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Two housing experts gave different predictions for Utah’s housing market Friday.
Dejan Eskic told a packed ballroom he thinks housing prices will be about the same or as much as 2% lower in a year.
Jim Wood told the crowd gathered at the Little America Hotel in Salt Lake City for the annual Ivory Institute that he thinks homes will cost 3% to 4% more this time next year. The Ivory Institute is an annual look at what Ivory Homes is doing, the Utah housing industry and the state housing market.
Eskic, a senior research fellow at the Kem C. Gardner Policy Institute, and Wood, the institute’s Ivory-Boyer Senior Fellow, also disagreed on what the market would do during the same event last year.
They.were both wrong as housing prices rose about 5% in 2023 — in the middle of their estimates.
Utah’s housing markets are the least affordable they’ve ever been amid a historic run-up in housing demand and interest rates holding at a 22-year high, with the possibility of another hike from the Federal Reserve.
A median price home in Utah is about $490,000, Wood said. Real estate websites put the median price closer to $507,000.
Only 23% of Utah households can afford a median-price home, Ivory Homes CEO Clark Ivory said as part of an introduction to the two-hour event.
He said that number drops to 7.8% when you only consider renter households.
Pricing typically goes down as interest rates rise, Ivory said, but that hasn’t happened in Utah because demand still outstrips the housing supply.
Elevated interest rates are impacting what people pay for housing as well as homebuilders’ credit lines and debt repayment, he said.
Interest rates are key, all three men said, and they should be coming down next year.
Rates won’t go back to pre-hike levels, Ivory said, but they should come down from 7% or higher to a little above 6%.
Financial institutions predict a gradual drop, based on a graph shown during the presentation.
That alleviates a worry Eskic expressed: That a sharp dip in interest rates could result in a spike in home prices.
Instead, Eskic expects housing prices to stay the same or decrease in the next year.
He thinks the market will pivot to offer townhomes and other housing options that are more affordable.
Wood, though, thinks more people moving to Utah and the state’s younger population will induce more demand in a housing market that’s already short on supply.
Both expect less building in the coming year, including a “big pullback” in apartment construction.
(Trent Nelson | The Salt Lake Tribune) Apartments under construction on 900 West in Salt Lake City on Saturday, Sept. 23, 2023.
Wood estimated officials will issue permits for about 20,000 new units in 2024. Eskic is slightly less optimistic with an estimate of 18,000.
Ivory Homes has its own estimate and is predicting 5,700 permits for multifamily housing, 13,300 permits for single-family housing and townhomes.
The homebuilder also expects interest rates to drop to 6.5% by the end of next year and Utah home prices to remain the same while housing prices across the country increase by 2%.
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Megan Banta is The Salt Lake Tribune’s data enterprise reporter, a philanthropically supported position. The Tribune retains control over all editorial decisions.