‘Hyper-, hyper-competitive’ — Salt Lake area housing market is white hot, but are Californians to blame?

This story is part of The Salt Lake Tribune’s ongoing commitment to identify solutions to Utah’s biggest challenges through the work of the Innovation Lab.

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Winter and Danesha Mead lived in California for almost a decade. They then hopped in an RV and traveled to a bit of everywhere before stopping in Salt Lake City.

The Meads knew they wanted to live closer to the mountains, and Winter wanted to be “a tad” closer to the East Coast, where his family lives. They settled on the city’s 9th and 9th neighborhood — the area around the intersection of 900 East and 900 South — and were ready to place an offer on a home that had been on the market for two years. But that weekend, two other parties put down bids.

“Something that we thought would be a slam-dunk ended up being a potential bidding war, and we ended up not getting that house,” Winter said. “It was very clear that all of a sudden it was an extremely hot market.”

What the Meads, who wound up in a different home around 9th and 9th, experienced has become the reality for Utah and out-of-state buyers alike.

During the Great Recession, there were around 18,000 inventory listings in Salt Lake County, according to real estate agent David Kevitch of Wasatch Homes & Estates. A few weeks ago, there were 632.

“A normal market has about a six-month supply of houses, meaning if we quit listing any new houses, there’d be about six months left of homes before we ran out,” said another agent, Brian Tripoli of City Home Collective. “And right now, we’re running right around one month’s supply. So it’s hyper-, hyper-competitive.”

A “hyper-, hyper-competitive” market raises questions: What’s driving Utah’s housing shortage? Is it purely a lack of supply, in that residents aren’t giving up their homes? Or is it the oft-cited influx of Californians?

Many people point to the latter, but a recent study from the Utah Foundation argues this isn’t the case — that “most of that population growth is linked to fewer people leaving.”

According to agent Brett Wilde of Wilde Real Estate, most out-of-state newcomers to Salt Lake County are, like the Meads, coming from California.

Winter has started his own company in Salt Lake City, but it’s completely remote — something he “hadn’t ever thought about” doing before the pandemic normalized Zoom work.

That’s a trend that has sent a lot of Californians to Utah. Wilde noted that California lost more than 300,000 residents last year, and “they certainly weren’t going west.”

“As they were coming east, strong economy states such as Idaho and Utah and Texas — we’ve been the beneficiaries of that influx,” Wilde said. “While that’s been good in a lot of ways, it’s also put a lot more additional pressure on that buyer portion of the market.”

The rise of impulse offers

The “Californians moving to Utah” model does not tell the full story.

First of all, it’s not just Californians, even if they make up a plurality of the new arrivals. Real estate agents say people are coming from New York, from Boston, from Vermont, from Austin, Texas, and beyond.

Besides, Californians have been coming to Utah for years. One of these Golden State families is the Finns. Mariko Finn and her husband came to Salt Lake City years ago. They loved the neighborhoods, the food, the outdoors. Eventually, though, they decided to move back to the Bay Area. As they sold their Salt Lake City home, Finn remarked, the once-deliberate and thought-out task of placing an offer has changed in pandemic times.

“Right now, if you see it, and you like it, you make the offer,” Finn said. “There’s absolutely no hesitation. It’s a little bit of a free-for-all.”

The impulse-offer strategy means that to land a home, shoppers in the current market often must accept abnormal buying conditions. Some sellers will require the party to wait several months to move in, so that the sellers can have ample time to find their next home.

“Up until last year, that was unheard of,” said Tripoli of City Home Collective. “You might have a seller who might ask for a couple of days after closing. And, you know, most buyers are super excited to get into the house that they just bought.”

Months removed from her Utah life, Finn acknowledges the impact of people like her family moving into the state. She noted that when they first arrived, California license plates were less common. Now, she said, they seem to be everywhere, even if some, like the Finns, move out. This will impact the city’s demographics.

“It is hugely going to change,” she said. “The thing that is sad is that people who are going to be first-time homebuyers in Utah are going to get pushed out of the market by people who are coming from other states.”

It’s all about supply and demand

But it’s not just the Californians — or the Vermonters, the New Yorkers and the Texans — who are affecting the market. Recent research by the Utah Foundation noted that the Salt Lake metropolitan area saw the fifth most extreme growth rate of 100 cities measured, but added that fewer people arrived in 2020 than in past years. Rather, more people are staying in the state.

“Is it Californians driving that growth? Not likely,” Christopher Collard, a research analyst with foundation, wrote. “It turns out that for 2020, Salt Lake metro residents are to blame (at least in part) for rising housing and rental prices because they have not moved out at a similar pace as in previous years.”

When asked for their reactions to the foundation’s conclusion, real estate agents said they agreed. Sort of.

“It’s funny, because I used to blame the market, mostly on the people moving to Salt Lake,” Tripoli said. But to him, the research makes sense.

Wilde agreed. He noted that the area is still seeing massive growth, but “more pressing is ... that we have two-thirds the amount of inventory that we did last year. That is 100 percent driving this economy, because demand is one piece, but supply is driving the train.”

Kevitch wasn’t satisfied with the “Utahns aren’t selling” simplification. He said there’s still enormous demand, and that the issue is that supply hasn’t been able to “catch up.”

“It’s not so much that they’re not wanting to sell. There’s still a fair amount of sales happening. The problem is that the demand is so high that the inventory can’t get to a level that would show that there’s a good supply.”

But if, as the Utah Foundation says, “Salt Lake metro residents are to blame,” do they have enough confidence in the market to sell?

Tripoli held that the supply issue is self-reinforcing. Because there is so little supply, Utahns feel uncomfortable planting that “for sale” sign in the ground. “They know that they couldn’t turn around and buy in the market that they live in,” he said.

“I know, personally, I have several clients who, in a normal universe, would have been inclined to sell, but have said that it doesn’t make sense to sell,” Tripoli said. “Because, yes, they might make top dollar, but then they would be caught in the vortex of trying to buy a place and paying top dollar for it.”

Wilde acknowledged that finding a home in this market is difficult. But it’s not impossible, he said, and shouldn’t discourage sellers.

“That’s a myth out there — that they can’t sell because they can’t find a new place to buy,” Wilde said. “Simply not the case. They need the right services; they need the right agency helping them.”

Agent Heidi Gillmor of Coldwell Banker Realty acknowledged, however, that there’s “a lot of stress in the market.”

“If you have a house, and you’re trying to move,” Gillmor said, “the question stands: Where do I move?”