Rising interest rates put homes out of reach for 2 of 3 Utah families
SALT LAKE CITY — As interest rates are expected to begin rising this week, more and more Utah families are watching their dream of owning a home fade.
As the nation’s average 30-year fixed mortgage rate has risen closer to 4%, a striking 67% of Utah households are being “priced out” of the state’s median-priced home, according to the calculations of Dejan Eskic, a senior research fellow at the University of Utah’s Kem C. Gardner Policy Institute who specializes in housing research.
“It’s bad,” he told Deseret News on Wednesday. “Typically when we see rates rise we do see a slowdown in demand. We see a slowdown in price. Sometimes the price actually falls,” Eskic said.
But in today’s market, don’t expect home prices to fall, he said.
Utah’s median-priced, single-family home was $512,000 statewide in the fourth quarter of 2021, according to the National Association of Realtors.
In January 2022, about 3,051 homes were sold in Utah, down 7.2% from the last January, according to a report published by the Utah Association of REALTORS.
‘Ropes of sand’
Utah real-estate agent Michael McPhie joined KSL NewsRadio’s Dave Noriega and Debbie Dujanovic to discuss what rising interest rates mean for homebuyers and homeowners.
Citing a Board of Realtors report, Debbie said, “The income required to buy a median-priced home in Salt Lake County — ready for this? — $58,000 seven years ago. Now it is over $101,000, ” adding the report states that “Utah is the only state since 1900 or homeownership the homeownership rate has fallen below 60%.”
“What that tells me is what you could afford on one salary, you now have to have two salaries in the home to afford one,” Dave replied.
“It feels as though our kids are going to be grasping at ropes of sand to get that home,” Debbie said.
More homes being built to ease demand
McPhie said it’s a tough market for homebuyers but also for renters.
“Renters are obviously having a hard time transitioning. About three quarters of renters are priced out,” he said.
McPhie said the good news is new homes are being constructed to help alleviate the supply problem, but “not nearly enough.”
To buy a home today in Utah “is there anything folks can do or is it just suck it up and pay what it costs?” Dave asked.
“I hate to do a shameless plug, but I’ve had to resort to really starting to contribute some of our commission towards our clients to help them cover closing costs,” McPhie said. “We’re having to get really creative with our buyers to get their offers accepted.”
‘Perfect storm’ in Utah real-estate market
“Is there any silver lining at all?” Debbie asked.
McPhie again mentioned new home construction adding to the needed supply of housing units.
“We’re still going to see double-digit home appreciation this year. I don’t really see that changing. I mean Utah’s was kind of a perfect storm here as far as good economy, decent wages and great to come here and grow a business,” he said. “All those things combined with the influx of out-of-state traffic is just really putting super-high pressure on.”
Dave & Dujanovic can be heard weekdays from 9 a.m. to noon. on KSL NewsRadio. Users can find the show on the KSL NewsRadio website and app, as well as Apple Podcasts and Google Play.