In June, it fell to $ 530,000, down slightly from $ 535,050 in May.
Meanwhile, sales are slowing dramatically. From April to June, single-family homes in Wasatch Front counties fell 10%, dropping to 7,140 single-family homes sold from 7,921 sold a year earlier. In Salt Lake County, single-family home sales have declined 15% since the second quarter of 2021, dropping to 2,800 homes sold from April to June of this year.
But don’t get too excited, or jump to an apocalyptic conclusion that Utah is about to see a housing bubble burst and prices are about to hit free fall.
This means that Utah home prices are starting to “stabilize,” as the Salt Lake Chamber said. It’s actually good news in a real estate market that has hit home buyers, said Dejan Eskic, a senior research fellow at the University of Utah’s Kem C. Gardner Institute and a leading Utah housing expert. He is also the chief economist of the Salt Lake Board of Realtors.
“After two years of a fast-paced market with multiple bids of tens of thousands of dollars above the asking price, the Utah real estate market is approaching normalcy,” Eskic said.
While homebuyers for the past couple of years have struggled to juggle a brutal market, with often only a few days to submit a winning offer before a home is torn up, the market is finally easing.
“Instead of a house taking a couple of days to sell, it will probably take a few weeks,” Eskic said.
It’s something Eskic feels personally. He remembers the sense of urgency he felt when he bought his house in the midst of the frenzy, joking that he probably “spent more time deciding which running shoes to buy” than he did when considering whether to bid on it. his house.
So what does all of this mean for the Utah real estate market, and where do we go from here?
Yes, house prices are starting to stabilize. But they are stabilizing at record highs and, for several reasons, Eskic will plummet below for us, they are expected to remain high.
Home prices in Utah are stabilizing, but are stabilizing at the top
This is not good news for the Utahns and the Utah home accessibility crisis. Yes, higher mortgage rates in the amount of 5% to 6% these days have somewhat tempered demand, but they have also rated a staggering 70% -75% of Utahns, according to Eskic’s calculations. This inflated typical monthly mortgage payments from $ 1,400 per month earlier this year, when interest rates were lowest, to $ 2,600 now.
Once again, context is key. Yes, Utah’s median home price has dropped slightly, but it’s still well over half a million dollars. Compare that to January of 2019, when it was just under $ 300,000, according to UtahRealEstate.com.
“So our prices are still in the stratosphere,” Eskic said. However, he noted that year-over-year government price increases fell by more than 20% until mid-teens.
This is what Eskic predicted would happen: higher mortgage rates would surely temper what was a runway market for years, but as the Utah economy remains strong, because jobs abound and because the housing shortage in the state remains a persistent problem, demand will remain strong thanks to the growth of the state.
Because Utah is in its own “bubble” compared to the rest of the nation
Utah’s 2% unemployment rate is the third lowest in the nation, on a par with New Hampshire and close to Minnesota and Nebraska, according to the Salt Lake Chamber Economic Dashboard. Consumer confidence in Utah, however, hit its lowest levels in June since data began collecting in October 2020, following national consumer confidence levels over 70 years of history.
This means that Utah is seeing signs of “diminishing growth as inflation and interest rate increases weigh on consumers,” said Derek Miller, president and CEO of the Salt Lake Chamber, in a prepared statement.
Still, Utah’s economy remains strong, Miller said, and despite these challenges, “Utah remains a net positive for industry growth across all sectors.”
Although Eskic said the “dirty ‘R’ word is being tossed around” – recession – as the US grapples with inflation and other challenges, Utah historically fared better than the rest of the nation thanks to its strong economic position. .
“We’re not immune … but we’re also in a little bubble,” Eskic said. “Our market has grown organically for some time now, and so even with whatever happens in the economy, after the dust settles, (people) come here because they feel comfortable in Utah. They realize that there is a little less uncertainty in Utah because … we are stable. “
Why are house prices so high in Utah?
Home prices in Utah were already steadily rising prior to the COVID-19 pandemic. It just accelerated it to insane levels.
“We were exploding long before the pandemic,” Eskic said. “It was just more fuel on the fire.”
We are now getting out of that sugar level. National headlines have noted that Utah has recently seen some of the largest shares of home sellers reduce their prices, but that’s because sellers have finally found home buyers’ breaking points and are adjusting their listings to reality.
Even though the price appreciation is no longer in the 20% range, Eskic said the price growth that continues to persist into the teens “is technically not good. The market is still expensive, even if the sentiment. it’s changing and things are slowing down, “he said.
“We have to reduce the price (increases) in a single digit,” Eskic said. “This is what we have to go back to.”
But the good news, Eskic said, is he’s seeing a sense of “seasonality” returning to the Utah real estate market. Coupled with the impact of high mortgage rates, he predicted that July numbers will show a further slowdown in the state market, which would reflect a seasonal mid-summer slowdown that we would normally see before the pandemic sent the market into a frenzy.
“Finally, in two years (from COVID-19), we have seasonality back on the market,” he said.
Inventory is increasing, but the housing shortage in Utah persists
Utah’s home inventory is also returning to pre-pandemic levels, Eskic said, “which I’m happy to see. It probably happened a little faster than I thought, frankly, “but the high mortgage rates have had a dramatic effect.
Here’s a historical context to put Utah real estate inventory into perspective today: From 2016 through early 2020, before the pandemic hit, for every home sold, 2.3 homes were listed on the market. During the COVID-19 housing rush, for every home sold, 0.8 homes were listed. A few months even dropped to 0.5 homes listed, Eskic said.
Now, the Utah home inventory is making a comeback, but it hasn’t returned to pre-pandemic levels yet. As of June, 1.7 homes were listed for every home sold. “Ideally, we have to go back to the two,” Eskic said, predicting it could happen next month.
However, even though the inventory is increasing dramatically from what it has been in the past couple of years, it still doesn’t fix what has been a problem in Utah for years. There aren’t enough houses yet.
That’s even as residential construction exploded here in 2021, putting Utah on the national map for its housing boom. It made a decent dent in the Utah housing shortage, but not enough to erase it.
As of this year, the cumulative housing shortage across the state of Utah now stands at 31,000 compared to about 56,000 in 2017, according to a recent report written by James Wood, an Ivory-Boyer senior researcher at Kem C. Gardner Policy Institute of the University of Utah, and commissioned by the Salt Lake Board of Realtors.