Sunday, April 27, 2008

Prices Starting to Slip

So the local media have discovered that real estate prices have gone flat in Salt Lake and Davis Counties and declined in Utah County. No surprise to anyone who bothers to watch, but since they're only looking at MLS numbers, the stats are a bit skewed. No foreclosures, no short sales, no deals in the ward parking lot, all of which are becoming more common. That explains why Draper shows a respectable increase even though every third house is for sale, prices on the bench are spinning in, and Suncrest is bankrupt. These are the same figures that were used to create all the celebrating about a 6% decline in inventory for Q1 without bothering to account for seasonal adjustments or sellers who gave up and pulled their homes off the market. Lies, damned lies, and statistics, folks.

It also doesn't account for a painful fact about this market. A flat market, even a slightly increasing market, is no better than a declining market for these sellers. They leveraged to the hilt with outrageous terms, expecting quick appreciation for a quick flip. It isn't happening, and they're sunk. Prices haven't really started slipping yet, but the market can't support this inventory.

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