The Utah Housing Market is Slowing Down
Pandemic supercharged Utah’s housing market driven by historically low-interest rates and low unemployment rates. Utah’s home prices have skyrocketed. Utah's housing market had been ranked as the nation’s #1 housing market for the strongest pace of job growth, along with low unemployment, low mortgage rates, few mortgage delinquencies, and low state & local taxes, according to Bankrate.com. Continued historically low mortgage rates and a solid recovery from the pandemic predicted Utah's housing boom.
Utah’s rock-solid economy has provided a big help to the housing market. Utah’s housing prices continue to climb at a rapid pace, but we will have to wait and see if this is sustainable considering that mortgage rates are likely to continue rising in 2022. In 2022, we can see a decrease in the speed of price growth compared to 2021. Rapidly rising inventory levels and mortgage rates have put the brakes on the Utah housing market. However, prices are expected to climb in all the counties in single digits.
It is a seller’s market in Utah as the current housing supply can't satisfy demand, which will drive prices to increase further even in the face of rising mortgage rates. The rapid appreciation witnessed over the past two years may have begun to decelerate as a result of rising financing costs and deteriorating affordability. This is nothing to worry about; rather, it indicates that the market is beginning to return to normalcy.
The same can be said about the Salt Lake County real estate market. The market is still highly competitive. Even while inventory is rising considerably compared to the previous two years, this does not solve a problem that has existed in Utah for years. There are still insufficient homes.
Utah Housing Market Report [October 2022]
In October 2022, around 2,866 homes were sold in Utah's housing market (statewide), down – 40.7% from the last October, according to a report published by the Utah Association of REALTORS®. YTD sales were 38,998, down – 16.4% from last year. The statewide median sales price was up 7% to $492,000. Last year at the same time, the median sales price was $460,000.
In Utah, Summit County is the most expensive housing market with a median sales price of $1,087,500 (- 3.3%% YoY). It is followed by Wasatch County with a median home price of $851,731. Beaver County is the least expensive with a median sales price of $172,000, where the price has declined by 55.3% YoY. If we talk about Salt Lake County, 841 sales were recorded in October, down by 45.9%. The median sales price in Salt Lake County was $519,000, up 8.2% from last year.
Why is Utah's housing market so hot?
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.
As a result, finding a dream house in this market is challenging for buyers, making it extremely competitive. Utah's employment landscape is also one of the most impressive in the country. It has had the most rapidly growing job market in the country for the past decade. Utah's population grew by 18.4% over the past decade, making it the fastest-growing state. It's now the 30th most populated state, with nearly 3.28 million people, according to U.S. Census Bureau data.
A large number of Californians are relocating to Utah, putting extra pressure on the supply side. In-migration to the Salt Lake metropolitan area is still at an all-time high. The issue is that demand is so strong that inventory can't reach a level that indicates a sufficient supply. People are also coming from New York, Boston, Vermont, Austin, Texas, and other cities, according to local real estate agents. They also think that people who are first-time homebuyers in Utah will be priced out of the market by people moving in from other states.
Utah Housing Market Trends Q3 2022
The following analysis of select counties of the Utah housing market is provided by Windermere Real Estate Chief Economist Matthew Gardner for the 3rd quarter of 2022. Counties include Davis, Weber, Utah, Salt Lake, Morgan, Wasatch, and Summit.
- In the third quarter of 2022, 7,134 homes were sold, representing a 31.6% decrease year-over-year.
- Sales decreased by 16.1% compared to the second quarter of the year.
- Year over year, sales fell across the board.
- Home sales in all markets covered by this report were lower than in the second quarter of 2022 as well.
- The average number of residences for sale in the quarter was 149% greater than a year ago and 79% higher than in the second quarter of this year.
- Utah home prices continued to rise on a year-over-year basis.
- The average home sale price in the third quarter was up 5.9% from a year ago to $627,503.
- However, prices fell 5.7% compared to the second quarter of this year.
- Median listing prices in the third quarter were down across the board.
- Except for Morgan County, all locations in this survey had greater sale prices than a year earlier.
- Only Wasatch County had greater sale prices in the second quarter of this year.
- The average number of days it took to sell a home in the counties covered by this report rose ten days compared to the same period a year ago.
- Though homes sold fastest in Salt Lake County, average market time rose in all counties covered year over year.
Utah Real Estate Market Report For October 2022
Here's how the housing market performed, according to UtahRealEstate.com. Utah’s median home price has dipped slightly but it’s still over the half-a-million-dollar mark. Compare that to January of 2019, when it was just below $300,000.
