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Utah’s housing market is cooling off but prices still feel out of reach for many

House for sale sign, Salt Lake City, July 25, 2022
Brian Albers
/
KUER
A house for sale sign in a Salt Lake City neighborhood, July 25, 2022.

When Juan Arce became a real estate agent almost five years ago, homes in Ogden sold for around $250,000. Now, the average price is $450,000.

Utah’s housing market has never been hotter than it was last year. Interest rates were super low, the value of homes was sky high and despite a small supply of houses for sale, it seemed as if everyone wanted to buy.

“The buyers went crazy trying to find properties and offering even [more] money above asking price,” Arce said.

Things have changed since June of 2021. The housing market across the nation has begun to cool down. Most recently, the Federal Reserve raised interest rates again in an effort to curb inflation.

As a result, Arce has witnessed a shift in seller and buyer attitudes.

“Buyers are not offering above asking price,” he said. “Now what I've seen is buyers are asking [sellers] to cover closing costs or repairs, you know, some concessions from the sellers.”

But a slowdown in the housing market doesn’t equate to a crash. Rather, Utah’s housing market is “correcting,” according to Dejan Eskic, a senior research fellow at the Kem C. Gardner Policy Institute who focuses on housing.

House sales in Utah have started to decline, too. Compared to June 2021, the number of houses sold dropped 10%, according to the Utah Association of Realtors. The overall price of a home in Utah is up 17% instead of 28% like it was at one point in 2021.

“The housing market is coming back to reality because there was this frenzy,” he said, “and now we've gone from like 120 miles an hour down to the speed limit.”

There’s also more housing supply available. In the month of June, Eskic said there are about two months worth of vacant dwellings throughout the entire state. That means if no new homes came on the market, the state would be out of inventory in two months.

Both Arce and Eskic don’t foresee homes in Utah falling much below the current price tags. And with interest rates on the rise, it’s even harder for most residents to afford a home.

“Monthly payment increased by about $1,200 bucks,” Eskic said. “And so that increase has now priced out about somewhere between 70 to 77% of Utahns.”

With at least 70% of Utahns unable to pay for homeownership, the state’s rental market is projected to get increasingly pricey Eskic said.

“While I see housing prices coming back down to earth,” Eskic said, “I don't see rents.”

Corrected: July 28, 2022 at 9:33 AM MDT
A sentence on the comparison of average housing prices was removed for clarity.
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