I was searching for homes today on the Wasatch Front Regional MLS for one of the Buyers I’m working with and noticed a neighborhood that had an extremely high percentage of short sales. 41% of the homes in that neighborhood are short sales.
It made me stop and wonder about how many short sales are in other areas of Salt Lake County. Here are the results of that search which includes Salt Lake County homes and condos in all price ranges.
City % short sales of Active listings
Salt Lake Aves/Cap Hill 3.9%
Salt Lake Central City/South Salt Lake 10.6%
Salt Lake East City/Mill Creek 5.3%
Salt Lake Rose Park/Glendale 24.4%
Holladay/Cottonwood Heights 10.6%
Midvale/West Sandy 15.6%
East Sandy 14.5%
West Valley City/Kearns/Magna 27.4%
West Jordan/South Jordan/Copperton 24.8%
Salt Lake County 18.6%
*All data taken from Wasatch Front regional Multiple Listing Service on 8/26/09 on Salt Lake County homes & condos.
One thing that intrigued me was the closer you get to downtown Salt Lake City, the fewer short sales there are overall. Yes, I live downtown, but that’s not why I was so intrigued.
I have a theory. During our last housing boom in Salt Lake County, 2005-2007, the areas that the majority of the residential new construction homes and condos were built were further away from downtown Salt Lake where the vacant land exists which is on the South and West side of Salt Lake County.
By early 2005, the cost of new construction in Salt Lake County was much greater than the cost to buy an existing home of comparable size and location. This was due to the escalating cost of land, building supplies and a tight labor market. Also during this time, money was easy to borrow regardless of your credit score so there were plenty of people who could buy.
The cost of existing homes in those areas quickly adjusted upward as a result of the increasing cost of new construction creating instant equity for those who bought before 2005.
But by 2007 there was 12 months of inventory in new construction, which is primarily located in the South and West part of Salt Lake County. Then in August 2007 our banking crisis started which led to higher credit standards for home loans and fewer low down payment loan programs.
Two things I think happened here are there are many people who bought later in the boom and have now lost their job or had some other hardship. If they bought with nothing down, and most did, they are upside down on their mortgage. Short sale!
The other thing I think happened is many people had their home value increase by $50,000 or more in less than a year and took some of their equity out to improve their home, buy toys or pay off other debts. Short sale!
Eventually some of the short sales sell, some owner get loan modifications and some homes go into foreclosure.
There are more theories that can be drawn from the varying percentage of short sales and if you look at smaller areas, some areas are higher and some are lower.
This something to consider when buying Salt Lake City homes and condos.
If you need help with the purchase of a Salt Lake City home, condo or duplex, please contact me. I’ve been a Salt Lake City realtor for over 10 years and the majority of my clients are buyers of Salt Lake City homes and condos.
Associate Broker, MBA
SLCHomes Real Estate