Across the country, signs abound almost everywhere that the housing market crisis may officially be over. Big homebuilders are reporting solid earnings. Retail giants Home Depot and Lowe’s are seeing all-time high profits for renovations. Likewise, business is booming for paint maker Sherwin-Williams, mattress company Tempur Sealy, and appliance king Whirlpool. How long can this last? The last time we saw numbers like this was back in 2007, and we all know how that turned out. In all likelihood, the housing market is not going to crash. But, we must consider these numbers with a grain of salt. Mortgage rates have begun to rise and the Federal Reserve will most likely start to hike interest rates even higher. If this happens we will most likely see a slow down in home sales. In markets that have close economic ties to the energy industry, the drop in oil prices could hurt the demand for housing. Despite an improving job market, many younger adults are either renting or living at home for longer periods of time rather than buying a home of their own. If mortgage rates continue to increase, expect rental numbers to skyrocket even further. So, what does this mean for the Utah housing market?
You can compare this year’s figures to the 2014 Utah housing market here. Utah real estate is currently one of the hottest housing markets in the nation, and this is because Utah has bounced back from the recession quicker than most states. While other states prior to 2008 had a loose credit approval process the Utah housing market had more speculation and a more modest price increase in property values. Because of this there was less of a decline in housing market numbers compared to the rest of the nation, and therefore Utah has recovered faster. Couple this with the strength of the state’s economy and the 2015 housing market in Utah is stronger than many more popular areas of the United States. But finding a house to buy in the Utah is not exactly easy. While housing construction has increased there is still less supply than demand. Because demand is high the state is also seeing a trend in higher-density residential construction. Communities are being designed specifically for walkers and cyclists while also intermingling townhome options with larger single-family residences. This helps make the housing more affordable and doesn’t put as much stress on infrastructure. This results in savings and future upkeep prices for cities while also helping the housing market to grow.
One silver lining is that since the last market crash banks have tightened up credit lines and lenders are in much better fiscal shape. This means that if the 2015 housing market in Utah does suddenly go south the state will (once again be in a good position to withstand the fallout. And according to rental websites like ApartmentList.com and Craigslist Utah rental prices are steadily rising. As these rates get closer to mortgage rates homeownership may become more appealing for some. For these reasons CEO of the Utah Central Association of Realtors Taylor Oldroyd’s housing market predictions for the foreseeable future is optimistic. “Homeownership offers immediate benefits and long-term value. Their home is a save haven for their families as well as for investment.” And statistics back up his forecast. So far this year sales have reached well over 2,500, up nearly 20% from a year ago.
Salt Lake City, Temple Square Christmas Lights by Micah Sheldon
Factors Influencing the 2015 Utah Housing Market
- Zillow has the Home Value Index for Utah at $214,800. This is a 4% increase in the past year and the forecast for the upcoming year has the Utah housing market Home Value Index increasing another 4.8%.
- Median rental prices in the state are approximately $1,235.
- The percentage of delinquent mortgages is 2.4%, less than the national average of 6%.
- Median list price for homes is $259,000. While homes aren’t selling for this price homeowners feel comfortable putting out a large number without discouraging buyers.
- As of July of this year homes spent an average of 82 days listed.
- Utah has an 8.8/10 Market Health Index rate. This illustrates that the current health of the state’s housing market is extremely healthy in relation to other markets around the country. This index takes into account past and projected evolution of home values, foreclosures, negative equity, mortgage delinquency, and the speed in which a home sells in relation to past data for the same market.
Best Places to Live in Utah
Salt Lake City UT real estate is perhaps most representative of the health of the state’s housing market. The median home value is relatively high, coming in at $234,100. This is a 4.3% increase in the past year, and it is forecasted to increase another 5% in the next year. What’s most surprising is according to Zillow Salt Lake City UT only has a mortgage delinquency rate of 1.5%. This is one-fourth the national average and nearly a whole percentage point lower than the state average. There are several factors influencing the market in Salt Lake. According to the Salt Lake Tribune, in the prestigious Park City area high-end homes are seeing more listings move recently via auction. This is creating a sense of urgency that normal realtor listings can’t match. It also gives an immediate home value index. “It’s no different than a person that sells a Van Gogh at auction. They immediately find the market value of that property,” says real estate auctioneer Daniel DeCaro.
The capital of Utah Salt Lake City is the state’s most populous city and demand is high. On Trulia Salt Lake City currently only has 787 resale and new home listings. The reason for such high demand is that Salt Lake City serves as a cultural hub for the region. The city is littered with museums, performing arts venues, and a vibrant festival scene. Several corporations have also come to call the city home due to its geographically centered location and international airport.
Provo is on the southern outskirts of Salt Lake City and therefore enjoys some of the perks of the capital. Because it is home to Brigham Young University it is also a draw for a more youthful demographic. But it’s the state’s economy that has helped fuel the market. In 2013 Forbes Magazine ranked Provo as the #2 city of Best Places for Business and Culture. As a result the Provo UT real estate market has a respectable Home Value Index of $195,100. This market has seen incredible growth recently, increasing 6.7% in the past year, and the 1-year forecast has the market increasing nearly another 5% in the upcoming year. Mortgage delinquency in the city is almost a whole percentage lower than the state average at 1.5% further proof that the economy is strong. Rent prices in Provo average around $1,190 due to a high demand.
Sandy is a suburban community located in Salt Lake County. It is a sought after family friendly area that has become known for its retail and dining options. Sandy UT real estate averages a Home Value Index of $257,100. Sandy hasn’t seen tremendous growth compared to other markets in the state, but forecasts have the home values increasing 5.1% in the next year. Rental prices are actually averaging higher than Salt Lake City with prices around $1,645. Median list price is a whopping $319,000 and is dominated by larger single-family homes.
The city of Ogden is located just to the north of Salt Lake City. Although it is close to the expensive capital housing market, Ogden UT real estate is one of the most affordable areas. The Home Value Index for Ogden is only $121,100, but this has increased 7.2% in the past year and forecasts have this increasing by another 5.3% within the next year. Median rent price in the Ogden market is only $972, and like the rest of the state mortgage delinquency is low. Like Provo Ogden’s strength is its economy. Several large employers including government offices and Weber State University help Ogden serve as an economic hub for the northern part of Utah.
The growth rate for home values is the slowest in the St George UT real estate market. In the past year it has only seen a growth of 2.3% and the 1-year forecast for the state is 2.6%, both well below the state average. Prior to the recession St. George was one of the fastest growing metropolitan areas in the country. Although the numbers are lagging behind the rest of the state the increase is nothing to balk at, as it is an increase nonetheless. The city owes a large portion of its economy to the tourism industry. Located on the southern border of Utah it is only 118 miles northeast of Las Vegas and it is home to several state parks.
Located just to the north of Provo is the Orem UT real estate market. Orem’s moniker is “Family City USA,” and Forbes has named the city the 5th Best Place to Raise a Family in 2010. Orem continues to have a strong local economy boosted by a wide variety of stores and businesses. Because of this the housing market is steady and healthy. Orem has a Home Value Index of $200,500, a 4.8% increase in the last year, and projections have this increasing another 4% in the next year. Median rent is $1,250, slightly higher than the state average due to high demand. Mortgage delinquency is on par with the rest of the state, hovering on the lower side of 2%. Popular places in Orem like Midtown 360 and University Place is seeing a large influx of mixed-use development where residential is coupled with commercial space.