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Utah Real Estate Market Slowly Rebounding
Speaking at the Mid-Year 2010 Real Estate Summit at the Grand America on Monday, Zions Bank executive vice president Michael Morris said the Utah commercial real estate market may not even begin to recover until next year.
"This year I don't see much reason for optimism that we're going to have a big rebound in commercial property," he said. "More of a gradual recovery building into 2011 and 2012, but still with the backdrop of other (economic issues facing the industry).
Morris said the amount of debt used to finance projects prior to the economic meltdown has caused major problems for the commercial sector and there are no simple solutions that will resolve them anytime soon.
"It's more that we over-leveraged then we overbuilt," he said. "Over-financing and over-leveraging and over-engineering financial products is really what has led to an artificially highly valued market to begin with."
On the residential side, declining home values have pushed housing prices back to much more affordable levels, according to Zions Bank senior vice president Lee Carter.
"The lower end of the market (under $300,000) … is recovering," he said. "We've probably seen a bottom or very close to a bottom in that part of the market." Carter described the middle part of the market as "a little bumpy" with the higher end "going to remain a mess for some time to come."
"We've just got too much high-end real estate in the state … and we just don't have people with the incomes and fundamentals that can support those higher payments," he said.
Carter said he expects the lower end segment to recover "fairly quickly," whereas the high end may be "a bit challenging."
Source: Deseret News
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