22 March 2008 - Last year may have been a slower year for real estate, but big homes still saw big sales, says a new Realtor report.

Data from the Utah Association of Realtors shows that sales of high-end homes along the Wasatch Front saw their second best year in 2007 - despite a credit crunch, subprime mess and slower housing market.

The report says 1,568 homes priced $500,000 and above were sold along the Wasatch Front in 2007 - down from the 1,667 sold in 2006, but up from the 970 sold in 2005. In fact, the drop in high-end sales from 2006 to 2007 was only 6 percent.

This report is particularly interesting because high-end homes were perhaps most affected by the credit crunch and tighter lending standards imposed over the summer. Jumbo loans (those more than $417,000) became harder to find and their interest rates soared.

Even so, the situation wasn't nearly as bad as it seemed, especially in Utah as buyers continued to enter the market for homes costing more than $1/2 million. In fact, data from July to December (which reflect the effects of the credit crunch) shows that sales of high-end homes along the Wasatch Front in the final two quarters of 2007 were still the second best on record.

Wasatch Front Realtors sold 686 homes priced $500,000 and above in the final two quarters of 2007, down from the 945 sold in the last half of 2006, but up from the 584 sold in 2005.

The trend was similar across Salt Lake, Utah and Davis counties; each saw sales of homes $500,000 and above fare better than in 2005. In Davis County, 2007 was a record-breaking year with high-end home sales actually increasing about 35 percent from 2006.

Basically what these numbers mean is that we saw a phenomenal year for real estate in 2006, with record sales and appreciation rates. We've now returned to a more stable market that reflects what we saw in 2004 and 2005.

What has changed is the number of homes available for sale. The UAR report shows home listings increased significantly over the past two years, especially for homes $500,000 and more. This increased inventory and competition may be the reason why it seems like fewer high-end homes are being sold.

Along the Wasatch Front, the percentage of new listings in this price range increased nearly 63 percent from 2006 to 2007, the largest gain in any price range. From 2005 to 2006, new listings were up 92 percent.

As the housing boom was taking place, builders significantly increased production to meet the perceived demand. Now that the market has slowed, this excess inventory will need to be absorbed, and it may force some sellers to cut their prices if they are serious about selling.

The good news is 1) builders have reduced construction which should stabilize the market, and 2) buyers now have a number of opportunities: Interest rates are at historic lows, selection is high and negotiating power is better than it has been in years.

In fact, Time magazine recently published an article, titled "Ignore the Headlines," that argued against waiting to buy, saying that as the economy recovers, interest rates will rise and wipe out any gain from waiting for a lower home price.

"If mortgage costs rise just a half a point [in a year] … you'd have saved nothing," the article said. "Meanwhile home prices might steady and sellers might become less willing to negotiate. And you have spent a year living someplace you'd rather not be."

So if you'd rather move into your own home, call your Realtor; he or she will tell you what is really going on the your market - because nobody knows Utah real estate like a Utah Realtor.