Salt Lake housing market bouncing back after demand dropped to 2nd worst in the nation
National numbers Friday show rebound across the country after pandemic-related slump in spring
SALT LAKE CITY — After being among the hottest metro housing markets in the nation prior to the coronavirus outbreak, the Salt Lake City area became one of the areas most hurt by the pandemic.
But the pain didn’t last for long, local real estate agents are finding. And national sales numbers released Friday showed sales of new homes rose a sharp 13.8% in June, the second straight increase after two months when sales plunged as the country went into lockdown because of the coronavirus.
Clever Real Estate, based in St. Louis, Missouri, recently reported that the U.S. housing market took a significant hit when COVID-19 cases began to surge across the country and related shutdowns derailed the economy. The company examined national housing market trends in relation to buyer demand and took a deep dive into how large metropolitan areas fared by creating a Housing Demand Metric for 50 major metro areas.
Results showed Salt Lake City as having the second worst decline in housing demand into June.
“We found that Salt Lake City was one of the cities that kind of dropped off and then kind of had steady buyer demand throughout the initial coronavirus lockdown, and then we’ve seen a pretty sharp decrease just since May in buyer demand overall,” according to Clever Real Estate data scientist Francesca Ortegren.
The metric looked at median number of days on the market, percentage of active listings on the market under two weeks and contract ratio — the number of pending sales out of all active listings.
National analyses identified the low point of buyer demand during the pandemic as the week of April 6, Ortegren said. The low point date was used for comparison with the more-recent trends based on the latest available data from June 15.
“It could mean the buyers are pulling back a little bit, which could be a result of this seeming second wave of coronavirus outbreaks or it could mean that more sellers are putting their home on the market,” she said.
Despite that drop in buyer demand, Ortegren said the Salt Lake housing market is still pretty strong compared to many other large metros.
“More recently, Salt Lake City has dropped a little bit lower than national (demand) averages, but typically it’s really high,” she noted. “Prior to May, the buyer demand was two to three standard deviations above what we saw nationally, which is really indicative of people interested in purchasing. So I think the drop is probably temporary as we move through these uncertain times.”
Alicia Holdaway, president of the board of directors for the Salt Lake Boards of Realtors, said recent activity in the market shows the downturn was short-lived.
“The number of sales was down in April and May as I think it was nationwide,” Holdaway said. “But in June, our sales were actually up 5%. And so far in July, our under-contracts are significantly higher than in 2019 in July.”
The Salt Lake board reported a decrease in home sales of 0.8% in March compared to the previous March 2019. The year-over-year declines were much worse in April and May — down 27% and 24%, respectively — before rebounding as the state relaxed some pandemic-related restrictions.
Acknowledging that springtime is typically the period when more properties go on the market and buyers begin in earnest to look to purchase a home, Holdaway said this year was a little different because of COVID-19 but the market is beginning to regain its footing.
“We’re experiencing the spring market that didn’t happen in April in May,” she said. “We’re experiencing it now in June and July.”
Prior to the outbreak, Utah had one of the hottest housing markets in the region, with many properties receiving several bids and buyers frequently paying more than the seller’s asking price, she said. Now, the market is picking up where it has left off, she added.
“We only had 60 days of lower sales and it bounced right back and with a vengeance, frankly,” Holdaway said. “We’re dealing with multiple offers on almost every single property right now.”
Ortegren said buyer demand should be steady as long as there is not a widespread, intense lockdown or a rampant rise in COVID-19 cases. She expects a similar phenomenon throughout the country, barring an unforeseen issue.
Ortegren said despite the drop in demand, Salt Lake metro housing prices have increased during the outbreak.
“An example is the median listing price is actually higher now than it was in April by nearly $30,000, so homes are still selling and they’re selling for more,” she said. “Another indication is that there are fewer price drops on active listings, so people who are selling their homes don’t feel like they need to drop their listing price in order to get it sold, which is also indicative of a decent buyer demand in the area.”
Meanwhile, Ortegren said demand in many of the 50 metros has been affected by numerous factors, including the stability of property values and individual employment.
“A lot of people’s biggest concerns are with the value of their homes. If they own a home now, they’re worried that prices are going to drop and they’re going to lose equity in their home,” she said. “People who are purchasing or planning to purchase a home, they’re worried about job security and continued income.”
The Commerce Department reported Friday that the June gain pushed sales of new homes to a seasonally adjusted annual rate of 776,000, a better-than-expected performance. The increase follows a 19.4% jump in May.
The two months of sales gains followed two months of sharp declines in sales in March and April as much of the country went into lockdown.
A separate report Wednesday showed sales of previously owned homes surged 20.7% in June to a seasonally adjusted annual rate of 4.72 million. Even with the gain, which followed three months of declines, new home sales remain roughly 20% below pre-pandemic levels.
In June, sales were up in all parts of the country with the biggest gain coming in the Northeast, a surge of 89.7%. Sales rose 18% in the West, 10.5% in the Midwest and 7.2% in the South.
Contributing: Associated Press
Metro areas with largest increases in demand
- Albany, New York.
- Houston, Texas.
- Harrisburg, Pennsylvania.
- Dallas-Fort Worth, Texas.
- New Orleans, Louisiana.
- Detroit, Michigan.
- Washington, D.C.
- Cleveland, Ohio.
- Nashville, Tennessee.
- Philadelphia, Pennsylvania.
Metros with biggest drops in demand
- Tulsa, Oklahoma.
- Salt Lake City.
- Tucson, Arizona.
- Virginia Beach, Virginia.
- Cincinnati, Ohio.
- Jacksonville, Florida.
- Kansas City, Missouri.
- Knoxville, Tennessee.
- Little Rock, Arkansas.
- Boise, Idaho.
Source: Clever Real Estate