Real Estate Market 2022: Utah prices are nearly 600,000. Will they ever go down?

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Real Estate Market 2022: Utah prices are nearly 600,000. Will they ever go down?


The latest sales data from Utah is on the way and shows that the average selling price of single-family homes in two of the main Wasatch Front counties is approaching another staggering indicator: $ 600,000.

In Salt Lake County, the median price of a single-family home reached $ 580,000 in February, up more than 23.6 percent from $ 469,000 in the same period last year, according to the Salt Lake Board of Realtors.

In Utah County, the price is even higher – the largest of all five Utah Wasatch Front counties. There, the median single-family home price jumped to $ 589,450 in February, more than 29 percent from $ 456,563 a year ago.

It’s the latest leap in what have been two solid years of record price hikes in Utah and the Intermountain West, with no clear end in sight even as interest rates are rising and putting even more pressure on potential buyers of. homes in today’s persistently painful market.

Affordable housing continues to be among the state’s biggest problems and the governor of Utah on Thursday. Spencer Cox said he fears that “market corrections” could be what will ultimately drive prices down.

But no one knows when it might happen.

“Market corrections”

The governor was asked at his monthly PBS Utah press conference about the latest home price data and whether the Utah real estate market is getting out of hand.

Cox, without missing a beat, replied, “Yes, it is.”

“There is no doubt,” he said. “And this is true nationwide, and certainly true in the Intermountain West, where we are seeing these extraordinarily high prices.”

That’s why, Cox added, Utah’s legislature passed several bills during its 2022 session to address the affordability of Utah housing.

However, the governor added that he was concerned “that there are market corrections coming”.

“Of course, there are trends that don’t look great,” Cox said, noting that the Federal Reserve raised interest rates this week for the first time since 2019, indicating more interest rate hikes will follow. This comes in the wake of billions of one-time COVID-19 federal stimulus money that complicates the nation’s economy.

“So I’m worried about that,” Cox said. “I’m worried about what happens when all this federal money – this kind of fake sugar high we’re in right now – makes its way through the system and what happens next.”

The governor highlighted record inflation that worries the United States, especially the West, and how the latest wave of COVID-19 in Asia is once again threatening the global supply chain.

“And not to mention the war in Europe,” Cox said, pointing to the Russian invasion of Ukraine.

“So there are certainly economic clouds on the horizon that make us think, that we are observing very closely and that we are preparing for.”

The governor attributed to the legislature “incredible cooperation on the budget” and the assurance that the state fund for rainy days is solid.

“It’s possible those rainy days are on the way,” Cox said. “So that means, with the arrival of market corrections, that we hope to see house prices go down. But let’s hope that house prices can come down not at the expense of the citizens of Utah. ”

How did we get here?

Record inflation was already straining Americans’ wallets before the Russian invasion of Ukraine pushed oil and gas prices up and created problems for the global economy that had already been hit by two years of COVID. -19.

Nationwide, the housing market has been rocked as the pandemic has spurred many Americans to reevaluate their lives. The West, in particular, has seen a surge in immigration from home buyers seeking more space at lower prices.

And for high-growth, job-rich states like Utah, that has fueled demand at unprecedented levels. Having already faced a housing shortage before the pandemic, states like Utah are now under extraordinary real estate pressures, with inventory running out.

February also marked the ninth consecutive month of decline in home sales of all types of housing in Salt Lake County, with just 949 homes sold last month – a decrease of 14% from 1,102 sales in the same month of the year. last, according to the Salt Lake Board of Realtors. The board attributed the decline in sales to “limited inventory, higher house prices and fewer buyers on the rise.”

“The last time home sales fell for a long time was in 2007, the start of the Great Recession,” the board said in a news release Thursday. “In 2007, home sales in Salt Lake County plummeted by 27%. Falling sales and substantial layoffs triggered a four-year drop in house prices in Salt Lake County (2008-2011). Since 2012, house prices in Salt Lake County have been on the rise. For Utah to suffer a near-term housing bubble, it would require job losses, an unlikely prospect in the coming years. “

The supply vs. the demand dilemma is why real estate experts see no indicators of a bubble about to burst, although in Utah they have warned of a “severely unbalanced” real estate market as demand continues to sadly outstrip supply. As long as this continues, Utah will see price hikes and rising interest rates will likely not stop price increases, but it will slow them down.

Other economic factors are at play and it remains to be seen how much global economic conditions affect the US real estate market and the Utah real estate market.

So when will a so-called “market correction” actually take place? This is a big question mark.

What is Utah doing to help housing?

During the 2022 general session that concluded earlier this month, Utah lawmakers allocated a record $ 70 million for housing and homelessness programs, including $ 15 million for housing conservation. But that figure was still far below the $ 128 million recommended by Cox in his budget for housing and homelessness programs.

“I appreciate the legislator’s work in helping pass bills that we believe will increase supply and, in turn, reduce house prices,” Cox said.

Pressed by a reporter that the lower funding amount was a missed opportunity for lawmakers, Cox said he “obviously” would “love” the legislator to adopt all of his budget recommendations, “but I won’t complain about the money we have. ”He called the $ 70 million” very generous “and a” historic number. ”

That $ 70 million is on top of the $ 50 million that the legislature allocated to housing and homelessness initiatives in 2021. Cox noted that some of those funds that were approved last year “are not. still been spent “.

“So let’s see how we do it,” Cox said. “They absolutely need to hold us accountable and make sure we are using the funds in a way that makes a difference.”

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