Real Estate in Cache Valley has been booming the past 2 + years, with prices rising over 11% per year since 2015, home inventory at record lows, and new homes popping up along ridges and through fields like prairie dog towns all over the valley. I’ve been overjoyed for my sellers, but a little nervous for my buyers – wondering if we’re on the edge of a bubble – concerned that the market might take a down-turn and buyers be left in a depreciating market such as that we experienced 2008-2012. Here is where the research took me.
Economists have devised a pretty accurate Real Estate prediction model using 5 factors – resulting in what can be termed as a housing MRI. The items to consider are: 1. EMPLOYMENT 2. SUPPLY & DEMAND 3. APPRECIATION & REPLACEMENT COST 4. AFFORDABILITY 5. DEMOGRAPHICS & DATA.
Here’s the skinny on how these factors look in our specific Cache Valley/Logan market.
- Employment: This is a leading indicator of Real Estate strength. The Department of labor and employment has graphed the impact of unemployment rate on Real Estate in markets all over the US, documenting that job growth and high employment rates = strong Real Estate market. Utah ranks #1 in job growth, adding 46,600 jobs just in 2016. Our state’s economy is ranked as #4. According to the US Bureau of Labor statistics, the unemployment rate in Cache County as of September, 2017 is a mere 2.6% ( compared to 4.1% nationally). The highest unemployment rate Cache Valley has seen in recent history was August 2010 at 6.9% – coinciding with the low point in our Real Estate market. Current employment/job stats bode very well for a continued strong local Real Estate market.
- Supply & Demand: Things to consider in this area are: changes in re-sale inventory, rise in new home inventories, oversupply of apartment construction/vacancy rates. Here the local indicators are actually very positive: The Cache Valley supply/demand balance has been at a steady equilibrium for the past 2 years, resulting in low inventory of homes for sale despite the abundance of new construction. The average days on market (DOM =average time it takes for a home to sell) is currently 41 days -with those priced between $100-$200,000 taking just 26 days to sell, and homes priced at $400,000 + taking an average 110 days. Despite the perception (my perception) of new homes cropping up like… well crops- actual figures don’t indicate overbuilding of either single family or apartment buildings. Here are the numbers for building permits pulled in Cache County the past 3 years. In 2015, 393 single family permits were pulled and 104 apartments. In 2016, 468 single family and 42 apartments. In 2017 (to date) 410 single family have been pulled and 187 Apartment units. In Contrast, back in 2006 & 2007 (prior to the market crash) there were over 650 permits pulled each year. Apartment vacancy rates are below 1% with waiting lists in many cases. It appears the additional apartment units & single family homes being built will be easily absorbed by the increased/increasing population (see point 5)
- Appreciation & Replacement costs: As mentioned earlier, home appreciation in Cache County has gone up around 22% in the past 2 years, and according to FHFA.gov, Utah ranks 5th in the nation in home appreciation. Over the past 5 years, home prices in Utah have gone up 45.46%. Replacement costs have gone up at about the same rate – indicating a strong, stable market.
- Affordability: This is an index based on home price, mortgage interest rate, and median family income. Local statistics are readily available on the median single family home price (currently around $228,000 in Cache Valley) and on the mortgage interest rate (30 year fixed – 4%). Unfortunately, I’ve been unable to find any credible current numbers on the median family income… available data is from 2015, and shows the median income at $51,000 for Cache Valley. My hope is that household income has been increasing somewhat commensurate with the increase in home prices so that affordability is a positive index. Since lenders have much stricter parameters in qualifying buyers than they did during the last Real Estate fiasco, and buyers are still able to get loans, it can be assumed incomes must be also rising.
- Demographics & Data: This index is positive indeed for Cache County. The latest estimates from the US Census Bureau show Cache County as the 20th fastest growing metro population over $50,000 in the US, reaching an estimated $131,441 by the end of 2017, up 2.% since 2010. Utah in general ranks #1 in population growth in US- resulting from both high birth rate and influx of people moving from other states/countries. Cache Valley/Logan continues to rank low in crime and high in outdoor recreational opportunities (specific rankings vary depending on the study, but all are favorable).
Based on statistical information, the Cache Valley/Logan Real Estate market IS NOT in “bubble trouble”. This is a desirable place to live, and people are moving here. Unemployment is low. Job Growth is positive. Inventory is low with a stable balance of supply and demand – even with new construction factored in. The appreciation rate may level off – and that is expected, but there are certainly no indications of any depreciation in the foreseeable future.
If you would like any other Real Estate information, have questions about purchasing or would like to know the value on your home, please feel free to call or e-mail me.
Terri Sizemore 435-770-9407 firstname.lastname@example.org