Expert weighs in on home prices in Utah
Feb 26, 2024, 11:05 AM
FILE: A for sale sign is pictured in North Salt Lake on Monday, Aug. 28, 2023. (Kristin Murphy/Deseret News)
(Kristin Murphy/Deseret News)
SALT LAKE CITY — A new report on Utah’s economic outlook cites a drop in the median housing price in December. But Dejan Eskic with the Kem C. Gardner Policy Institute said the drop in Utah home prices was short-lived.
According to Eskic, the median price for a home in January was $485,000.
He blames interest rates for causing a housing shortage and says we shouldn’t expect housing prices to come down anytime soon.
“All of last year we’ve had interest rate growth. We peaked at the end of October by just touching 8%,” said EsKic. “We came down to about 6.5% percent but then [we] still have persistent inflation.”
“And the latest numbers were a little bit higher than people were comfortable with. So, the treasury markets went up again and that brought the mortgage rates back up to just over 7% again.”
What is driving interest rates?
Eskic doesn’t expect home prices to come down anytime soon unless there’s an economic downturn.
“Every time we get low interest rates, when does it happen? It happens when economic conditions are bad,” said Eskic.
“It happens in a great financial crisis. That happened during COVID. But for prices to come down, we have to have a glut of new inventory.”
For that to take place, Eskic explained, people have to lose their homes.
“How does a person lose their home? They lose their job. They can’t make the monthly payments,” said Eskic.
According to Eskic, home prices have stayed relatively flat. But the increase in interest rates can be too much for consumers.
“[The] volatility of interest rates, where they go from 6.5% to 7.5% percent in one month, that really prices people out.”
Why the one-month price drop?
The time of year and interest rates are the likely culprits for the December anomaly.
“Really, we have to talk about why they fell. It’s two parts. Part of it is seasonality. Demand for housing in December is really low because of Christmas holidays and interest rates,” said Eskic.
According to Eskic, the median price for homes in January shot right back up to $485,000, an amount he said was in line with prices in October and November of 2023.
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