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As a Utah realtor, it's essential to stay up-to-date on the latest trends and statistics within the real estate market. This blog post takes a dive into the Quarter 2 2023 real estate market in Utah, comparing it to the rest of the United States. From appreciation rates to inflation and median home prices, this article covers everything you need to know about this dynamic and ever-evolving industry.
U.S. vs. Utah Home Prices
The U.S. median home price is now $410,000, which is 12% above what is considered the healthy stable growth trendline of 4%. Utah's median home price hit $510,000, which is 67% above the state's trend line.
Utah out-appreciated almost every other real estate market in the last 3 years, and the lack of inventory nationwide, especially in Utah, makes it hard to fall below that long-term average growth of 4% appreciation.
Where new homeowners and potential buyers are feeling the effects of rapid interest rate increase and appreciation the most , is in their monthly home payments. In Utah in 2021, the median monthly payment of those buyers putting 20% down was $1,537 a month with interest rates hovering around 3%. With rates increasing to nearly 7%, the average monthly home payment in Utah in June 2023 is $3,125.
Appreciation
While the U.S. housing market is seeing stagnant appreciation overall in 2023, the extreme and quick growth the Utah housing market saw has led to a 7.9% depreciation from last year. While many sellers may see that as a sign to reconsider selling, the effects of 25.7% appreciation in 2021 and 13.3% in 2022 can't be understated. Unless you bought within the last 2 years, you're probably sitting on a large amount of equity regardless of this year's slight depreciation.
New Construction Shortage
The infographic above shows a county by county look at the housing shortage we are projected to see over the next decade. Being underbuilt for 15 years, having 2.8 months of inventory (still considered a strong sellers market), and having fewer homes hit the market, Utah is expected to see home prices continue to appreciate as the state continues to grow.
Market Indicators
Utah is now seeing homes remain on the market for an average of 57 days...more than twice as long as the 2021 Days on Market count of 23. This is giving buyers a chance to breath...buyers are reporting less buyer's remorse and are feeling more confident in their home purchase decision. Buyer's are also seeing fewer multiple offer situations.
Mortgage Rates
The Fed kept rates unnaturally low throughout the pandemic, allowing for many first-time home buyers to enter the market despite breakneck appreciation and buyer competition. As quickly as this frenzied the market, the Fed's attempt to curtail inflation by raising interest rates seems even quicker. This is why rates feel so "high" despite still being under historical 30-year averages. However, buyer's should note that there are no projected rate decreases this year, with another increase is assumed to happen. While this rate hike has flatlined prices and stalled some buyers for now, the market is projected to rebound as buyers realize this may be the new normal.
Foreclosures and Affordability
While foreclosures are up 185% from 2 years ago, the reason isn't because of a sudden influx in homeowners unable to pay their mortgage like in 2008. Government moratoriums halted many would-be foreclosures during the pandemic in an attempt to keep people in their homes with the uncertainty of a world health crisis. Foreclosures that have been stalled for years are now coming to fruition, which is skewing the data. Many homeowners were able to refinance to a low mortgage rate or sell if necessary to avoid foreclosure.
The Yearly Housing Affordability Index HAI ratio indicates whether the median household income is sufficient to purchase the median-priced home in a certain area. A score of 100 indicated that the median household income is just enough, while a score less than that means homes are less affordable and a score higher than that indicates more affordability. While in the U.S. overall, the HAI ratio of 99.5 indicates that the median household income is just sufficient...it is not the case in Utah. Utah's score of 71.0 indicates that more than the median household income is needed to purchase a median-priced home in the state.
Rent in Utah
The Salt Lake County average rent jumped 24.75% last year to $1,623 a month.
In the last 5 years, Salt Lake County has seen a 40.8% increase in rent.
Why does it pay to own vs. rent? With SLC averaging a rent of over $2,000 a month for a 3-bedroom property, renting may be costing you more than you think. The graph above shows that if you were to own a home for 11 years, you would have about $234,124 in equity at the end of that period. If you rent for 11 years and invest all of the money you are saving in monthly payments, etc. that would be higher if you were to own, you would have approximately $106,229. If you rent and only invest 10% of that difference, you would end up with approximately $66,418. When looking at the data, it pays to own.
Inflation and the Economy
The infographic above puts affordability in perspective. While comparing inflation from 1989 to 2023, you can see that housing prices increased 77.49% while wages only increased 19.34%. This slow-forming but now significant discrepancy is what a lot of buyers are feeling right now.
Utah at a Glance
Utah has seen a healthy economy that is consistently under the country's yearly unemployment numbers, coming in last year at 2.1%. The state also boasts other accolades like the 3rd highest labor force participation rate, 2nd lowest poverty rate in the country, and 4th highest median household income.
What Home Improvement Projects Will Net You the Most?
So what does all of this mean? A lot of this data speaks to the pain points many buyers are experiencing right now, increasing interest rates, homes that have appreciated rapidly, inflation and affordability issues. However, it also shows us that rent is on the rise as well, Utah is expected to continue to grow (double in size actually by 2050), and that home prices are not projected to fall anytime soon...As a buyer, if you are only looking to make Utah your home for a few years, it may not be the best time to buy here. But if you think you'll stay here a while, it is a great time for Utah buyers to enter the homeowner market. We can help most buyers through creative lending solutions; willingness to compromise on some things like location, home size, or condition; or buyer assistance programs like first-time homebuyer grants or state-run down payment assistance programs.
For sellers, despite a slight dip in median home prices this year, most likely there is still a large amount of equity in your home. Inventory remains low, days on market remain below historical averages, and we are still seeing a seller's market in Utah. Homes priced within market value are seeing buyer competition, so if you want to know what your home is worth or find out what services I provide for me sellers, give me a call!
Find Your Utah Home with Angie Clarke and UT Makes Moves / Keller Williams Realty
If you are looking for the right Utah home, then give Angie Clarke with UT Makes Moves a call. I aim to offer an exceptional relocation experience and unparalleled customer service through prompt communication, ethics and integrity, and the utmost care / concern for my clients!
Angie Clarke with UT Makes Moves is your local Salt Lake City home expert, specializing in working with buyers who are relocating to Utah. Whether you are buying or selling, I'd love the opportunity to make your relocation journey smooth and successful...I strive to provide Relocation Elevated: easing minds, building community, and finding home.
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