With Soaring Prices, Is Utah’s Housing Market Overvalued?
May 27, 2022
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Utah is among the states leading in real estate. According to a study held by Florida Atlantic University, experts deduced that housing in Utah is overpriced as prices continue to soar. During the first quarter of this year, housing costs have doubled across the Wasatch front compared to the year before. Real estate in the state has become unaffordable for many individuals, leaving many wondering will the Utah housing market crash or will it continue to rise? Some of the reasons affecting real estate in Utah include:
1. Increase in Demand
Demand for real estate is rising because of the demographic growth of buyers. During the COVID-19 pandemic lockdown, many institutions profited by having their staff work from home, deciding to make it permanent. Working from home enabled many Americans to reside anywhere they wanted, resulting in the migration of individuals from ineffectively run states with high taxes. Low mortgage interest rates combined with the effects of COVID-19 made it simple for individuals to migrate to more desirable areas like Utah.
The resistance to high-density housing and lack of land has made it difficult to build more homes. The cost of building a house has also skyrocketed, resulting in high buying prices for homeowners. Data recorded by the Salt Lake Board of Realtors shows that all counties across the Wasatch front (Utah, Davies, Salt Lake, Weber, and Tooele) have experienced an increase in real estate prices during the initial three months of the year to prior years.
2. Low Resale Inventory
Home availability is one of the factors influencing the real estate industry. Homeowners seek to optimize the transaction timing to improve the financial outcome available for their families. Low resale inventory benefits sellers since there are minimal houses to sell compared to ordinary trends. This problem is solved by developing new real estate in the area since selling owned real estate to another person doesn’t create inventory. With high demographic growth and low resale inventory in Utah, prices have significantly risen.
3. High Lumber Prices
Over the past year, the price of lumber in Utah has risen by over 400%. A lumber industry facing difficulties since the 2008 housing crisis and great recession is further forced to shut down and reduce its staff under strict guidelines provided by the government to curb the COVID-19 pandemic. With many people buying and renovating houses in Utah after the challenges brought about by the pandemic, timber prices have risen compared to previous years.
Endnote
Utah has a one-month supply of homes available to be purchased. A solid real estate market should have a six-month supply. If you are relocating to Utah and planning to purchase a home, this is what you ought to expect. You may find yourself in multiple proposition situations; you should give a proposal over the asking price to have the edge over the competition.