Inflated Housing Costs in Utah
Inflated housing costs stem from inflation and how the pandemic impacted the housing market’s supply and demand. According to an article from the Deseret News, Utah’s latest sales indicate the median sales price of single-family homes in two major counties along the Wasatch Front is nearing a staggering $600,000. The pandemic has supercharged Utah’s housing market driven by historically low-interest rates and low unemployment rates. Utah’s home prices have skyrocketed.
Utah Housing Market
According to Bankrate.com, the Utah housing market has been ranked as the nation’s number one housing market for the strongest pace of job growth, along with low unemployment, low mortgage rates, and low state & local taxes. Continued historically low mortgage rates and a solid recovery from the pandemic predict that the Utah real estate market could set another record in 2022.
Experts at Norda Real Estate Investments, the Utah economy has provided some relief for the housing market. Utah’s housing prices continue to increase, but we will have to wait and see if this is sustainable considering that mortgage rates are likely to continue rising in the coming months. Twenty-four of Utah’s 29 counties had increases in the double digits last year.
- For the year 2021, 55,588 homes were sold in the state of Utah.
- 2021’s median price of $442,200 was 24.6% higher than the previous year.
- As the year ended, 17,899 homes were sold in Salt Lake County.
- Its median price went up 21.5% in 2021, to reach $460,000.
Norda Real Estate expects in 2022 to see a major slow down in price increases compared to 2021. However, prices are expected to climb in double-digits in all the counties while some may potentially surge by close to 20 percent.
“To suggest that it is a seller’s market in Utah would be an understatement. The current housing supply can’t satisfy demand, which will drive prices to increase further even in the face of rising mortgage rates,” Marco Santarelli said.
The same can be said about the Salt Lake County real estate market. According to a study, Ogden, Provo, and Salt Lake City are close behind Boise, Idaho, among the nation’s top ten cities with “overvalued” home prices. According to Florida Atlantic University and Florida International University, Utah and Idaho cities have risen to the top of the list of cities in other states such as Texas, Michigan, Washington, Arizona, Nevada, and California with the “most overpriced” housing markets in the country.
According to Realtor.com. the hot housing market in Salt Lake City is expected to continue in 2022. A housing forecast on Realtor.com ranks Salt Lake City as the nation’s top housing market for 2022. Realtor.com expects Salt Lake City to lead the nation with 23.7% combined growth in sales and prices next year. They expect sales to rise 15.2%, and prices to increase by 8.5%.
Projections from Utah Association of REALTORS
According to a March 2022 report by the Utah Association of REALTORS, in January 2022, around 3,051 homes were sold in Utah, which is down 7.2% from January 2021. The statewide median sales price was up 28.2% to $486,000. Last year at the same time, the median sales price was $379,000.
In Utah, Summit County is the most expensive housing market with a median sales price of $1,325,000. Carbon County is the least expensive with a median sales price of $184,000. If we talk about Salt Lake County, 894 sales were recorded for the month, down – 17.3%. The median sales price in Salt Lake County was $500,000, up 27.6% from last year.
Why Are Housing Prices Inflated?
Experts say rapid population growth and job growth are the two most important drivers of housing demand in Utah right now. According to local real estate agents, there aren’t enough single-family homes to meet the rising housing demand. A balanced market has roughly a six-month supply of houses, which means that if we stopped listing new properties, we’d still have about six months before we ran out. And right now, Utah is down to about four weeks of supply of homes.
According to the Utah Department of Workforce Services, Utah had the most rapidly growing job market in the country for the past decade. The state’s population grew by 18.4% over the past decade, making it the fastest-growing state. According to U.S. Census Bureau data, Utah is the 30th most populated state, with nearly 3.28 million people.