Pundits See No Slowdown in Utah Real Estate Market – Lehi Free Press


Adam torkildson | Guest writer

Utah ranks among the most populous states in the West and has seen record increases in house prices. However, the state is currently facing a serious imbalance in its housing market.

Home prices in Utah have risen so much that more than half of Utah households cannot afford to buy a home. The state’s median-priced single-family home was $ 460,000 in 2021. These price increases have also made it more difficult for renters to purchase homes, according to the latest research on Wednesday from the Kem C. Gardner Policy Institute of the University of Utah, the Housing State of Utah. Marlet.

The median selling price of Utah homes has risen to $ 380,000 by 2020. In 2021, prices have risen again. The median-priced home was out of reach for 63% of renter households in 2019. This share of over-priced renters rose to nearly 73% in 2020, according to the report.

During Wednesday’s roundtable, James Wood (Ivory-Boyer Senior Fellow at the Kem C. Gardner Policy Institute at the University of Utah) said Utah has a long history of rapid price acceleration. housing.

The COVID-19 pandemic has disrupted supply chains and caused chaos in the national housing market. Utah’s housing markets have been second to Idaho in heat for the past year. Utah’s housing market saw a remarkable 28.3% price increase from 2020. This makes it number 2 in the country for year-over-year percentage increases. Idaho saw a staggering 37.1% increase.

” An aberration ? An abnormality ? Or an outlier? Wood said he wasn’t sure. “But this year, in my many years of working in the housing industry, we have never seen anything like it.”

Wood said prices have skyrocketed since 2008 when the housing market collapsed and was followed by the Great Recession.

He said he believed there was no real estate bubble. “First, bubbles are not defined by an actual deceleration, moderation or drop in prices, but by a prolonged period of falling prices.”

The report says that while Utah’s “short” and “long-term” price drops have been associated with recessions and job losses, none will appear in the next two or three years.

Wood said he believes financial markets and household balances are doing better now than they were during what he considers Utah’s only real estate bubble. Wood, a housing expert, believes there is no bubble that will burst, although prices could slow slightly.

According to the report, price acceleration and output will remain positive in 2022. According to the report, the year will be influenced by mortgage rates. However, favorable demographic winds are expected to keep housing demand strong for the remainder of the decade.

Eight different mortgage rate forecasts show that the 30-year mortgage rate is currently 3.1%. It will rise to 3.6% by 2022. The report says that while this is not a significant rate hike, it will impact affordability and lead to price acceleration in the market. Utah single digit growth.

COVID-19 has caused “unprecedented circumstances” in the country’s housing market by disrupting labor markets and supply chains. 30% of the building materials were imported from China. The Federal Reserve has also “skewed” demand by lowering interest rates and “extraordinarily increasing liquidity through quantitative easing.” These measures “triggered high levels of demand which, in turn, pushed house prices to record levels,” according to the report.

This made the situation worse than what housing experts had warned for years, even before the pandemic. According to the report, there is a cumulative shortage of 44,500 units between 2010 and 2020. This has led to record rental rates (now at 2% along the Wasatch Front), the lowest vacant housing supply ever recorded and the lowest number of vacant homes for sale.

The report states that “the shortage has eliminated vacant homes from the market, an unhealthy situation leading to higher house prices and rental rates.” It will be several years before the housing market returns to a healthy state, given the large gap between the growth rate of households and the number of housing units.

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