Housing markets on the Wasatch Front hit a key friction point earlier this year as an ongoing housing shortage pushed sales of existing homes down and prices went even further skyward.
The number of homes sold January through March fell across the five-county region centered on Salt Lake City — even though there’s historic demand spurred by low interest rates, Utah’s recovering economy and a pandemic-induced quest for new living spaces.
Region-wide, 5,611 single-family homes changed hands in the first three months of 2021, 451 fewer than those same months the year prior. Average sales prices, meanwhile, vaulted by between 17% and 23% or higher, depending on the location.
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There simply aren’t enough single-family homes to sell right now, real estate agents and housing experts say.
And as any would-be buyer in Utah at the moment well knows, that’s made everything more frantic.
“It’s a whirlwind, for sure. We’ve never seen the supply this low and demand this high,” Matt Ulrich, president of the Salt Lake Board of Realtors, said Tuesday. “This is probably one of the most challenging markets I’ve ever witnessed.”
Housing was tight before the pandemic but demand has flown even higher, agents say, as many homeowners seek more space. People are increasingly working from home, widening their living options, and millennials are jumping into home shopping after saving money over the last year.
Many potential sellers, though, are keeping their houses off the market, slashing available inventories out of a fear they might not be able to afford a replacement home after they sell.
Ulrich said the resulting pinch has also pushed house hunters out to once-rural communities in southern Utah County and Tooele County. He estimated the Wasatch Front now has enough available homes to met roughly two weeks of current demand, down from three to four months’ supply a few years ago.
Other key data points illustrate the squeeze:
• Active listings for homes have dropped by between 11% and 32% across the region in just a year.
• The average Wasatch Front home listing now stays on the market between four and five days before going under contract, down from 28 days a year ago.
• Realtors say that getting 30 offers on a home is all but standard these days, usually well above the price listed. Several reported desperate buyers offering up to $100,000 above asking price in their initial bids.
• Cash buyers make up the largest share of home total purchases since 2010, according to new research, accounting for as many as 18.5% of all transactions, according to new research, up from 12% a year ago.
• The dearth of single-family homes appears to be pushing higher demand onto condominiums and town houses, which saw both notable sales gains and price increases at the start of 2021.
If you’re hoping to be a first-time buyer, the picture is especially bleak in light of estimates that Utah lacks at least 50,000 moderately priced homes and rentals statewide after years of rising building costs and shrinking land supplies.
“We’ve never seen inventories like this,” said Jaren Davis, executive officer of the Salt Lake Homebuilders Association. Ramped-up new construction could “provide a safety valve with more supply,” Davis added, “but we’ve got to go all-out, full throttle.”
In Salt Lake County, single-family sales fell 1.4% last quarter even as the state’s economy continued to add employment in key sectors. At the same time, according to the board’s latest report, the median sales price in the county leapt 17% compared to the same time last year, to $468,000.
For comparison, that median price was at $378,000 at the close of 2019. Prices shot up in all but one of Salt Lake County’s ZIP codes, too, for an average increase of 23% year over year.
That same pattern boomeranged more dramatically in surrounding counties, with sales declines of 3.7% in Tooele County and 6.9% in Utah County and bigger drops of 16.4% and 18.4% in Davis and Weber counties, respectively — all attended by big price increases.
Median sales prices as of the end of March were at up 20% to $450,000 in Utah County. In Weber County, the gain was 23.2% to a price of $340,000. Davis County’s median price rose 21% to $430,000. And in Tooele County — once viewed by many as a place to find bargains — that median was at $360,000, up 17.8%.
Prices were typically lower by region for condos and town houses, though they are also surging compared to prior years. In Salt Lake County, the median price on those homes was $335,000 last quarter, while it had risen to $307,000 in Davis County, $291,812 in Utah County, $281,647 in Tooele County and $271,000 in Weber County.
A top real estate analyst with the University of Utah’s Kem C. Gardner Policy Institute said Tuesday the trends of heightened housing demand and price rises is likely to hold both in Utah and nationally for several years, as the U.S. economy continues to rebound from its pandemic-related downturn.
“We’ve had a recession and now we’re in a recovery phase, with jobs coming back,” said economist and senior research fellow Dejan Eskic, “Why would housing prices go down?”