In wake of 2020 ‘feeding frenzy,’ Utah home sales slow in what may be the ‘calm before a potential storm’

What the latest data reveals about the Wasatch Front’s housing market

The latest housing data shows the median priced home in Utah’s most populated county increased to $550,000 in the third quarter of 2021.

That’s a new high — and a 28% jump from the median price of $430,000 in the same time period from 2020. That means Salt Lake County homebuyers paid an average of $120,000 more than they did a year ago, according to the Salt Lake Board of Realtors.

But the number of home sales has plummeted by double-digit percentages. In the third quarter of 2021, 11,033 homes of all housing types sold across the Wasatch Front — 18% less than the 13,374 homes sold in the third quarter of 2020, according to the Salt Lake Board of Realtors.

That indicates Utah’s market has “stabilized,” from the “big feeding frenzy” of 2020, said Matt Ulrich, president of the Salt Lake Board of Realtors.

“For buyers, for sellers, for agents it was just nuts. It was chaos,” Ulrich said of 2020. “Now, it’s normalizing. It’s stabilizing. ... But we’re still going to have a record-setting year for sales.”

The year 2021 is still pacing to be the No. 2 best year for Wasatch Front home sales, second only to 2020, when the COVID-19 pandemic threw the national housing market — particularly in the West in states like Idaho and Utah — into upheaval as many Americans reevaluated their lives and moved out of big, expensive cities in search of homes with more space at lower price points.

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In 2021, Ulrich said realtors are still seeing multiple offers on homes. “Maybe we’re not seeing 20 to 30 (offers per home), but we’re still seeing a handful. Prices are still increasing, we just need more inventory.”

Ulrich called the market of 2021 more “maintainable” than 2020’s. “Nobody wants to see prices going up 25%.” He noted some buyers are continuing to “sit on the sideline” with hopes that prices will eventually drop, but experts don’t see that happening anytime soon.

Rather, Ulrich said he sees today’s market as the “calm before a potential storm.”

Once interest rates begin to rise, which some experts have said may happen at the end of the year (though there are no guarantees), Ulrich said “it’s going to be another crazy market. I’m not necessarily looking forward.”

That “storm,” Ulrich said, could be another frenzy. After interest rates look like they’re taking a turn, prices likely won’t come down enough to offset rates so “it’s just going to get more expensive.”

“When they start creeping up ... then you’re going to see people wanting to cash in to get a good interest rate before it’s gone,” he said.

‘We’ve never seen anything like this’: As the West’s housing market rages, Utah faces ‘severe imbalance’

Priciest Wasatch Front ZIP codes

In 2021’s third quarter, the ZIP code with the highest median sales price was 84004, home to Alpine, a Utah County suburb set in the foothills east of the Point of the Mountain, known for its large lots and massive homes.

Here’s how the top 10 priciest ZIP codes’ single-family median sales prices ranked in the third quarter of 2021, according to the Salt Lake Board of Realtors:

  1. Alpine, Utah County, 84004 — $1.05 million.
  2. Emigration Canyon in Salt Lake City, 84108 — $830,000.
  3. Draper, Salt Lake County, 84020 — $825,000.
  4. The Avenues in Salt Lake City, 84103 — $825,000.
  5. Sandy, Salt Lake County, 84092 — $800,000.
  6. Eden, Weber County, 84310 — $792,500.
  7. Holladay, Salt Lake County, 84117 — $735,000.
  8. Millcreek Canyon in Salt Lake City, 84109 — $725,000.
  9. South Jordan, Salt Lake County, 84095 — $720,000.
  10. Holladay, Salt Lake County, 84124 — $704,375.

Salt Lake ranks as one of the nation’s least affordable metros

Salt Lake City is the 10th least affordable metro area in the nation for housing, according to new research released this week by Real Estate Witch, which is owned by the real estate site Clever Real Estate.

Salt Lake City is the 10th least affordable city in the nation for housing, according to new research by Real Estate Witch and Clever Real Estate. | Real Estate Witch and Clever Real Estate

The site found Salt Lake City had an average home price of $485,813 in 2021 compared to an average household income of $92,900, and a house-price-to-income ratio of 5.2. The average ratio experts recommend, according to Clever Real Estate, is 2.6.

The report said only six of the 50 most populated metro areas in the U.S. have a house-price-to-income ratio lower than or equal to the maximum recommended ratio of 2.6: Pittsburgh, Pennsylvania; Cleveland, Ohio; Oklahoma City; St. Louis, Missouri; Cincinnati, Ohio; and Birmingham, Alabama.

Record-breaking home value increases do have a bright side: fewer Americans are underwater in their mortgages.

Across the nation, the percentage of homes with underwater mortgages decreased by 54% in the most populous metro areas, from an average of 12.2% to 5.6%, according to the Real Estate Witch report.

The Salt Lake City metro area saw the biggest decrease in underwater mortgages in the nation: a jaw dropping 1,081% decrease from 18.5% in 2015 to 1.6% in 2020, according to the report. That’s compared to the metro with the second largest decrease, Las Vegas, that dropped 513%, from 21% to 3.4%.

However, there’s a dark side to these figures.

“These same homeowners could be poised for disaster in the next housing crash,” the Real Estate Witch report says. “This is especially troubling for people who bought homes during the pandemic because they’ve had the least amount of time to pay back their mortgage.”

In Utah, experts continue to say they do not see a “bubble” waiting to pop on the state housing market’s horizon, though they do warn of a “severely imbalanced” housing market, especially when it comes to affordability. Now more than half of Utah’s households are unable to afford the state’s median priced home, according to a report released earlier this month by the University of Utah’s Kem C. Gardner Policy Institute.

‘We’ve never seen anything like this’: As the West’s housing market rages, Utah faces ‘severe imbalance’