Utah Mortgage Defaults Plummet in Tooele County
Foreclosures are rising across the nation… with some notable exceptions.
Defying national trends, home mortgage defaults are fast becoming a thing of of the past in the red-hot residential real estate market of Tooele County, Utah.
During the past year, foreclosures dropped by about 70 percent compared to 2005, according to the Tooele Transcript Bulletin.
“Twelve to 18 months ago we would see 10-16 foreclosures per month, but now we only get three to four per month,” said Vicki Griffith, owner and broker for Tooele’s Prudential Real Estate office.
“The value of houses has gone up so much and the market is so hot that people are able to sell quickly [before the bank files a delinquency notice],” she said.
During 2006 home prices in Tooele, Stansbury Park and Erda jumped by 18.6 percent to a median price of $160,000, according to MLS data. Home prices in Grantsville jumped 20.9 percent during the same time frame to a median price of $178,809. Countywide home prices increased 18.4 percent.
The increase helped those who were forced to sell quickly.
“Eighteen months ago there were a lot of no-down-payment mortgage loans,” Griffith said. “People would lose their jobs or get divorced and end up in foreclosure.”
Tooele County Board of Realtor’s President Michelle Warner said today that Utah mortgage demand is booming, while there are currently zero bank-owned or HUD-owned properties for sale.
“That may change tomorrow, but we’re doing so well and the values of homes have increased so much that we’re seeing few foreclosures,” she said.
Area broker Brad Sutton related a similar scenario, noting that both foreclosures and short-sales back to banks have dropped. Short-sales, however, have helped some homeowners avoid foreclosure in this portion of the Utah housing market, since banks are often willing to buy properties appreciating at double-digit rates year over year.
People are able to avoid Utah foreclosures by selling back to the bank at a loss, said Sutton. It’s okay with the bank in many cases, because the people involved already are 2-3 months behind in payments.
However, if there is private mortgage insurance on the home loan, banks will file a claim then sell the house to the insurance company so that the bank won’t suffer a financial loss.
“Almost always with a foreclosure there is a 2nd mortgage and the debt is greater than the value of the house - second mortgages are relatively easy to get, so the house is appraised too high and people get in trouble and end up owing more than the house is worth,” Sutton said.
Despite signs the Utah real estate market could cool off somewhat this year, Tooele County’s market may buck the trend. December was the best month ever for Prudential’s Tooele office with sales volume totaling $9 million. And during the past 40 days, 93 houses were sold in Tooele.
There were 1,215 houses sold in Tooele County during 2006. Utah County (21.7 percent) posted the biggest jump in values along the Wasatch Front followed by Salt Lake County at 21.3 percent and then Tooele County at 18.4 percent. Davis County housing increased 14.9 percent and Weber County jumped 11.5 percent.