Home ownership in Utah could become even harder, experts say
Sep 13, 2023, 4:00 PM | Updated: Sep 14, 2023, 4:26 pm
FILE: Homes in West Jordan are pictured on Monday, Oct. 10, 2022. (Scott G Winterton, Deseret News)
(Scott G Winterton, Deseret News)
SALT LAKE CITY— Experts are forecasting very little if any relief for prospective home-buyers in Utah over the next year.
Home prices and demand from the state’s rapid growth and the pandemic have already left thousands of Utahns unable to afford a home. Between interest rates, the high cost of housing, and a struggling supply, the dream of homeownership may get farther from people’s reach.
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“Homeownership is a fading dream for many renters in Utah,” said Dejan Eskic, senior research fellow and scholar at the University of Utah’s Kem C. Gardner Policy Institute.
According to a new report from the Kem C. Gardner Policy Institute, nine out of 10 Utahns already can’t afford the median cost of a home in the state. As of August 2023, the median cost was nearly $490,000.
Eskic said if that price drops to $300,000 to $400,000, or 20% to 25% of the current market, still only 15% of Utah renters could afford those prices.
Kristin Matthews, the vice president of consulting at John Burns Real Estate Consulting told KSL Newsradio they expect home prices to rise in 2024, 2025, and 2026 after seeing a 1% drop in 2023. Combining the high prices with interest rates well over 7% will leave thousands of Utahns on the outside looking in.
Supply problems
Utah’s record growth over the last decade has also made it difficult for builders to keep a supply large enough to meet the number of new incoming residents. Exkic said that too could become more troublesome.
“Builders basically cannot finance these projects unless they dramatically increase the prices of rent,” Eskic said. “They aren’t building as a result.”
According to the report, the forecasted number of building permits issued in the state will hit its lowest number since 2016. Existing home sales were also forecasted to reach their lowest levels since 2014.
While experts predict interest rates to steadily fall over the next few years, Eskic said the supply and price issues will only make things harder for prospective buyers.
“We still expect affordability to worsen,” Eskic said.
Related reading:
- Mortgage rates hitting a 20-year high could snowball Utah’s housing crisis
- Deeply affordable housing for seniors and veterans experiencing homelessness unveiled
- Utah ranks 45th in the country for affordable housing
