SALT LAKE CITY — For the first time in Salt Lake County, sales of multifamily housing units topped $1 billion in 2017.
Overall housing sales were also among the highest totals in history, a new report stated, even though there was a slight decline in the number of properties sold last year compared to the year before.
The 2018 Salt Lake Housing Forecast showed that 2017 was the third best year for single-family home sales and the biggest ever for multifamily sales. Despite a 3 percent decrease from the previous year, more than 13,200 single-family properties were sold last year. In addition, the median sale price of a single-family house in Salt Lake County climbed 10 percent to $325,000.
Sales of condominiums, town houses and twin homes rose 8 percent for the year, with 4,500 units sold — the most ever, the report stated. The median sales price jumped 11 percent to $225,000, helping to push the total sales value over the $1 billion mark, according to the report commissioned by the Salt Lake Board of Realtors.
Salt Lake City, West Jordan and Sandy topped the list of cities with the most home sales for the year, explained report author Jim Wood, Ivory-Boyer Fellow at the Kem C. Gardner Policy Institute at the University of Utah. He noted that the rise in multifamily sales is a function of increased demand for affordable homeownership options.
"People can get into that market a little bit easier — particularly for first-time buyers," he told an audience of 800 real estate professionals Friday at the Little America Hotel in downtown Salt Lake City. "That's a market that is really hot."
He said that demand for housing has increased significantly over the past several years and that demand will likely continue through 2018. The median sales price for a home in Salt Lake County has risen 50 percent since 2011, from $216,431 to $325,000 today, he noted.
Affordability remains a potential issue for many prospective homebuyers, he warned. Mortgage interest rates are predicted to hover between 4.5 percent and 5 percent for the year, but that would still help maintain a strong housing economy for the area, he said.
"If we can stay below 5 percent, then we'll have another very good market again in 2018," Wood said. Rates below 5 percent would preserve favorable housing affordability for another year, he added.
Wood said the perceived shortage of listings is due mostly to strong demand generated by high rates of net in-migration and employment growth than a dramatic decline in property listings. The number of listings is expected to increase in the second half of 2018 as homebuilders ramp up new home construction, he said. Additionally, the past six years of positive equity buildup produced by higher prices should also move more prospective homeowners into the buying market, he said.
As for the potential for a “bubble” in the current housing market, he said today's situation differs from the pre-recession market in many ways thanks to stricter lending standards instituted following the Great Recession.
"We really do not have a bubble at this point. Conditions are very different," he said. "During the last ‘bubble' it was the first time that we had consecutive years of price declines. We had four years — 16 quarters — of price decline in the Great Recession."
Today, lending requirements by financial institutions are much tighter, household debt has not ballooned and flipping by real estate investors is not as prevalent, he said. Also, the subprime secondary market has been mostly eliminated and memories of falling housing prices would hopefully serve as a check on “irrational exuberance” over prices, he added.
After six straight years of price hikes, strong demand should drive prices up once again, Wood said, but another year of a double-digit increase is unlikely. Prices will probably increase 7 percent to 9 percent in 2018, he said.
"The median sales price of a single-family home will be near $350,000 and the total value of residential sales will be $6.6 billion, well above the $5.9 billion in 2017," he said.