Salt Lake City is #7 on Zillow's Hot list for 2016

[Steve Theobald]

http://kutv.com/news/local/two-utah-cities-make-zi...

With average home values about 1/3 of my home state of California,  I know that Utah still has LOTS of room to go up.  As the "Mountain West" economy grows and favorable news like this become more popular, I think Utah may be LESS vulnerable to any negative market shifts.  I have heard and seen lots in the last 10 days about dropping markets, but people still have to sleep somewhere and, interestingly, they keep having babies!  I have no crystal ball, but I think Utah may be one of the best places to park money now for buy and hold deals.   What do you think?   How many people outside of Utah are investing here?

[Douglas Larson]

Hi @Steve Theobald Thanks for this thread! Usually I have 2 cents to share but this time I'm throwing down a whole nickel, for what it's worth.

I keep hearing a lot of investors feeling very nervous and expecting a big price drop any moment along the Wasatch Front area of Utah. I just don't see that anytime soon. It's my personal belief that we will have a minimum of 2 to 3 years of high demand and price appreciation of 5 to 10%, especially under 250 - 275K.

Reasons:
1. Supply and Demand.
Demand is high, especially in that lower end and supply is low.  

Builders can build, but not in that lower Price range unless it's a condo or townhome. I wouldn't buy higher-priced condos right now but SFRs, under 250K … Absolutely!

2. Part of demand is population growth and the population in Utah is growing at twice the national average. 200,000 net new people in the last 4 years and another 200,000 more expected in the next 4 years! - most of those will be along the Wasatch Front. New households are being formed and first-time buyers are pushing growing families into their second homes. There is a lot of talk about Millennials not getting married and forming traditional households, but that trend is just not that strong in Utah. Some things I have enjoyed about Utah over the past 11 years are the strong family values and traditional biases. 

3. It is cheaper to buy than to rent, especially under that 250K price tag. Example: A 250K home with a mortgage is a PITI of about $1500 a month. Rent would be 1600 - 1800. A 175K home would have a mortgage of about $1200 PITI but rent would be $1300. People who can buy, will buy.

4. Jobs. Utah has jobs, and in fact is in the top 5-10% of all economic and employment statistic of all the 50 states. Facts: Utah unemployment Rate – 3.4%, National Average - 5.5%, Job Growth in Utah projected at 2.8%, National Average 1.3%

5. Interest rates… Everyone has been saying for the last 10 years that interest rates will rise any day now. That may be happening, but banks and the government always get creative in packaging loan products. ARMs, interest-only, and some of you remember the negative amortization loans a few years ago that got a lot of people in trouble. They probably won't do those same things again but they will think of something! They always do.

6. Prices on the east and west coasts are getting crazy, and when that happens, people move to cheaper areas and Utahns move back home. I have a cousin from California who, like me, had never lived in Utah but he and his wife sold their California home recently and bought a house free and clear in Utah, with just the equity they had after the sale of their southern cal house. Again, this speaks to demand.

All components of supply and demand point to strong and increasing real estate prices under 250K and probably up to 350K for at least the next 2 to 3 years.

Now, there are always a few wildcards. No one can really predict the future, although we can estimate trends. Some wildcards are:
1. A stock market crash that many say is well overdue. A 10% correction . . . No Big Deal. A 40% drop? . . . Yikes! -who knows?!? When consumers and lenders lose money they tend to stop buying and lending.

2. Politics - I don't see huge changes to economics or policy unless Trump or Sanders take the White House. The rest are politicians and won't rock the boat too much. Trump though has made some crazy promises about foreign policy and exporting millions of people. whether or not you think that's a good idea, it could have major, unexpected consequences. Sanders has made some equally bold promises but on the other side of the spectrum and who knows what that will bring if actually implemented.

3. A zombie apocalypse!
I know this sounds like a joke but there's always something crazy looming overhead that "could happen." I was living on Maui when terrorists hi-jacked several planes, including the ones that hit the Twin Towers in New York City. It was devastating to our tourist economy in Hawaii for three months and then things came slowly back to life economically and in the real estate market. If two or three attacks like that would've happened one after another every couple months… Who knows?

Terrorists?… Aliens?… Zombies?… Who knows?

However, if you live your life, never taking any risk because of a potential zombie apocalypse you are not likely to actually live a life at all.

After all that, I think we are looking pretty strong in Utah, at least for a while!