- In October 2022, around 2619 homes were sold on MLS.
- No. of single-family homes sold was 2000.
- No. of multi-family homes sold was 619.
- The median days on market were 36, up from 30 days last month.
- The median selling price reached $530,000 for single-family homes, up 5% year-over-year.
- The median selling price reached $405,000 for multi-family homes, up 6.4% year-over-year.
- The data is provided by UtahRealEstate.com, the leading provider of real estate technology in Utah and one of the largest Multiple Listing Services in the United States.
Utah Housing Market Forecast 2022 & 2023
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.
Utah's housing market is sizzling hot at the moment. Residential real estate has boomed during the pandemic, and Utah has emerged as a particularly desirable market. Utah home prices are soaring as Californians migrate into the state leading to an imbalance between supply and demand. Utah's economy is currently in excellent shape. The latest data available shows that Utah closed 2021 strongly with solid employment gains and an annual growth rate of 4.7%.
According to a study, three Utah towns — 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.
Utah's housing market will have another excellent year. Rising salaries, according to Matthew Gardner, will likely offset the majority of the potential hardship from higher mortgage payments. The state has a robust economy, the unemployment rate dropped to 2%, which is the lowest level recorded since the Labor Department started keeping records in 1976.
Utah and the Salt Lake City metropolitan area continue to rank among the nation's hottest housing markets. According to the Federal Housing Finance Agency, the Salt Lake City metro region ranked 13th in terms of year-over-year house price growth among the nation's top 100 metro areas through the first quarter of 2022, with a 25.6 percent year-over-year increase in prices. Price rose 6.5% over the last quarter. The Cumulative change in FHFA HPI since 2007 amounts to 128.2 percent.
Why Are Home Prices So High in Utah?
Utah boasts the nation’s strongest pace of job growth, along with rock-bottom unemployment, ultra-low mortgage rates, few mortgage delinquencies, and low state and local taxes. All those factors pushed Utah into first place in Bankrate’s Housing Heat Index for the fourth quarter of 2020. Utah's home values increased by 15.39% in the 12-month period that ended Dec. 31, third-best among U.S. states, according to the Federal Housing Finance Agency.
Since 1991 Q1, HPI for Utah has increased by 414.95%. Idaho ranked #1 in FHFA State House Price Indexes. The HPI is a broad measure of the movement of single-family house prices. It is measured by reviewing mortgage transactions on single-family properties whose mortgages have been purchased or securitized by Fannie Mae or Freddie Mac. According to a Bankrate analysis of Labor Department data, Utah also posted the second-strongest job growth in the nation from December 2019 to December 2020.
Even if inventory is significantly higher than it has been in the previous two years, it still does not address what has been a problem in Utah for years. There are still not enough houses. Even though homebuilding soared in Utah in 2021, putting the state on the national map for its housing boom. It made a decent dent in Utah’s housing shortage, but not enough to erase it.
Since the last twelve months, Utah housing prices have gone up by nearly 10.3% — Zillow Home Value Index. ZHVI represents the whole housing stock and not just the homes that list or sell in a given month. The typical home value of homes in Utah is currently $557,171.
It indicates that 50 percent of all housing stock in the area is worth more than $557,171 and 50 percent is worth less (adjusting for seasonal fluctuations). Home values are expected to continue to rise at a slower pace than last year. Housing supply is low, while demand remains high, implying that prices are set to rise further. The housing forecast is positive for 2023.
Here's the current overview of Utah's Listing prices by “Counties” (source: Realtor.com)
A list price in real estate is the price of a house for sale determined by the seller and her listing agent. The listing price determines how long it takes to locate a buyer (i.e., Time On the Market = TOM), and TOM influences the price that comes from seller-buyer bargaining. Although paying 1 to 3 percent over the list price is not unusual, you should ask your realtor to come up with a price that is best for you.
|Counties||Median Asking Price||$/SqFt|
Salt Lake County
Box Elder County
Salt Lake City Housing Market Forecast 2022 and 2023
The Salt Lake City real estate market has been one of Millennials' toughest real estate markets due to limited supply relative to demand. It has become one of the top markets to watch in 2023. According to the most recent Salt Lake County house sales data, it seems that Utah's housing market may be slowing ever so little in the near future. More houses were sold in 2020 than in any prior year, putting 2021 on pace to be the second-highest sales year ever. With 19,202 homes sold in Salt Lake County, 2021 saw another record-breaking price rise, and it is expected to continue this year as well.
