Wednesday, October 13, 2021
Mixed News
Posted By Babs De Lay on October 13, 2021, 4:00 AM
Such mixed news in the past few weeks about real estate! The National Association of Realtors concurred with other market watchers that the number of pending home sales nationwide had again increased last month, leading with a 10.4% high in the Midwest.
Robert Shiller of The New York Times reported that home prices across the nation rose 17.7%—after correcting for inflation—in the year ending in July. The chief economist of the NAR, Lawrence Yun, said, "Home prices are roughly three times wage growth." He predicted home price increases by August of 2022 will remain high: Salt Lake City up 15.7%; Provo 17.9%; Ogden 16.5%. Given that, the real estate bubble won't be bursting in this state anytime soon.
At the end of summer, Fortune magazine reported that Ogden, Provo and Salt Lake City were three of the 10 most overpriced real estate markets in the country, along with Boise, Idaho; Austin, Texas; Spokane, Washington; Stockton, California; Detroit; Phoenix; and Las Vegas. And yet, people are still moving to Utah in droves, and the fact is we do not have enough housing inventory to accommodate all the people who want to buy or rent.
Google just announced they would be putting in a data center in Utah County across the street from Facebook's data center and down the way from the National Security Administration. Methinks all of them have come here to suck up our water for their massive computer servers, because Utah has the cheapest water in the country despite our statewide drought. And now that we're known as the Silicon Slopes, recruiters are wooing employees to our big tech companies: Adobe, Ancestry, BambooHR, Divvy, Entrata, Grow, HireVue, Jane.com, Jive Communications, Lucid Software, Net Documents, Overstock.com, Pluralsight, Podium, Simplus, SirsiDynix, Solutionresearch, Veracity Networks, Vivant Solar, Weave, Workfront and 1-800-contacts.
If you thought Salt Lake was hurting for affordable homes to buy or rent, Utah County is headed for housing hell! It's just not logical that all these big tech companies bringing in folks to work here will be able to offer hope of affordable housing for their lower-paid employees. Actually, even mid-level and high-end workers will find housing hard to get given the trends.
There is one bizarre economic concern that many are watching right now: the Chinese version of the Lehman Brothers collapse of 2008. Evergrande is one of the world's largest and most powerful real estate holders and developers, as well as the one with the most real estate debt. China has the highest homeownership rate in the world—almost 90%—and Evergrande has had a huge piece of this residential pie. They defaulted on a $260 million note last week, which was the group's first full-blown default ever. It caused the Hong Kong Stock Exchange to suspend trading of some of their highly leveraged shares.
Basically, this company is overleveraged and if they sink, there will be what is known as an "economic virus" that may ripple to financial markets around the globe, creating financial havoc in money markets that affect real estate markets.
About The Author
Babs De Lay
A full-time broker/owner of Urban Utah Homes and Estates, Babs De Lay serves on the Salt Lake City Historic Landmark Commission. A writer and golfer, you'll find them working as a staff guardian at the Temple at Burning Man each year.
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