Home prices are rising, but sales are down as the housing gap squeezes Utah markets

Limited housing supplies on the Wasatch Front are stifling sales of single-family homes and pushing prices to new highs.

In keeping with trends seen in many parts of the country, home sales fell between April and June in Salt Lake County as a result of tight inventories, declining by 4.6 percent compared to the same quarter last year, according to new numbers released Thursday by the Salt Lake Board of Realtors.

The region’s “strong economy continues to attract thousands of people,” said Adam Kirkham, the board’s president. He predicted that workers moving to Utah combined with new families already in the state would probably keep housing supplies tight "for several more years.”

The latest report shows that in Tooele County — something of a go-to area for bargain hunters in recent years — sales slowed by nearly double the rate seen in Salt Lake County year over year, down 8.8 percent. They also fell by 0.7 percent in Davis County.

Sales rose, meanwhile, by 4.3 percent in Weber County and 3.2 percent in Utah County.

A five-county surge in home prices shows little signs of letting up, with the median price tag for a single-family home in Salt Lake County now at $352,500 compared to $327,000 for the same quarter last year and $345,000 in the first three months of 2018.

But that 7.8 percent jump was relatively small compared to price gains in some adjacent counties.

Year over year, the cost of a home spiked an astonishing 20.9 percent in Tooele County in the second quarter, 10.1 percent in Utah County, 9.8 percent in Davis and 9.6 percent in Weber.

A recently released study found that housing prices in Utah have increased by an average of about 3.3 percent annually over each of the past 26 years, the country’s fourth highest rate overall. Experts say the trend is being driven by several factors, including dwindling availability of undeveloped land, rising costs of building materials, and a shortage of construction labor, particularly in skilled trades.

Officials are now talking more openly than ever about the effects of a housing deficit across Utah's urban center, with some warning that a persistent gap between new households being formed and available homes threatens to dampen the state's rate of economic growth.

Business and municipal leaders have launched a campaign to bring attention to deficient supplies of apartments, existing homes and new home construction across the state. A report commissioned by the Salt Lake Chamber has estimated that the number of dwellings built in Utah between 2011 and 2017 was about 50,000 below the number of new households formed.

James Wood, a leading Utah economist and Ivory-Boyer Senior Fellow at the University of Utah, said in a recent blog post that, in addition to higher housing costs, the shortage is pushing down vacancy rates and increasing the number of so-called “doubled-up households,” with families in shared living arrangements.

Upward movement in dwelling costs is also thought to be increasing the number of Utah households spending more than a third of their incomes on housing. Kirkham and others have also noted that those rising home prices across the five-county region spanning Ogden, Salt Lake City and Provo are impeding first-time homebuyers, in particular, from entering residential markets.

New listings of homes for sale came in at 6,608 for the second quarter, the Realtors group reported, down nearly 1.4 percent from the same quarter a year before. And as a further indication of tight markets, median sales prices of condominiums along the Wasatch Front have also jumped. The median price for a condo in Salt Lake County now sells for $237,300, up 5.5 percent compared to a year earlier.

Second-quarter data for single-family homes show median prices now stand at $335,000 in Utah County, $316,200 for Davis County, $266,000 in Tooele County and at $241,000 for Weber County.

Graphic by Christopher Cherrington | The Salt Lake Tribune

The 84004 ZIP code in Alpine saw home prices rise by more than 44 percent in the second quarter, the highest increase for all ZIP codes along the Wasatch Front. That pushed its median home price to $720,000, which also led prices in the five-county area. Areas in Provo, Holladay and Salt Lake City also saw price hikes above 25 percent.

Emigration Canyon (84108) and the Avenues (84103) are Salt Lake County’s most expensive neighborhoods, with median prices at $604,000 and $590,000, respectively.

Farmington (84025) had the top second-quarter median price in Davis County, at $437,500, while Eden (84310) had the highest price in Weber County, at $476,000, and Stockton (84071) was the highest-priced area of Tooele County, at $295,000.