In 2021, the median price of homes sold in Salt Lake County increased by 22% from $378,250 in 2020. According to the Salt Lake Board of Realtors, the median price of single-family houses sold in 2021 surpassed the half-million barrier, reaching $533,000, a remarkable 25% increase over the $425,000 median price in 2020. In December, prices were up 24%, just slightly below the largest gain of 27% in June and there’s no sign yet of a slowdown. The board predicts home prices will continue to climb between 10-12% in 2022.
Salt Lake City is a moderately walkable city with a population of approximately 186,419 people. While the city limits encompass 110 square miles, downtown runs nearly two miles from east to west and nearly two miles north to south. Salt Lake City's population is also very young. The largest percentage of the city's population falls in the 25 to 39-year-old age group.
Couple that with a high school graduation rate, and a large number of college graduates and you have an attractive workforce for many large companies. The state of Utah's population grew 9 percent over the last five years, much of it concentrated in Salt Lake City, where the typical home price at the end of 2021 was $583,858 (ZHVI Dec 2021).
The Salt Lake City area's economy is doing well, and it has one of the lowest unemployment rates in the U.S. Utah’s employment outlook during the pandemic continued to outperform the rest of the country. Utah’s nonfarm payroll employment for December 2021 increased an estimated 3.7% across the past 24 months, with the state’s economy adding a cumulative 59,200 jobs since December 2019.
Utah’s current employment level stands at 1,646,900. December’s seasonally-adjusted unemployment rate is estimated at 1.9%, with approximately 31,800 Utahns unemployed. Utah’s November unemployment rate is unchanged at 2.1%. The December national unemployment rate continued to decline, registering 3.9%.
Utah’s economy progressed through 2021. The strength of the overall economy significantly impacts the real estate market as buyers' ability to support housing prices largely depends on key economic factors. The state’s economy has proved to be “one of the nation’s best in reemploying workers” as officials continued to actively encourage those drawing unemployment benefits to seek work in sectors less damaged by the pandemic.
Long-term demographic and economic growth has generated rapid increases in housing prices in Salt Lake County. The median sales price of a single-family home in the county has increased from $378,500 in 2020 to $460,000 in 2021, an average annual growth rate of 21.5%. 2020's annual growth rate was 11.8%. Since 1996, housing prices in Salt Lake County have increased at an average annual rate of 5.1%. Affordability issues may impact rapid price increases in 2022, but we may still see another year of a double-digit increase.
Let us look at the price trends recorded by Zillow over the past few years. Salt Lake City has a track record of being one of the best long-term real estate investments in the U.S. Since Oct 2012, Salt Lake County home values have appreciated by nearly 8.1%. The typical home value of homes in Salt Lake County is currently $589,910.
According to NeighborhoodScout’s data, Salt Lake City appreciation rates in the last twelve months (2021 Q2 – 2022 Q2) continue to be some of the highest in the nation, at 15.48%. In the latest quarter tracked by them (2022 Q1 – 2022 Q2) Salt Lake City appreciation rates were at 4.02%, which equates to an annual appreciation rate of 17.06%.
If we consider the Salt Lake City metropolitan area, the typical value of homes is $582,222. Salt Lake City Metro home values have gone up 8.4% over the last twelve months year and Zillow predicts they may rise 5.6% from Oct 2022 to Oct 2023.
- Typical Home Values: $582,222
- 1-year Value Change: +8.4%
- 1-year Value Forecast: +2.6%
- (Data through October 31, 2022)
Salt Lake City Real Estate Investment Overview
Now that you know where Salt Lake City is, you probably want to know why we’re recommending it to real estate investors. Is Salt Lake City a Good Place For Real Estate Investment? You need to drill deeper into local trends if you want to know what the market holds for real estate investors and buyers in 2023.
If you are looking to make a profit, you don’t want to buy the most expensive property in the Salt Lake City real estate market and expect to make a good profit on rents. Perhaps you are looking for a slightly different hold-over, an investment property in Salt Lake City that you might move into or sell at retirement in the future. Either way, knowing your profit potential and purpose is the first thing to consider.
Salt Lake City is the largest city in the state of Utah, though it tends to be overlooked by real estate investors as just another part of a “flyover” country. Nearly half of all jobs in the state and 40% of the state’s population are located in Salt Lake County. The city is the core of the Salt Lake City metropolitan area, which has a population of roughly 1.2 million. Today, Salt Lake City is a major tourist spot in the U.S. The city is also the national hub of industrial banking.
