SALT LAKE CITY, Utah — While the cost of buying a home in Utah is expected to continue rising in 2020, the number of home sales is also expected to increase over the year. It’s expected to hit record numbers for the second year in a row.
And the pressure to build more home isn’t confined to Salt Lake County, a real estate group reports.
“You’re seeing it in the rural areas as well,” Utah Association of Realtors President Dave Robison said to KSL.com. “One of the best performing counties was Box Elder County, their sales went up 15%, and then Summit County went up 15%, Utah County went up 12%.”
And the numbers are rising in places he wouldn’t expect it, Robison said.
“One of the interesting statistics right now — this is the first time I’ve ever seen it — but Utah County has more homes for sale on the market than Salt Lake County,” he said.
Home sales in Utah climbed to a record high in 2019, with 54,274 last year, according to the Utah Association of Realtors. That’s the most sales recorded since the organization began keeping track in 2003, Robison said.
The increased activity is caused by several reasons, he said.
“It’s people moving in from out of state (and) it’s our low unemployment,” Robison said. “It’s our own population growing. It’s multiple factors.”
The high demand for housing also results in the cost of housing to go up, with the state median price at $320,000 last year. That’s up 7.7% from 2018’s numbers.
The number of houses sold for less than $300,000 declined 12% because the supply of the properties hasn’t kept up with the demand.
“[It’s] because they don’t exist; they are disappearing,” Robison said.
This rise in prices isn’t expected to lower any time soon, he added.
“Right now, it doesn’t look like it’s going to flatten out at all, simply because we have a shortage of homes and we have a high demand,” Robison said. “The builders are not building fast enough for our demand.”
In the past, especially from 1980 to 2006, homebuilders had built too many houses — 10% more than the market demand at the time. However, that isn’t happening in the current market.
Robison said local cities are also struggling to meet this growing demand because of the ever-increasing home prices. One solution for this, he said, could be combining homes — like twin homes or condominiums.
“The bulk of what people are going to be able to afford is going to be townhomes and condos,” he said. “Because it’s simple, it’s just going to be too expensive to own a single-family home anymore.”
He said he thinks the market may begin to lean toward this market of townhomes to maintain profit, especially because of construction costs, consumer demand and the cost of land. To achieve this, he said cities will need to start supporting more development of these more densely populated housing units.
However, if interest rates remain low, prospective buyers will continue to flood the market. He said this would be a benefit for Utah homeowners, who will receive more money for their properties as time goes on.
“When you look at interest rates, if interest rates go up a point, it reduces (homebuyers’) purchase ability by almost 12%. The interest rates being low, makes it very, very favorable for a buyer,” Robison said. “Now, for sellers, it’s definitely favorable for their selling price because we’re seeing the highest median price range we’ve ever had. So, it’s definitely favorable for them.”
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