If you've been in the process of buying or selling a home this past year or even considering it, you probably know it's remained a seller's market. Utah's inventory of homes available on the market has been low, generating more demand than the Utah real estate market can supply. And when you consider the current low interest rates, which makes it an excellent time for buyers to get more home for their mortgage dollar, then you've got a marketplace which buyers have been competing for every home for sale.
The result of Utah's diminishing land supply is that land prices go up, which in turn pushes housing costs up. And because of Utah's mountains, when someone wishes to go farther out to find more affordable housing, they’re going to wind up in the next valley over. This means a lengthy commute, with implications for family budgets, infrastructure needs, congestion, and air quality.
According to Utah Economist, Natalie Gochnour, "It really comes down to proximity and land availability...Right now, there are about 230,000 acres of developable land in Utah County while Salt Lake County is down to 30,000 to 40,000 acres. When businesses and residents locate to Utah County, they get the less expensive housing and commercial real estate."
State’s Population Grew 14.4 Percent
Over the past eight years, the state’s population grew 14.4 percent, which is faster than any other state, according to Census Bureau population estimates. And that’s increasing due to migration, which added 43 percent to the state’s growth between 2015 and 2018, compared to 16 percent in the previous four-year period. The state capital is drawing praises as a “boomtown” and Salt Lake County had the state’s largest numerical population increase in 2018.
However, for the first time in forty years, Utah is facing a housing shortage of 54,000 units, according to the Salt Lake Chamber, the state’s largest business association. Families around or below the median income — often including teachers, nurses or firefighters — are disproportionately vulnerable.
All of the employment possibilities in our state are proving to be incentives for out-of-state "transplants" or newly graduated college students to make Utah their new residence. Utah's increase in demand for real estate housing is showing to be a significant factor for the sustained increase in property values. Utah's unemployment rate registered at 3 percent — the lowest rate in Utah since early 2008 just before the Great Recession.
Explosion in Utah's Economy
One of the main elements causing the explosion in Utah's economy is the abundance of out-of-state professionals relocating to the state. Especially when you consider how many of these new residents are used to California or Arizona housing prices. Recognizing how a home with comparable size and benefit in the other states can fetch two or three times more dollar versus what can be found here in Utah. Considering this comparison, it makes stands to reason why families are looking to make the move.
Caused by the strong buyer demand and lack of new construction inventory coming on the market, Utah housing is still seeing healthy appreciation across the board. With the number of new residents, new jobs, and quality of life, Utah is likely to remain one of the strongest economies in the country.
Finally, confidence plays a vital role in whether home-buyers are willing to purchase a home. Although confidence may be down in some cases, Utah actually has one of the most promising markets in the nation, which bodes favorably for the future of Utah's economy. In fact, surveys administered by the Joint Center for Housing Studies show that people still believe homeownership is a safe investment and want to be homeowners.