Utah Housing Market Forecast
A recent report from the Salt Lake Board of Realtors described 2021 as the year of record-breaking price increases in Utah. Statewide, housing prices increased by 27%, far surpassing the 43-year-old record of 20.1% set in 1978. For the last nine months of the year home prices consistently increased over 20%, when compared to the same month a year early. Price increases were not confined to Wasatch Front; nearly every county in the state saw increases. In 2021, Utah ranked second behind Idaho for rapid acceleration in home prices.
These record-breaking price increases are expected to continue in 2022.
It’s no secret that Utah is growing and expanding. Between 2020 and 2021, the state experienced an annual population growth rate of 1.8% – which is the highest increase since 2017. Realtor.com ranked Salt Lake City as the #1 housing market positioned for growth this year.
Utah is one of the only states where the homeownership rate has never fallen below 60%. The homeownership rate is the percent of occupied housing units that are owner-occupied and luckily the relentless rise in housing prices has yet to threaten this.
Nevertheless, many people believe the continuous rise in home prices has placed Utah in a housing bubble that is subject to burst at any time. However, historical data indicates that a housing bubble appears when there are extended price declines associated with a substantial loss in jobs. Every period of price decline from the 1950s to 2008–2011 has been associated with a weak or contracting labor market. So, for Utah to experience an actual housing bubble it would require a rise in jobs losses, which is an unlikely prospect in the next few years. Utah’s unemployment rate dropped from 2.6% to 1.9% by the end of 2021.
From this information we can infer that a more likely outcome for Utah over the next two to three years is a period of price moderation. Although price momentum will trend lower, it is expected Utah is in for another year of double-digit increases of 10% to 12%.
High prices, interest rate increases, listing shortages, and a slowing rate of job growth is expected to combine and hold sales to around 17,000 units in 2022.
Although mortgage rates are expected to rise, the increase will be modest throughout the year as the Fed continue to taper. The average interest rate for 2022 based on forecasts, is 3.55% (APR 3.884%). We have already seen rates slightly increase; however, they are still low when compared to pre-pandemic rates.
The flip side to rising home prices is an extreme benefit for existing homeowners who will gain equity from strong price increases. As owning real estate in a high-growth market is a prime opportunity for wealth creation.
The report found that in 2021 alone Utah’s 700,000 homeowners’ experienced home equity increases by at least $82 billion. Wealth was created simply by paying their mortgage each month.
In contrast, 300,000 renters in Utah who had no increase in wealth – faced double-digit increases in rental prices. Apartment List’s National Rent Report found that rental prices went up $300 per month in 2021. This is staggering!
Owning real estate is still the best way that to create wealth. If you are a renter looking to buy, I highly recommend acting sooner than later to take advantage of current interest rates and home prices before they move more. There is a cost in waiting. If you are already a homeowner, you may want to evaluate the idea of a refinance and when the best time to act would be.
Our team is watching the market daily and listening to reports from the nation’s experts, in order to help you navigate the market and identify the most opportune time to move forward with your purchase or refinance.
If you have any questions about what’s to come in the market or what is the best move for you this year, reach out! I would love to further discuss the market and how you can benefit from it this year.
*Article Resource: Salt Lake Board of Realtors Housing Forecast*
