More than 50 percent of people in Salt Lake City couldn’t afford a home in their own neighborhood, a new study says

If you were moving into your first home today, would you be able to afford the house you live in?

Chances are the answer is “no”, according to a new study by Best Neighborhood.

Housing prices in Utah have gone up so much that they say more than 50 percent of all homeowners in Salt Lake City wouldn’t be able to afford a new home in their own neighborhoods.

The group behind the study says that it’s part of the reason so few millennials have bought their first homes – and that it might be a dangerous sign of what’s to come.

Housing prices skyrocket on the Wasatch Front

Best Neighborhood’s study wasn’t limited to Utah. It looked at housing prices and incomes across the whole nation, working primarily off of census data.

Housing prices, they found, have absolutely soared in the past 30 years. Even when adjusted for inflation, the average cost for a home in the U.S. has almost doubled since 1990. Our salaries, in the meantime, have remained relatively stagnant, only increasing in proportion to inflation.

For a new family looking to escape the rent trap, that makes becoming a homeowner incredibly difficult. Millennials will have to sacrifice twice as much of their paychecks to make mortgage payments as their parents did in 1990, all while juggling more than three times as much student loan debt.

Even for those who own homes, prices have gone up so much that, if they were forced to try to buy a home again, many wouldn’t be able to do it. Nationwide, the study found, 27 percent of homeowners do not make enough money to afford a house in their own neighborhood, while 14.2 percent wouldn’t even qualify for a mortgage.

Those figures are even worse in Utah and especially on the Wasatch Front, where housing prices have been skyrocketing.

A staggering 53.7 percent of homeowners in Salt Lake City would not be able to afford to repurchase their own homes.

Housing prices in the city, after all, have nearly doubled in the last nine years. According to Zillow, the average house in Salt Lake City in 2011 cost $204,000; today, that price is up to $388,100.

That makes buying a home in Salt Lake City extraordinarily difficult for a young professional. The average millennial in Salt Lake City, according to a Realtor.com report, earns $67,800 a year. Financial experts say that’s not even half of what they’d need to buy one of their city’s nearly $400,000 homes.

And in some other parts of Utah, it’s even worse. In three cities – Herriman, Saratoga Springs, and South Salt Lake – prices have gone up so quickly that less than a third of the homeowners could afford a home in their neighborhood today.

An “unhealthy rate”

With housing prices going up and wages staying more or less the same, millennials are definitely in a tougher financial situation than their parents. The problem, however, doesn’t just affect them. According to the authors of the study, it could have consequences for everybody.

KSL Newsradio listeners called into the Dave & Dujanovic show today and shared some of the ways rising home prices have affected their lives. A young family talked about their struggles to find an affordable enough home to stop renting, while an older homeowner shared how her property taxes have skyrocketed.

One caller explained that she’d tried to sell her now-valuable home, move into a smaller one, and enjoy the profits. The rising costs around her neighborhood, however, made it impossible.

“We just want a small home … but we can’t even do that, because it costs the same amount as my five-bedroom home,” the caller said. “Now I’m stuck in this big house.”

Those prices have been going up, says Jaren Davis, Executive Officer for the Salt Lake Home Builders Association, because housing construction hasn’t been able to keep up with demand.

Like our listeners, however, Davis agrees that those rising prices aren’t necessarily a good thing. “Quick frankly,” he told KSL, “it’s at an unhealthy rate.”

If housing prices continue to increase at their current rate, the median price for a house along the Wasatch Front is expected to reach $1.3 million by the year 2044.

Best Neighborhood’s researchers, however, don’t think that will ever happen. They say that, unless wages go up, the housing market can’t get much more expensive than it already is.

“The problem with the idea that homes will always appreciate is that it only works if there are enough buyers coming into the market who are willing and able to pay higher prices,” the study authors write. “Prices cannot rise above a level where buyers cannot afford a home. If real wages do not continue to rise the price of real estate will, at some point, become unsustainable.”

If things don’t change, they say, the U.S. housing market may be headed for a collapse.

More to the story

KSL Newsradio’s listeners filled our phone lines with their stories about how Utah’s housing market has affected their lives. If you missed their stories live on the air, you can still hear what they had to say on the Dave & Dujanovic podcast.

Dave & Dujanovic can be heard weekdays from 9 a.m. to noon on KSL Newsradio. Users can find the show on the KSL Newsradio website and app, as well as Apple Podcasts and Google Play.