Utah Housing Market 2023 Report
What is the Utah Housing Market Like?
Like many other housing markets around the country, the Utah housing market has reached new heights during the pandemic as a result of a perfect storm of low inventory, high demand, and interest rates near historic lows. However, as the Federal Reserve Bank started using its economic power to fight back against inflation, which has reached a forty-year high, by increasing interest rates, the Utah housing market is beginning to show signs of a significant slowing down.
Property prices still remain high. According to data collected in September 2022, the latest available at the time of writing, the median sale price for a house in Utah stood at $533,500, representing a 5.6% increase compared to September 2021. However, the sale volume has decreased significantly in the past year, with 3,219 houses sold in September 2021, representing a 26.7% decline in year-over-year comparisons. The number of days on the market had also increased sharply at 39 median D.o.M., compared to 15 the previous year, further indicating that the days when properties were being snatched off the market as soon as they were listed are long gone.
Inventory is on its way up, with 13,795 homes for sale in September 2022, 25,3% more than the previous year. However, this increase in inventory is not due to newly listed homes but properties staying on the market longer, as only 3,764 homes were listed in September 2022, 20% less than the year before.
How does the Utah Housing Market Compare to the National Housing Market?
The Utah housing market is following many of the same patterns observed nationwide. Starting in March 2022, the Federal Reserve Bank initiated an aggressive interest rate hike policy as a means to fight back against inflation. As of November 2022, four consecutive 75 bps increases brought mortgage rates over 7%, reaching their highest level since April 2008 and standing over twice higher as the same time last year.
For the average mortgage, the difference translates into approximately a $1000 difference for a similar home, representing tens of thousands of dollars over the life of the loan. With their buying power significantly diminished, house hunters find themselves priced out of the market or may consider postponing their home-buying plans until interest rates return to a more affordable level. Since Utah house prices are higher than the national average, it should come as no surprise that the demand has gone down noticeably since July 2022. However, despite the increased inventory in the past months, there were only three months of housing supply available in September 2022, still a long shot away from the five to six months required for a balanced market.
Utah Metro Areas with the Hottest Housing Markets
Utah may be the 13th-largest state in the country by area, but it is also the 11th-least densely populated. Roughly two-thirds of the population live in the Wasatch Front in the north-central part of the state, which includes the capital city, Salt Lake City. Here are Utah’s metropolitan areas with the hottest housing markets for volume.
- Salt Lake City
- West Valley City
- West Jordan
Salt Lake City
Salt Lake City is the capital and most populous city of Utah, with a population of 200,133, Salt Lake City housing market is somewhat competitive, with listed properties receiving three offers per listing and 24.5% of them selling above the asking price. The median sale price for a house in Salt Lake City has reached $550,000, increasing by 6.3% compared to the previous year, and the median number of days on the market was 32, compared to 17 in September 2021.
West Valley City
West Valley City is assimilated to a suburb of Salt Lake City, but it is also the second most populous city in the state, with 140,230 residents. Like Salt Lake City, the West Valley City housing market is competitive, with listed properties receiving four offers on average and selling after 41 days on the market. The median sale price for a house in West Valley City was $436,500 in September 2022, representing a 2.9% increase in year-over-year comparisons. 27.7% of homes sold above the asking price.
Like West Valley City, West Jordan is considered to be a suburb of the capital city Salt Lake City. However, it is also the third-most populous city in Utah, with a population of 116,961. The housing market in West Jordan is competitive, with the average listed property receiving five offers and selling within 27 days on the market. 28.7% of homes sold above the asking price, reaching a median sale price of $525,000, which represents a 7.8% increase in the past year.
Higher Mortgage Rates Could Slow Down the Price Growth of Utah
The Utah housing market has been following similar trends as the ones observed nationwide, including a white-hot real estate market characterized by a low inventory and high demand for housing. However, there is no denying that the rapid increase in interest rates, with more likely in the work before inflation reaches a targeted rate of 2%, has significantly affected it. After a peak of the housing market in May 2022, when the Utah median home price reached a record $577,500, Utah house prices have slowly been decreasing, although they remain higher than they were the year prior. We also observe a lengthening of the time spent on the market and a decrease in both new listings and sales, which points towards a general slowing down of the Utah housing market.
Utah home prices remain significantly higher than the national average. Therefore, the impact of increasing interest rates has been felt more in the state than in other parts of the country. As the demand for housing decreases as buyers find themselves priced out of the market by the increasing cost of borrowing money or postpone their homebuying plans to preserve their buying power, we can expect Utah housing prices to stabilize or diminish. Nevertheless, at the time of the writing, the Utah housing market remains a sellers’ market due to the lack of inventory.
Key Market Stats for the Utah Housing Market
According to September 2022 data, some of the key market stats for the Utah housing market appear as follows:
- Median home price: $533,500 – a 5.6% Y.o.Y. increase.
- Home sales: 3,219 – 26.7% less than a year ago.
- Months supply of inventory: 3 – up from 1 in September 2021.
- Mortgage rates as of November 10th, 2022: 7.08%
Utah Historic Price Changes and Affordability
As in many other places across the country, Utah home prices have increased faster than usual in the aftermath of the COVID-19 outbreak. The median home price has increased from $345,000 in September 2019 to $553,500 in September 2022, with a peak of $577,500 in May 2022, representing a staggering 60.43% increase in 36 months, well above the national average.
The Utah housing market benefits from the state’s attractivity, which features a strong economy and job market. However, as the level of Utah housing prices outstripped the national average, the demand is bound to decline as salaries are not increasing nearly as fast as property prices. In addition, inflation and the looming specter of a recession are also taking a toll on Utah residents’ buying power. Therefore, experts expect that Utah home prices will slow down their staggering growth and may decline in some areas.
- The Utah housing market benefitted from the state’s attractivity and the dynamic job market. The past three years have been marked by staggering growth and rapidly increasing Utah home prices.
- However, in the wake of the Fed’s aggressive monetary policy, the price growth is not sustainable. Utah house prices are significantly higher than the national average, and local salaries are not keeping up with the price growth and inflation. Therefore, the Utah housing market is to be expected to slow down.
- At the time of the writing, the Utah housing market remains a sellers’ market as the available inventory is not keeping up with the demand despite an increase in the number of houses for sale and months of housing supply.