Cost of Living in Utah Makes Homeownership a Challenge
Utah is known for its beautiful natural landscapes, including national parks like Zion, Bryce Canyon, Arches, and Canyonlands, plus skiing trails (thanks to all of the snow it gets every year), the annually anticipated Sundance Film Festival, and plenty of fantastic breweries. But along with this high quality of life comes high prices.
High Homeownership Rates — And Equity
As of January 2022, the average Utah home value stands at $555,263, and the state had the second-highest median price in the Western U.S. as of March, behind Colorado at $574,000. Regionally, prices are even higher, with single-family homes in Salt Lake County reaching $580,000 in February. In fact, Salt Lake City even ranked among the top five out of 51 metropolitan areas in terms of the biggest year-over-year jumps in median sales prices — a 26% increase from $410,000 to $516,759. This broke the previous all-time record for largest price jump of 20.1% all the way back in 1978.
The city also placed highly on the list of cities where houses sit on the market for the shortest amount of time, at 18 days — along with Omaha, Nebraska. This is compared to other metro areas like Nashville (14 days) and Seattle (17 days). It also ranked number two in terms of population growth between 2020 and 2021.
Utah has a fairly high homeownership rate of 69.1%, meaning that current owners are at an advantage when it comes to value and equity increases in recent years, and the average Utah homeowner gained $91,000 in equity in 2021.
“In some parts of our state, we’ve had 30% appreciation,” Dejan Eskic, senior research fellow at the Kem C. Gardner Policy Institute, told KJZZ. Within the last 20 years, the highest appreciating cities are Montezuma Creek, Park City, Moab, Garden City, and Salt Lake City, which represent virtually every region of the state.
However, this growth doesn’t bode as well for first-time buyers.
Aspiring Homeowners Forced to Put Dreams on Hold
“Affordability now is the major issue because the mortgage payments are no longer masked by low rates,” Eskic also told KUTV 2News. “I estimate that approximately 67 percent of Utahans are priced out of the median priced single-family home. Because of this, we see more pressure into entry products like townhomes, pushing up their prices as well.” Prices are expected to continue to rise 10-12% in 2022, and according to local realtors, interest rate hikes and inflation will only make things more difficult for prospective homebuyers.
A recent analysis by ABC4 News found that currently, the average Utah resident would need to save 10% of their annual income for 10–12 years in order to afford a down payment of 10–15% on a home. What’s more, the average college graduate in the state makes just $39,000 per year, so they would need to save for an even longer period of time.
One one hand, the market is becoming less competitive — but this is because buyers are being priced out of the market, and in most cases, first-time buyers aren’t even being considered.
This is a conundrum, as the first-time buyer contingent in Utah is quite high, relative to the rest of the U.S.
“[They] are finally getting their life together and moving out of their parents’ basements. And they’re starting families,” Eskic also remarked. “Nationally, we have roughly 33 million people hitting that first-time homebuyer age of 32,” he said. “In Utah as a share of our population, we have an even greater percentage.”
You should know
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