Higher Property Values Only Part of the Story

by | Jun 2, 2006 | Uncategorized

Both this morning’s Salt Lake Tribune and Deseret News reported on rapidly growing property values. The St. George area leads the nation and Utah ranks 15th nationally in growth in home prices. What got no attention in these articles is the skyrocketing foreclosure rate both in Utah and around the nation.

Since January 2001 most Americans have seen a decline in real wages. With the nation’s budget and trade deficits consistently hitting record levels, interest rates have started to climb adding further to the burden average Utahns and Americans now face. With housing costs climbing into the stratosphere, working families will find their stagnant wages increasingly insufficient to enable them to get into a home if they haven’t already, let alone keep the one they have.

In the first quarter of 2006 foreclosure rates hit a record reaching 72% higher than the first quarter of 2005. From January 2001 through January 2006 inflation rose 13.6% while wages in places like St. George rose only about 5.39%. Utah now ranks in the top ten nationally for foreclosures and James J Saccacio, chief executive officer of RealtyTrac states “Foreclosures have now increased in four consecutive quarters and are on track to go above 1.2 million in 2006, which would push the nation’s annual foreclosure rate to more than 1 percent of U.S. households.”(RISMEDIA, April 25, 2006)

Skyrocketing property values are great when declining wages aren’t threatening to squeeze the middle class out of the housing market. During the 2006 legislative session Utah’s Republican led legislature refused to even consider Senator Ed Mayne’s legislation to increase the minimum wage in Utah. In addition, legislation that would help small businesses and their employees receive greater access to health care by opening up the Public Employees Health Plan also never came up for a vote. Utah’s college students will be seeing 10% or more tuition increases next year as well. Under these circumstances increasing property values only threaten to add to the growing burdens facing Utah’s middle class.