What's in store for Utah's economy in 2012? Here's what to expect for housing, investments, benefits and more:
More foreclosures ahead • Foreclosure levels are expected to remain high in 2012 as a number of adjustable-rate mortgages taken out at the height of the housing market in 2007 hit their five-year reset.
Many borrowers will see the monthly payments on loans with low "teaser" rates go up 1 percentage point or more, said Kristin Johnson, director of housing for the nonprofit credit-counseling firm Cornerstone Financial Education in Ogden. That could add hundreds of dollars to a homeowner's monthly mortgage payment. Plus, many borrowers with ARMs aren't in a position to refinance to take advantage of fixed-rate loan rates, which are at historic lows.
Little uptick in home values • High levels of foreclosure tend to push down home values, which is one reason economists keep pushing back their estimates of when the housing market will recover.
In Utah, home values were supposed to stabilize in 2011. But now, that probably won't happen until later in 2012, at best.
If the economy really picks up, home values could inch up a percent or so. But even that increase may not materialize.
"We see home values in Utah bottoming out in 2012 and slowing picking in 2013," said Marycruz De Leon Garcia, economist with Moody's Analytics.
The median home price in Utah peaked in 2007 at $201,020. In 2012, the median is expected to bottom at $145,120, Garcia said.
More homeowners underwater • Falling home values aggravate the problem of negative equity, which will remain a big issue for Utah homeowners.
Nearly 95,000 Utahns out of about 480,000 with mortgages owe more than their homes are worth, according to real estate data firm CoreLogic.
Many purchased their homes at the height of the market or in the years leading up to it. In the era of easy credit some didn't even need a down payment. While others put down 20 percent or more.
Four years of declining home values along the Wasatch Front, however, have in many cases wiped out even the biggest down payments.
It could take a decade of home-price increases for some to see their properties worth more than they owe.
Meanwhile, many families are in a quandary. Wait out the downturn? Try to arrange a short sale, in which a homeowner convinces a lender to accept less than they are owed? Walk away and accept foreclosure?
Improving job market • On the positive side, Utah is expected to be among the top states for job growth this year, with growth as high as 2.7 percent. The brightest sectors should be high-tech, professional services and energy.
Many Utahns, however, remain unemployed or underemployed. Some will be rehired at lower pay and with less-desirable benefits than before the downturn.
"It will take years to fully reverse the consequences of the recessionary period," economist Mark Knold said.
Benefits? Some good, some bad • Many who remained employed during the downturn haven't seen a raise in years. Many also lost their 401(k) matches.
A new study by global consulting firm Towers Watson, though, shows that at least the 401(k) match is making a comeback.
According to the study, 75 percent of 260 employers that had suspended their matching contributions during the downturn have reinstated them. Of those that have, nearly three-quarters have restored them to their previous levels.
Raises, too, may return for some workers. Towers Watson estimates the average raise paid by large companies to salaried, nonexecutive workers will be 2.8 percent in 2012.
But human resources professionals say large-company workers stand to benefit most. Employees at smaller, privately held companies probably won't give raises or reinstate retirement plan contributions.
Health care costs still rising • Another nagging issue for workers is the rising cost of health care coverage. Chances are, you're paying more than last year for the same (or even reduced) coverage.
The cost of health insurance will rise an average of 5.9 percent in 2012, according to the 2011 Towers Watson Health Care Trend Survey. Roughly two-thirds of employers will increase the amount employees pay for single-only coverage for 2012, while three-quarters will increase what employees pay for family coverage.
To cut costs, more employers are pushing high-deductible coverage, which costs less but require workers to pay sizeable sums before their coverage kicks in.
Which way will stocks go? • As if the pains of the recession weren't bad enough, many people also saw the value of their retirement plans shrink as stock prices took a hit. Because so much of many workers' retirement plans is tied up in equities, most of us are affected by what happens with the stock market. And unfortunately, most experts say investors shouldn't expect 2012 to be a rebound year on Wall Street.
Washington, D.C.-based Kiplinger, a publisher of business forecasts, says there will be more volatility and a continued "seesaw" market.