14 June 2008 - Even though Utah is already fundamentally healthier than many other real estate markets, improved economic conditions for the U.S. in the second half of the year should continue to help housing in the Beehive State as more people choose to move here.

That was the optimistic message from Lawrence Yun, chief economist of the National Association of Realtors, when he spoke to Realtors in Park City last week about housing conditions here in Utah.

"People are moving into the region; far more coming in than moving out. That's always positive. That creates additional demand for housing, and anytime there's demand for housing, that makes the market much more healthy," said the economist who U.S. Today recently named as one of the top 10 forecasters in the country.

Yun cautioned, however, that even though Utah has a positive migration trend, people in California and other states need to sell their homes before they can move here and buy real estate.

"Given that the area you represent is a vacation/resort destination, someone has to sell their home someplace before arriving here," Yun said.

Because Utah's resort areas like Park City rely on out-of-state buyers, several recent economic developments are expected to help both on a national and local level.

The first, and very recent, development is that Fannie Mae and Freddie Mac within the past few weeks have begun to actually purchase conforming jumbo loans - mortgages between $417,000 and $729,750 - as part of the government's economic stimulus package.

This is significant because global investors were shying away from these high-dollar loans after the credit crunch last summer, making their interest rates skyrocket and keeping buyers on the fence. Now that these loans have the implied backing of the U.S. government, their rates have been coming down to more manageable levels, making it easier for homeowners in high-cost regions to sell their homes and ultimately buy property in other areas.

"The California market is important to you because they need to sell their homes so they can buy a home here," Yun told the Utah audience. "Because the jumbo loan market [was] not functioning, it [was] slowing the home sales [in California]."

Another factor that should help sales pick up is the elimination of Fannie Mae and Freddie Mac's declining markets policy, which required higher-than-normal down payments and credit scores for buyers purchasing in areas where home prices had decreased. Although Utah as a whole was not classified as a declining market, the change should buoy up sales in California and elsewhere, in turn helping more borrowers come to Utah, Yun said.

In addition to the improved mortgage conditions and Utah's positive migration, there are several other factors, such as a comparatively low foreclosure rate and solid job growth, which lead Yun to forecast a positive outlook for Utah in the next few years.

"There's a nationwide downturn in the job market, but there are certain pockets in the country holding on, and Utah and the Rocky Mountain area are areas where the job market is holding on nicely, which means any setback in housing, in my view, would be temporary."

Yun also believes any decline in Utah housing prices would be brief because the home prices here did not rise as fast as they did in areas like Phoenix and Las Vegas.

"My guess is any price decline will likely be short-lived because despite the increase, [Utah] prices are still affordable by Western region standards," he said.

In fact, Yun told the group that he expects prices will be higher in 99 percent of U.S. markets five years from now, which is why he emphasized to the group that it's important to make buying decisions based on long-term trends, not short-term ones. In the Rocky Mountain area, for example, prices could rise 30 percent in five years, Yun said.

"The long-term prospect is very bright for the Rocky Mountain states," Yun said. "Given that currently it's a buyer's market - high inventory, historically low rates - it may be a good time to enter the marketplace."