People are moving there due to the lower cost of housing, good quality of life, and outdoor recreation. The economy is strong and the city has one of the lowest unemployment rates in the nation. A strong job market and a robust economy have been contributing to the rising housing costs over the past several years. Utah is the only state since 1900 where the homeownership rate has never fallen below 60%
The 2021 Utah housing market will be long remembered for its record-breaking price increases. Statewide, housing prices increased by 27%, shattering the 43-year-old record of 20.1% set in 1978, according to the Salt Lake Board of Realtors. Record price increases were not confined to Wasatch Front counties; nearly every county in the state saw record increases. Twenty-four of Utah’s 29 counties had double-digit gains.
Forecast for 2022: High prices, projected interest rate rises, listing shortages, and slower employment growth will keep Salt Lake County sales at approximately 17,000 units in 2022, according to the Salt Lake Board of Realtors. Mortgage interest rates are projected to climb, but only a little. Based on the estimates of seven organizations, the average rate for 2022 is 3.55 percent.
The pricing momentum will weaken, but another year of double-digit increases is possible; expect a 10% to 12% increase, resulting in an additional $50 million in commissions. Finally, there are two sides to the pricing coin: present homeowners will profit from high price increases again, but future generations will be less likely to own a home, resulting in more inequality and lower wealth for these households.
So what makes Salt Lake City Downtown so appealing to home buyers and investors? Downtown is the oldest district in Salt Lake City, Utah. The grid from which the entire city is laid out originates at Temple Square, the location of the Salt Lake Temple. Downtown Salt Lake City encompasses the areas of Temple Square, The Gateway, Main Street, the central business district, South Temple, and others.
Throughout the last decade, Salt Lake City has seen a significant increase in development, from City Creek Center to 111 Main, these and other developments have played a crucial role in improving the vibrancy of downtown. Like the rest of the state, Salt Lake City Downtown is benefiting from the region’s healthy economy.
More people live and work in the downtown area than ever before. But according to local real estate experts and representatives from the Downtown Alliance, despite the boom, the supply in downtown Salt Lake City isn’t catching up to the demand, and more development is needed in the city’s central business district to accommodate the growing demand for housing and office space.
The Urban Land Institute ranked it the nation’s third-best market for commercial development in its 2018 Emerging Trends report, fueled in part by the big names relocating here like Goldman Sachs, which now has the fourth-largest office in the world in Salt Lake City. Salt Lake City's housing market is booming because of an ideal combination of business growth triggering in-migration and strong native population growth.
And with a variety of affordable homes in high-quality neighborhoods, it is a market that is not yet closed to first-time home buyers. Is Salt Lake City going to be a sizzling real estate market for investors in 2021? Looking at the positive forecast, the annual appreciation rate is predicted to be between 10% to 12%.
You can either choose to invest in your future or market your home to potential buyers. If you are looking for an affordable real estate market with a high potential for return on investment, you should consider Salt Lake City in 2021. Let’s take a look at the number of positive things going on in the Salt Lake City real estate market which can help investors who are keen to buy an investment property in this city.
Positive Demographic Trends
The total fertility rate for the United States hovers between 1.8 and 2.1 depending on the source you want to believe. Mormons, the majority of the population in Salt Lake City and Utah as a whole, have an average of 3.4 children. This puts constant pressure on the Salt Lake City real estate market. It also makes the Salt Lake City housing market unusual in the demand for homes with multiple bedrooms suitable for large families. There is a niche in the Salt Lake City real estate market for large luxury homes, but it is notable for the sheer demand for 4 or more bedrooms in affordable neighborhoods.
Near Certain Real Estate Appreciation
Salt Lake City sits at the intersection of I-80 and I-15. The industry tends to spread out along the highways, and housing follows. Investors in the Salt Lake City real estate market can buy land to develop or invest in housing projects being built in expectation of workers who will soon move to the area. Demand is one factor in the equation that determines the price of housing. The other is supply.
Salt Lake City has seen an increase in housing construction since the economy rebounded. However, geography limits how and where homes can be built. This is causing home prices to appreciate significantly, and there is no evidence Salt Lake City could over-build the way Phoenix did before the Great Recession. A subtle issue hitting Utah is the relative shortage of skilled building trade talent despite the influx of people coming to work in business and tech.
Salt Lake City Market Is Everything Which California Isn’t
California is experiencing an incredible divergence from its ideals. While there is still a red-hot housing market in Silicon Valley, the state also has the highest poverty levels in the nation. They’re chasing businesses out of the state through oppressive regulation and high taxes. In contrast, Salt Lake City is booming because it is business-friendly.
