Utah’s hot housing market is unlikely to slow down anytime soon. That’s according to a new report that forecasts a record number of home sales for 2021 in Salt Lake County.
Written by James Wood, with the Kem Gardner Policy Institute, and commissioned by the Salt Lake Board of Realtors, the Housing Forecast Report says a continuation of favorable conditions will likely create another fast-paced year for the local real estate market in 2021.
“Continued historically low interest rates and a strong rebound from the pandemic suggest that 2021 could be another record-breaking year for the Salt Lake County real estate market,” Wood wrote in the report.
With mortgage rates expected to remain around 3% for 2021, Wood predicts single-family sales will increase 4% to 14,000 units in 2021, and condominiums/townhomes will rise 6% to a record 5,500 sales. That’s after an all-time record in sales in 2020.
“ was a really strong year, and, of course, it’s really a reflection of the Fed’s intervention to prevent a serious, deep recession by lowering interest rates,” Wood said in a presentation about the report. “Interest rates dropped almost a point or so, and it brought people into the market.”
The rebound in jobs and employment will support future sales. Even though there will be losses of about 50,000 jobs because of the pandemic, Wood said the losses are less than expected because of the state’s strong rebound. In fact, Utah is No.1 for job growth for the past 10 years and only behind Idaho in the most recent job growth numbers.
“We’ve really been an island over the last 10 years of high growth, almost impervious to anything thrown to us by the national economy, including a pandemic,” Wood said during his presentation.
The forecast for state employment growth in 2021 is 3.8%, which would be an increase of 58,000 jobs — the most ever in a single year.
Population growth and migration from other states could also boost home sales.
“There are lots of anecdotes about in-migrants coming to the state working remotely,” Wood said.
Utah also leads the country in population growth over the past 10 years at about 15%.
For prices, Wood expects the median price of a single-family home in Salt Lake County to increase 6-8% in 2021 to $455,000. For condominiums and townhomes, he expects a gain of 9-10% to $335,000.
That’s in addition to price increases of 11.8% in 2020 for a single-family home. In one year, that’s an increase of around $10 million in equity for homeowners.
Since 2011, the median sales price of a single-family home in Salt Lake County has increased from $199,000 to $425,000. In the last five years alone, prices have gone from $272,900 to $425,000 — a 56% increase in housing prices.
“This is really a boom that we haven’t seen as prolonged as what we’re experiencing now,” Wood said.
Those increases have created a tough situation for first-time buyers who have higher monthly housing payments. It now takes $97,000 to afford the median-priced home in Salt Lake County.
“These increases in prices put a real impediment on those who haven’t had access to the homeowner market,” Wood said in his presentation.
To create more opportunities for homebuyers, builders will need to continue constructing new housing units. In 2020, home builders added more than 30,000 units, which is a new record by almost 10%. In 2021, Wood expects stable residential construction.
To learn more about what’s happening in your housing market and for help navigating the competitive conditions, contact a local Realtor. Find a directory of Utah Realtors at MyRealtorStory.com.