Utah was behind the curve when it came to the recent housing boom. Real estate inflation here hit long after it had gripped many other large U.S. cities. And when it came, home prices here didn't rise as drastically as they had in, say, Phoenix or Las Vegas.
Maybe that means the housing bust will, itself, be a bust by the time it gets here.
Don't count on it.
Utahns have had the advantage so far of watching the housing crisis from afar. A report in this newspaper yesterday said foreclosures and bank repossessions haven't hit here the way they have elsewhere. But the ripples of that nationwide crisis already have tightened the mortgage-lending market here.
It shouldn't take a crisis to learn some valuable lessons. Financial experts, ecclesiastical leaders and others have cautioned for years against borrowing money in risky ways and against home-equity loans and second mortgages. In this case, the housing bust is being spurred by subprime mortgages. Primarily, these are the popular adjustable-rate loans that allow people to buy houses they couldn't quite qualify for if they wanted a traditional mortgage. The idea behind these loans is that they begin with low interest rates and low payments, but that those rates and payments subsequently climb based on a variety of factors.
As long as home prices appreciate and traditional interest rates remain low, these loans aren't a problem. But when home prices fall and interest rates rise, homeowners quickly find themselves in over their heads.
Home-equity loans can cause similar problems. If home values decline, people could end up owing more than their house is worth.
Some people blame the current crisis on the lending industry, which has eagerly pushed these lending schemes. The industry does indeed bear much of the blame. But home buyers shouldn't be exonerated for taking risks, either.
Perhaps many of them watched helplessly as inflation kept the dream of home ownership just out of reach. The prudent thing, however, would have been to avoid lending schemes that easily could lead to a crisis.
Nationally, mortgage foreclosures were up 93 percent last month over the year before. Utahns should count themselves fortunate if they escape this tide.