24 May 2008 - Whether inflation, GDP or consumer confidence, every day there seems to be another economic indicator in the news. Although these numbers provide a snapshot of the health of the economy as a whole, most of the reports only mention national data, not local statistics that apply directly to our state.

For real estate decisions in particular, having local data is invaluable. That's because local conditions, not national ones, have the most significant impact on the current and future value of property.

Take Michigan, for example. Home values in the state have been dropping for almost two years now, not because Michigan saw a huge run-up in real estate prices during the housing boom but because of a struggling economy. In fact, unlike many areas of the country that saw double-digit price increases in recent years, Michigan hasn't seen home price growth of more than 5 percent since 2001. Here, local factors like ongoing job losses are the reason home prices are sliding.

To help us better understand where our state stands in terms of its real estate and economic fundamentals, I've gathered some Utah data and compared it to U.S. statistics. Once you read through the comparisons, I think you'll agree with me that Utah continues to be one of the best places to own a home.

Job Growth/Unemployment
In this key area of economic health, Utah has clearly outperformed the rest of the nation. The most-recent figures show a job growth rate of 2 percent for the state while the nation only created jobs at a rate of 0.3 percent for the year ending April 2008, according to the Utah Department of Workforce Services. That means Utah created 6.5 percent of new jobs in the U.S. even though our state comprises less than 1 percent of all U.S. jobs.

On the employment side, Utah again excelled with an unemployment rate of 3.1 percent, compared to the nation's 5 percent jobless rate.

In terms of real estate, these two statistics are particularly significant because they indicate that people are moving into our state and building the wealth necessary to buy homes. Because our state is creating a demand for houses, it is likely homes will see their value increase over the years.

Home Prices
Even though home prices fell in two-thirds of the nation's metropolitan areas during the first quarter of 2008, Salt Lake City saw a slight price increase of 3.5 percent during the same period. Nationally, the median sales price dropped 7.7 percent, according to the National Association of Realtors.

Although it's possible Utah may see a dip in prices as the market works to absorb excess inventory and solve affordability problems, analysts predict any price drops will be less than those seen in other states.

Gus Faucher of Moody's Economy.com told the Salt Lake Tribune that any real estate downturn in Utah should be relatively mild because of the state's strong economic fundamentals.

Subprime Mortgages
In the United States, only 9 percent of homeowners have subprime mortgages; however, more than half of foreclosures are from subprime mortgages. Clearly having a subprime mortgage correlates with a greater risk of default.

Utah's exposure to subprime mortgages is about the same as the nation's, with 9 percent of homeowners having a subprime loan and 56 percent of foreclosures coming from subprime loans, according to the National Association of Realtors and the Mortgage Bankers Association.

Utah stood out in the statistics; however, because the state has the highest decline in subprime use in the country. The percentage of subprime mortgages in the fourth quarter dropped 150 basis points from the previous year, compared to a decrease of only 100 basis points nationally, according to the Mortgage Bankers Association. Ultimately this drop-off in subprime use means Utah should see fewer foreclosures in the future because more people are choosing less risky mortgage products.

Even though Utah is not immune from the housing and economic problems the nation is facing, we can be grateful that we're living in a state that has shown considerable strength and resiliency. In fact, Forbes magazine recently named Salt Lake City as one of the top 10 recession-proof cities in the country. This economic strength should continue to bring stability to our housing in the months ahead. For more local real estate information, visit UtahHousingFacts.com.