SALT LAKE CITY — Despite inflation and rising interest rates impacting all Utah consumers, the state’s housing market remains active.
A recent study from real estate agency Redfin listed the 10 American housing markets that are currently experiencing the most rapid “cooling.” Despite all the cities being located in the west, the list did not include any areas from Utah.
However, the Utah housing market is not as “hot” as it was during the COVID-19 pandemic.
“We are coming back down to our normal pace,” said Dejan Eskic, a senior research fellow at the University of Utah’s Kem C. Gardner Policy Institute. “A metaphor I like to use is — prior to pandemic we were going 65 miles per hour, then, right up to 120-130 miles per hour, now we are back down between 65-70 miles an hour.”
During the pandemic boom, many houses in Utah sold within hours or days of being listed; but that is no longer the case.
“Today we sit at roughly 11 days,” Eskic said.
Eskic added that the slower pace of sales is adding more inventory to the market, which can be a benefit to buyers.
“Now is a good time and opportunity for buyers where they can actually look at a house, think about it, process it and make a good, honest and wise decision about it,” said Scott Robbins, a broker with Summit Sotheby's International Realty.
Statistics provided by the Utah Association of Realtors show home values continue to increase.
June 2020 saw a modest 6% increase in median Utah home values compared to June 2019. However, June 2021 marked a whopping 30% year-over-year increase.
The most recent data from June 2022 shows the year-over-year rate of appreciation is slowing, but still a robust 18%, while the median home sales price in Utah rose from $325,000 in June 2019 to more than $500,000 in June 2022.
“We estimate roughly 75-80% of Utah households cannot afford the median priced home,” Eskic said.
Rising interest rates have also added to the affordability issue. First-time home buyers are being forced to pinch more pennies and scale back their expectations.
“If you could only afford $600,000, now you can probably afford $500,000,” Robbins said. “They still need housing. They still want to get out of their parents’ basements.”
Utah’s housing market isn’t immune to the cooling trend currently felt in other areas of the country, but Eskic says the market is managing to remain strong and active while responding to adverse economic conditions plaguing the country and the world.
“Utah tends to always attract more activity during economic uncertain times because we weather any recession or pandemic better than most other states.”