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SALT LAKE CITY (AP) -- Utah home value appreciation trails that of all other states, a government agency reports.
Known in the mid-1990s for having one of the nation's hottest real estate markets, Utah's home prices rose only 2.51 percent in the fiscal year that ended June 30, according to the Office of Federal Housing Enterprise Oversight, which released its quarterly house price report Tuesday.
Utah's performance is worse than all other states except Nebraska, where home values appreciated 2.14 percent, The national average was 5.56 percent.
Utah ranked dead last in terms of appreciation over five years. In that time period, Utah home prices increased only 11.22 percent, the report shows. New Mexico ranked second-worst, at 16.41 percent.
Rhode Island had the greatest appreciation in that one-year period -- 11.81 percent -- followed by Washington, D.C., at 10.10 percent.
The good news is that in a tough economic environment, no state had declining home prices over the past year, said Armando Falcon Jr., director of the Office of Federal Housing Enterprise Oversight.
Falcon said that although appreciation has slowed in many parts of the country, Utah and other states probably will not experience downturns in their real estate markets followed by significant declines in values as some had feared.
The Office of Federal Housing Enterprise Oversight, created to oversee the safety and soundness of mortgage funds providers Fannie Mae and Freddie Mac, tracks appreciation by measuring price changes of individual properties as they are sold and refinanced over the years. Many economists consider the method one of the most accurate ways to measure housing price appreciation.
Housing prices in Utah began to rise in the early 1990s as the state's economy boomed and the number of people moving to the state began to rise. While price increases varied by neighborhood, a number of Wasatch Front homeowners saw the value of their properties increase by 10 percent to 20 percent a year; some families doubled their money in just a couple of years.
In the late 1990s, however, several factors began to translate into fewer buyers and less demand for homes. The economy began to struggle, employers began to lay off thousands of people and fewer people moved to Utah from other states, particularly California.
Current low home-loan interest rates, which can spur home buying, also typically push up housing prices because buyers have more purchasing power than they do at higher rates, said Ernie Goss, an economist at Creighton University in Nebraska.
Goss said the performance of Utah's real estate market during the past 10 years helps explain why the state's appreciation trails most of the rest of the country.
"Housing prices in Utah were going up so much faster than the rest of the U.S. prior to the recession," he said. "That's why you're seeing the leveling off now even though many other states fared worse in the recession than Utah."
Goss said Utah homeowners shouldn't expect strong appreciation anytime soon because the economic recovery is slow and has not yet resulted in many new jobs. In fact, he said appreciation in Utah could continue to lag behind the national average for another year or two.
Over the long term, Utah's economy -- and real estate market -- are poised to perform well, Goss said.
(Copyright 2003 by The Associated Press. All Rights Reserved.)