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Show THE OGDEN VALLEY NEWS Page 8 February “= 1, 2006 Ogden Valley Real Estate 2005 Year in Review The year 2005 has been a banner year for real estate in Ogden Valley. Here are answers to some of the most commonly asked questions from real estate clients. the average price 24 percent, from 2005. This shows regardless of home per square foot increased $97 in 2004 to $121 in that prices are increasing size. What is a Rolling Average? Sales Pri 6 and 12 Month Rolling Average $400,000 $380,000 For each month, the number is $369,700 | simply the average of all sales $360,000 $340,000 $320,000 $200,000 prices over the previous 6 or 12 $332,000 months. For example, December's 6 month average covers July through December, eos 000 in January, it covers August $240,000 | $323,300 $220,000 $200,000 |-$228:700 Jan Feb through January. Rolling averages give a better estimate of price trends than monthly figMar Apr —@—6 May Jun Jul month avg —m— Aug Sep Oct Nov ures when there are a small number of transactions, because they minimize fluctuations from one large sale. Dec 12 month avg (Based on information from the Wasatch Front Regional Multiple Listing Service, Inc. for the period 2001 through 2004.) What was the appreciation rate for homes in Ogden Valley oe 2005? According to data from the Wasatch Front Regional Multiple Listing Service, the 2005 average price home sale in Ogden Valley was $332,000 — 42% higher than the 2004 average. This is more than seven times the appreciation rate of 6.8 percent in 2004! But the real story is even more dramatic. Because prices have been increasing steadily throughout the year, annual statistics tend to understate trends. Chart | shows the 6 and 12 month rolling average sales price each month in 2005. (See the box for an explanation of rolling averages.) On a rolling 6 month basis, prices increased 62% from January 2005 to January 2006. Q: Is the appreciation rate real, or is it just because houses are getting larger? As you look around the Valley, you can see many huge homes under construction. But the price appreciation is not a result of increased size. One way of controlling for size in analyzing sales prices is to look at the price per square foot. From 2004 to 2005, Q: But what about home size? Are homes really getting larger? No. Over the past 7 years, fluctuations in home size appear random. The largest average was just over 3,000 square feet in 2000, and the lowest was 2,426 in 2004. 2005 was Average Size of Sold Homes -- 2005 Year Ss. Inventory tells the same story; during the past year, inventory has consistently averaged fewer than 60 homes (single family and condo). As little as two years ago, the average inventory was more than twice that. Q: Why are home prices increasing so much here, when they seem to be slowing down in other parts of the country? The most obvious answer is that other markets started their real estate boom long before we did. From 2001 through 2004, Ogden Valley real estate prices increased a total of 10 percent—about 2.5 percent per year—while many parts of the U.S. were basking in strong double-digit appreciation. In 2000, analysts were already discussing prospects of a real estate bust in markets (particularly ones on the east and west coasts) that had experienced a decade or more of double digit increases in home prices. The resulting disparities in home Average Square Feet 1999 2000 2001 2,657 3,008 2,614 2002 2,746 2003 2,764 2004 2,426 seen 2,742 Nn information from the Wasatch Front Regional ihe listing Service, Inc. for the period 2001 through 2004.) an average year in terms of home size. Q: Have we hit the top? Can prices continue tos-ahage’ A: o key indicators are the time it takes for Nomen to sell (measured as the average number of days on the market) and amount of inventory, or the number of homes available for sale. The 2004 average of 100 low passengers came from Ogden, Layton, Roy, etc. Last year, locals seemed to be more the exception than the rule. Compared with other major ski resort areas such as Jackson Hole, Vail and Park City — Ogden Valley prices seem very reasonable. days on market dropped 9.5 percent to 91 days in 2005. as with sales prices, annual statistics understate the real story. The decline in marketing time has become more dramatic recently — over the past six months, the average time that homes have been on the market was just 86 petitive, especially to people from more expensive areas who are looking for second homes. Two other factors indicate that housing prices in Ogden Valley are likely to remain strong. 1. We have finally been “discovered” by the rest of the world. The post-Olympics boom seems to have finally occurred. Prior to last year, it seemed that people sharing the gondolas at Snowbasin were far more likely to come from “someplace else” than in prior winters. Formerly, fel- 2. Limited supply of housing. The current3 e zoning rules place inherent limits on the number of homes that can be built in the Valley. Although many local residents feel that the limits are inadequate, it is clear that it will prevent the kind of congestion prevalent in other major ski areas such as Park City or Vail. Q: Are we in danger of a real estate bubble? Despite the hoopla from the general press warning that the real estate “bubble” is about to burst, the reality is actually quite different. The concept of “bursting bubble: Friday” when the stock market lost 22 percent of its value. owever, unlike equities, real estate prices do not crash because of the inherent value of the underlying investment. When real estate markets decline, the process is very gradual. Long before prices depreciate, the rate of increase begins to slow. So what is really on? Nationally, many frecesters suggest that the days of double-digit appreciation are behind us. This is particularly true in markets that have experienced dramatic increases for several years. But the question remains, how high is too high? An important factor is the affordability of housing relative to income in the local area. Because local areas vary widely in incomes, _ estate markets are extremely localiz According to David Wyss, economist REVIEW cont. on page 9 St. Fi lorence Catholic Community . : ee : ASSES: mem Sunday: 5:00 p.m. 8:00 a.m. 10:15 a.m. WEEKDAY MASS: Tuesday: followed on The Rosary Phone: 745- LORD ‘i Huntsville, Utah PASTORAL ADMINISTRATOR: Fr. Charles Cummins 399-9531 RECONCILIATION: 30 minutes before Mass Come celebrate with us God’ Ss good news. 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