The Wasatch Front’s already strained housing markets have tightened even more this year as new listings of homes for sale lag and prices keep skyrocketing.
Making matters even worse, rising mortgage interest rates are conspiring with galloping prices for a combined pandemic-related trend upward that is steadily eroding affordability across all but a few ZIP codes in the five-county area.
March alone added roughly $20,000 to Salt Lake County’s median sales price for a single-family home, which has spiked to as high as $650,000 this month before settling back to about $629,000.
“We’ll be at $700,000 before you know it,” predicted Dave Anderton, spokesperson for the Salt Lake Board of Realtors, which released its latest quarterly sales data Friday.
For a before-and-after sense of how the upswing has accelerated due to extended effects of the coronavirus — including heightened in-migration to Utah and a quest for suburban spaces, home offices and bigger backyards — the median price for an existing single-family home in Salt Lake County was at $350,250 in late April 2019.
[Go to www.sltrib.com/homeprices to see home prices and sales in the five-county region by ZIP code.]
The median price for Utah’s most populous county was up 27.1% for the first quarter of 2022 as a whole, compared to the same time last year, when prices had similarly jumped head and shoulders over their pre-pandemic levels. Virtually every quarter since April 2020 has been marked by similar patterns.
Other Wasatch Front counties saw price gains on a similar scale and fewer homes changing hands. Sales of existing single-family homes, condominiums and town homes are now down for a 10th consecutive month, year over year, and the effects are being widely felt as prevailing rents rise.
Several real estate agents, meanwhile, reported routinely selling homes at between $100,000 and $200,000 above asking prices. Multiple bids per listing and cash offers abound.
And with interest rates officially dialed upward by the Federal Reserve to head off inflation, at $629,000, a would-be homeowner borrowing for a standard 30-year mortgage at 5.25% interest with a 5% down payment would be shelling out about $3,300 a month, without taxes and insurance.
With rates now approaching 5.5% in some cases — the highest in more than a decade with more increases on the way — even well-heeled buyers who could otherwise afford $600,000 or more “are being priced out,” said Steve Perry, chief operating officer at Presidio Real Estate. “That’s a huge problem that we don’t usually see here in Utah.”
The effects are being felt hardest, though, by would-be first-time buyers, young families and those earning the region’s average incomes or below.
And while market conditions mean that existing homeowners in the Beehive State are able to sit back and watch as their home equity soars, fewer are selling and moving up, apparently daunted by the prospect of finding an affordable replacement home. That’s a huge factor in the current supply crunch, as are years and years of under-building coming out of the Great Recession.
Salt Lake County had 855 homes actively listed for sale as of Thursday, headed into the spring season of stepped-up house shopping — a fraction of the 4,000 to 5,000 listings typical in pre-pandemic years.
The result: A housing squeeze of historic proportions, one that has forced its way onto political agendas across the country, including Utah’s Capitol Hill.
Utah County’s median sales price for a single-family home swelled to $579,700, up 28.8% compared to last year, the latest data shows, while the same metric rose by 26.8% in Davis County, to $542,500, and by 27.4% in Weber County, to $433,000. In Tooele County — where, like Weber County, agents say bargains can still be found, especially for those not bound to a daily work commute — the median rose 36.1% last quarter to $490,000.
The Wasatch Front has added its second million-dollar median ZIP code, with Huntsville in Weber County now joining Utah County’s Alpine in that bracket.
Draper in suburban Salt Lake County and Salt Lake City’s 84103 ZIP code, spanning Capitol Hill, the Avenues and Federal Heights, are not far behind, with their median prices now at $932,500 and $930,000, respectively.
(Rick Egan | The Salt Lake Tribune) A home for sale in Glendale, on Thursday, April 28, 2022. In three years, the median home price in Salt Lake County has nearly doubled, though houses are more affordable in Salt Lake City's Glendale neighborhood.
Salt Lake County’s least expensive homes are found in Copperton, Glendale, Poplar Grove, parts of West Valley City, Taylorsville and Kearns, with median prices at $430,000 or less.
In Utah County, lower-priced homes are in Goshen and Santaquin, the latest data shows, with medians at $470,000 or below. Farr West and Roy had Weber County’s lowest medians, at around $400,000, and, in Davis County, the least expensive homes were in Clearfield and parts of Layton at $471,000 or lower. The city of Tooele had some of Tooele County’s lowest home prices last quarter at $470,000.
Perry, also current president of the Salt Lake Board of Realtors, recently pointed to a Pew Research Center survey indicating that about half of all Americans view the lack of affordable housing in their local community as a major problem.
Recent Utah-based surveys reveal a similar level of alarm. Soaring housing costs — along with the dearth of available homes — have a majority of Utahns worried about the long-term consequence of the state’s rapid growth, a November poll found.
A national study found that rising prices are forcing buyers to pay higher premiums on their homes in 99 of the 100 top U.S. markets. Ogden, Provo and Salt Lake City rank among the top 10 most overvalued markets in the country, according to researchers based at Florida Atlantic University and Florida International University.
“Just to have an offer accepted, buyers have to outbid a host of other competitors, but that means they’re wildly overpaying in many areas,” said Ken Johnson, an economist in Florida Atlantic University’s College of Business.
Analysts at Fannie Mae, the government-sponsored national mortgage association, warns a recession could be coming next year but predicts it will be cushioned by the nation’s hot housing market.
Johnson and others, including housing experts at the University of Utah’s Kem C. Gardner Policy Institute, do not see a housing market bubble.
“This,” Perry said, “is going to take two to three years to fix.”
Correction • April 29, 2022, 11:35 a.m.: An earlier headline and photo captions have been updated to correct the time span being compared in the rising home prices.
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