So many California tech firms have relocated to Salt Lake City that the area is now nicknamed “Silicon Slopes”. Forbes listed Salt Lake City first on its list of “next tech meccas”. The city is already home to many new startups. Where there are currently good-paying jobs, new residents are sure to move in. And that only puts more pressure on the Salt Lake City housing market. The very low crime rate in Utah compared to surrounding states is merely a bonus.
The Low Cost of Living in Salt Lake City
Housing aside, another reason why people relocate from the West Coast to Utah is the low cost of living. In fact, the $400,000 house in Utah with four bedrooms and a yard looks cheap when you sold a two-bedroom condo for 50% more than that in California. The overall cost of living in Utah is cheaper than the nation overall, and it is far cheaper than California, so many choose to relocate here from the high-cost states on the coast.
The Growing Salt Lake City Rental Market
The Salt Lake City housing market can’t keep up with demand, and this is pushing many Millennials and new residents into the rental market. While many would like to own a home, affordability is an issue for the young would-be homeowner; the average Millennial earns $68,000 a year while the median home price is $400,000. This explains why Salt Lake City has some of the fastest-growing rents in the country.
As of December 04, 2022, the average rent for a 1-bedroom apartment in Salt Lake City is currently $1,475. This is a 23% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Salt Lake City increased by 3% to $1,185. The average rent for a 1-bedroom apartment increased by 14% to $1,475, and the average rent for a 2-bedroom apartment decreased by -2% to $1,645.
- Two-bedroom apartment rents average $1,645 (a 13% increase from last year).
- Three-bedroom apartment rents average $2,200 (a 15% increase from last year).
- Four-bedroom apartment rents average $2,800 (a 20% increase from last year).
The Zumper Salt Lake City Metro Area Report analyzed active listings last month across the metro cities to show the most and least expensive cities and cities with the fastest growing rents. The Utah one bedroom median rent was $1,272 last month. Draper was the most expensive city with one-bedrooms priced at $1,600 while Cedar City ranked as the most affordable city with one-bedrooms priced at $550.
The Fastest Growing Cities For Rents in the Salt Lake City Metro Area (Y/Y%)
- Millcreek had the fastest growing rent, up 23.4% since this time last year.
- Orem rent jumped 20.4%, making it second.
- South Salt Lake was third with rent climbing 16.7%.
The Fastest Growing Cities For Rents in the Salt Lake City Metro Area (M/M%)
- Provo rent had the largest monthly growth rate, up 5.2%.
- Ogden was second with rent climbing 3.1%.
Salt Lake City requires landlords to get a business license, even if they own one rental home. The fees that you are required to pay as part of the rental program depend on how well-maintained the units are. However, Salt Lake City in general is very landlord-friendly. Eviction for nonpayment of rent can get someone out in two to four weeks. Courts regularly side with landlords and award triple fees for damages by a tenant. If someone violates the terms of the lease, they have three days to correct the situation. You can end a month-to-month tenancy with 15 days of notice.
Multiple Luxury Markets
Downtown Salt Lake City properties near the Mormon Temple command a premium, but that isn’t the only upscale market in the area. Park City and the northern side of Oakley have properties that cost on average well over a million dollars. As you move up Highway 80 toward Hoytsville and Wanship, properties routinely cost more than a million dollars despite the hour commute to Salt Lake City.
Looking For Salt Lake City Investment Properties?
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.
NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Salt Lake City.
Consult with one of the investment counselors who can help build you a custom portfolio of Salt Lake City turnkey properties. These are “Cash-Flow Rental Properties” located in some of the best neighborhoods of Salt Lake City.
Not just limited to Salt Lake City or Utah but you can also invest in some of the best real estate markets in the United States. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete Salt Lake City turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.
Like the Salt Lake City real estate market, the other housing market to go for to diversify your investments is the Baltimore real estate market. The Baltimore real estate market has been in decline for years, but several spots offer significant returns. And there are signs that the city is starting to turn around.
The Baltimore real estate market around the new industrial parks built to cater to Amazon will boom because we can expect as many jobs from Amazon’s suppliers in those areas as Amazon itself – and those workers will want to live close to work. The Baltimore real estate market is promising and shows a new increase of opportunities for both buyers and sellers.
Similarly, Cincinnati, OH is another great market to get started in real estate investing. Cincinnati's real estate market is on the upswing and looking strong for the foreseeable future. It provides many opportunities to investors, regardless of the market you want to invest in.
Let us know which real estate markets in the United States you consider best for real estate investing!
Remember, caveat emptor still applies when buying a property anywhere. Some of the information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.