're still fourth in terms of job growth. If the underpinning of strong home-price appreciation is a strong economy, then Utah has it. The rebound is legit."
The report said 30 metropolitan areas across the country, like St. George, showed price appreciation at more than 25 percent for the year. For the first time since the fourth quarter of 2003, Las Vegas did not make the top 20 list of cities with the highest appreciation.
Nationwide, home-price appreciation was strongest in the Pacific and Mountain regions, while states in the South had the lowest appreciation.
"There is no evidence here of prices topping out," Patrick Lawler, OFHEO chief economist, said in a prepared statement. "On the contrary, house-price inflation continues to accelerate, as some areas that have experienced relatively slow appreciation are picking up steam."
Federal Reserve Chairman Alan Greenspan recently cautioned that home prices could fall. However, fears about the rapid run-up in national housing prices are largely overblown, according to a report released earlier this month by the Mortgage Bankers Association of America.
"We've only seen nominal house prices fall in a couple of quarters in the last 40 to 50 years nationally," said Douglas Duncan, MBA's senior vice president and chief economist. "So we think it is unlikely to see a national decline."
The OFHEO house price index measures average price changes in repeat sales or refinancings on the same properties.