Sales are down, inventory is up, and price increases come to a halt. So why are so many Utahns still priced high on the real estate market? The median home price in Utah fell for the first time in nearly two years. In June, it fell to $530,000, down slightly from $535,050 in May.
Meanwhile, sales slow down considerably. From April to June, sales of single-family homes in Wasatch Front counties fell 10%, to 7,140 units sold, from 7,921 units sold a year earlier. Single-family home sales in Salt Lake County were down 15% from the second quarter of 2021 to 2,800 units sold from April to June of this year.
But don’t get too excited or jump to worrying conclusions, like the idea that Utah’s housing bubble will burst and prices will plummet.
The slowdown indicates that, as the Salt Lake Chamber put it, Utah property values are beginning to “stabilize.” According to Dejan Eskic, a senior fellow at the University of Utah’s Kem C. Gardner Institute and one of Utah’s top housing experts, the news is welcome in a housing market that is punishing buyers. Of house. He is also the Salt Lake Board of Realtors’ top economist.
“After two years of a frenzied market with numerous offers in the tens of thousands of dollars over asking price,” Eskic said, “Utah’s real estate market is returning to normality.”
While homebuyers have struggled over the past two years to negotiate a tough market, often with just days to make a winning bid before a property is purchased, the market is gradually calming down.
“Instead of a few days, it will probably take a few weeks,” Eskic said.
It’s something that Eskic feels personally. He recalls the sense of urgency he felt when he bought his house during the frenzy, joking that he “probably spent more time deciding which running shoes to buy” than determining if he were to make an offer on his property.
So what does this mean for the Utah real estate market, and where do we go from here?
Yes, real estate prices are starting to stabilize. However, they are stabilizing at record highs, and for various reasons that Eskic will explain below, they are expected to remain high.
Housing prices in Utah are stabilizing, but at a higher level.
This is bad news for Utahans and the state’s housing affordability problem. Yes, higher mortgage rates of 5% to 6% these days have dampened demand slightly, but they’ve also cost 70% to 75% of Utahns, according to Eskic’s estimates. The typical monthly mortgage payment has fallen from $1,400 earlier this year, when interest rates were lower, to $2,600 today.
Again, context is crucial. The median home price in Utah has fallen slightly, but is still above $500,000. In January 2019, it was just under $300,000, according to UtahRealEstate.com.
“So our prices are still out of this world,” Eskic said. However, he pointed out that the state’s year-over-year price increases had increased by more than 20% by the mid-teens.
Higher mortgage rates would no doubt cool what has been a runway market for years, but with Utah’s economy robust, jobs abound and the state’s housing shortage remains a chronic problem, demand will remain strong due to state expansion.
Why is Utah isolated from the rest of the country?
According to the Salt Lake Chamber’s Economic Scorecard, Utah has the third-lowest unemployment rate in the United States, tied with New Hampshire and after Minnesota and Nebraska. Utah’s consumer confidence, on the other hand, fell in June to its lowest level since data collection began in October 2020, matching national levels of consumer confidence in its 70-year history. .
That means Utah is “slowing growth as inflation and rising interest rates weigh on consumers,” according to Derek Miller, president and CEO of the Salt Lake Chamber.
Despite these issues, according to Miller, Utah’s economy is robust and “Utah remains a net positive for industrial growth across all sectors.”
Even though the “dirty word ‘R’ – a recession” is rife as the United States grapples with inflation and other issues, Utah has generally fared better than the rest of the country due to of its strong economic situation.
“We’re not immune…but we’re also in a little bubble,” Eskic said. “Our market has grown organically for a long time, and so regardless of what’s going on in the economy, (people) come here because they feel safe in Utah. They see less uncertainty in Utah because… we are stable.