2020 marks the ninth year of Utah’s economic expansion. And with it comes a lot of benefits, like near record-low unemployment and more economic opportunity, according to James Wood, a senior fellow at the University of Utah’s Kem C. Gardner Policy Institute.
Speaking at the Salt Lake Board of Realtors annual housing forecast on Friday, Wood said it’s also been great for Utah’s realtors and homeowners. They’ve seen housing prices increase by 67% over the last seven years, which in 2019 alone, gave homeowners $6 million more in equity — roughly $25,000 for the average household, he said.
But for anyone on the outside looking in, buying a house will only get tougher in 2020. Wood said that in the nearly five decades he’s studied housing markets, this one is the most unaffordable he’s ever seen.
“Many households can’t even get into the rental market,” he said.
The challenges have a lot to do with lingering effects of the recession, when homebuilding slowed and incomes fell.
And while Utah’s housing construction has been consistently high over the past four years — including a record number of apartments built in 2019 — it hasn’t been enough to keep up with the growing population, Wood said.
It’s also meant shifting trends in the market. Utah, like other parts of the country, is seeing a move towards higher-density housing, which includes those additional apartments but also extends to single-family homes. Wood said more houses now are built on smaller lots, with little room between them.
He said households in Utah are also getting crowded. More young people are living with their parents for longer and more homeowners are taking on renters.
Chris Herbert, managing director of the Joint Center for Housing Studies at Harvard, also spoke at the event. He said a lot of what is happening in Utah is happening nationwide. But in some ways, the trends are accelerated here.
The impact of the recession was slower in Utah than in the rest of the country, but Herbert said as the economy rebounds the state’s housing prices have risen much faster. So even though interest rates are expected to remain low at least through the next year, hopeful buyers will still have to come up with bigger down payments.
“I think the big story in Utah is not so much whether you can afford the mortgage payment, but where you’re coming up with the cash,” he said.
Herbert said he thinks there should be more policies to help people with down payments, through incentives like a publicly-funded match-savings program. And those who are able to buy their first house, will be able to see the benefits of the continually rising prices.
Jon Reed is a reporter for KUER. Follow him on Twitter @reedathonjon