SALT LAKE CITY, Utah — The cost of living and Utah housing is likely to rise to new records, especially in the Salt Lake City metro area.
The median sales price for a single-family home is expected to rise 5%, reaching a $400,000 sticker price for the first time. Median prices for condos and town houses are expected to climb 10%, reaching $300,000 by next year. This is all according to James Wood, Ivory-Boyer senior fellow and the Kem C. Gardner Policy Institute.
“A lot of people don’t have much choice in the housing market,” Wood said to KSL.com. “The alternatives are pretty limited, particularly if you’re moderate income.”
The single-family home median sale price in Salt Lake County last year was roughly $380,000, Wood said. That’s a 91% increase from 2011: when prices ended their decline following the Great Recession.
Utah housing prices have jumped 67% statewide over the last seven years — a significant jump, Wood said.
“Since the end of the Great Recession, a shift has been underway in housing demand,” Wood said in a report presented to the Salt Lake Board of Realtors Friday at its annual Housing Forecast Breakfast. “This shift reflects the homebuyer’s preference and need for more affordable housing.”
Changing demographics, a strong job market, a robust economy — they’ve all contributed to the rise in housing costs, according to Wood. This significant rise is affecting housing affordability across Utah.
2019 saw the third straight year of double-digit increases, with the median sales price of a condo/town house rising 10.6% last year, according to Wood’s report.
Since 2012, median sales prices have climbed at an average annual rate of 9.7%. Since the Great Recession ended, prices for condos and town homes have risen faster than single-family homes, according to Wood.
Home sales in Salt Lake County are expected to reach 18,000 units, Wood predicts. This number is made up of roughly 13,000 single-family homes and 5,000 condos/town homes.
However, the price increase is expected to continue.
“Economic growth, demographic growth and on the cost side with land, it’s just inevitable. You’re going to get a lot of upward pressure on prices,” Wood said to KSL.com. “There’s no way to avoid it.”
To get ahead of the housing affordability issue, which is becoming more apparent in Utah, Wood said some home developers are turning toward selling more affordable products. This means selling property in outlying locations where the land is less expensive.
“Those are in (places like) Saratoga Springs, Eagle Mountain and Lehi,” he said. “These are very small lots — they’re detached, but there’s only a few feet between each home.”
This kind of development is also taking place in counties like western Davis and Weber.
Wood said those on the inside of the housing market should expect to build a lot of equity in 2020. But for those on the outside looking in, getting into the housing market is becoming more challenging.
The rising housing costs don’t just affect home owners, he said — it also makes it more expensive for those looking to rent who can’t find something within their budget.
”So the people who aren’t in the homeownership market just get left behind. It’s painful,” he said. “(There are) millennials (with) graduate degrees, professionals, and one of the problems is they want to live in Salt Lake City and even Rose Park is pretty expensive, so they just get discouraged. It’s tough. It’s really tough.”
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