A once boiling hot housing market that’s been shocked by higher mortgage interest rates is taking its toll on Utah’s housing market.
Utah’s most populated county, Salt Lake County, has seen its first year-over-year decline in housing prices since 2011. In December, Salt Lake County’s median single-family home price dropped to $541,900 — 6% lower than the county’s median price in December 2021.
That’s according to new UtahRealEstate.com data released by the Salt Lake Board of Realtors on Tuesday.
Is the housing market crashing?
While it’s significant that Salt Lake County has seen real estate prices drop for the first time in over a decade, it’s also important to note these year-over-year declines come after about two years of wild price run-ups fueled by the pandemic home buying frenzy, which hit the West and states like Utah and Idaho particularly hard.
That rush caused Salt Lake County’s median single-family home price to jump nearly 60% from 2020 to 2022. In May of last year, the county’s single-family median home price was $650,000. Since then, home prices have fallen 17%.
Housing experts and economists in Utah do expect 2023 to bring a painful hangover to the housing market after two years of unprecedented price increases and a flurry of demand — but they also don’t predict a 2008-like crash.
Today, the U.S. housing market is going through what Federal Reserve Chairman Jerome Powell has called a “difficult correction” and a “reset” as it comes off the tail end of a pandemic frenzy fueled “housing bubble.”
Experts say Utah’s strong economy and job market will insulate the state from widespread job losses and foreclosures seen after the 2006 housing bubble popped, largely fueled by risky lending practices and a subprime mortgage crisis.
Housing experts in Utah, however, also are at odds over just how far Utah’s housing prices will fall in 2023 before possibly bouncing back in 2024.
Jim Wood, the Ivory-Boyer Senior Fellow at the University of Utah’s Kem C. Gardner Policy Institute, has a more optimistic forecast, expecting Utah will see minor “year-over-year price declines in the first and second quarter of 2023, but prices will begin to stabilize by the third and fourth quarter,” he told real estate professionals at the Salt Lake Board of Realtors’ 2023 housing forecast earlier this month.
However, Wood’s research colleague at the Kem C. Gardner Institute, Dejan Eskic, is more bearish, predicting Utah home prices will drop 9% year over year in 2023. From peak-to-trough, he expects prices to decline by a percentage somewhere in the mid to low teens, depending on interest rates.
Wood and Eskic predict Utah’s estimated 31,000-unit housing shortage will continue to keep home prices high, even if the state sees some price drops, so they expect Utah’s housing affordability crisis to …….