There’s no question that Utah’s housing market is a seller’s market right now. Rising prices are causing some concern among buyers and is a hot topic. It also means more and more residents are spending more than the recommended 30% of their income on housing.
What makes housing expensive right now?
An unanticipated consequence of the pandemic is a booming housing market. With record low rates and a lack of inventory, prices continue to rise. The state has also seen a huge increase in population in the last decade and ranks number one in the nation for growth, putting a strain on the low inventory.
Utah’s economy is another factor attracting many people from out of state. With so many people moving in, the lack of inventory is more visible than ever and is driving prices up. The median sales price has risen 16% year over year and in February 2021, the average sales price was $504,060.
High density housing
As more first-time buyers enter the market, finding affordable housing is an increasingly concerning problem. The dwindling availability of land has created a challenge for builders. One way developers have addressed the need for affordable housing is to build more high density housing. Some current homeowners fear this will affect their housing prices, but recent studies show this isn’t the case.
The study shows that homes located within half a mile of newly constructed apartments or other high density housing saw an overall appreciation of home value. As developers work with local communities to provide much needed housing, more buyers will be able to afford housing. Many first time home buyers will be purchasing townhomes as opposed to single family homes.
Utah Housing Market Trends
What does this mean for Utah residents? Residential housing is booming and as more people move to the state and are able to put cash offers down, prices will continue to rise. There is definitely an imbalance between supply and demand.
Bankrate puts Utah first in the nation in their Housing Heat Index in the fourth quarter of 2020 and expects the market to continue to rank first this year. Housing prices are expected to continue to rise at a double digit rate in 2021. Homes will continue to sell quickly making it difficult for first time buyers to purchase. Bidding wars are likely to continue as well.
Another expected consequence of increasing home prices is the need for more families to have dual income. It will also take more planning and more time for first time buyers to purchase. The best news is if you are in the market to sell a home, you’ll likely sell for above asking price and have multiple offers to consider.
While it is challenging to buy a home in a hot market, with the right agent and a little patience, there’s no reason why you can’t find the right home for your family. Reach out to us with any questions or concerns you have about the current market. We are happy to help!