Davis Chamber speaker: There's 'good, bad and hopeful' in housing market

Becky Ginos
The Davis Journal 

Utah ranks eighth-highest for median sales price for existing single-family homes in the nation.

The state needs an additional 153,000 units to meet the projected demand of 248,000 by 2030.

Those statistics as well as others on the housing front were the topic of a presentation by Dejan Eskic, senior research fellow with the Kem C. Gardner Policy Institute at the University of Utah, during a Davis Chamber event held recently called “Utah Housing Market Update – The Good, Bad, and The Hopeful.”

“It’s very complicated,” said Eskic. “Generational challenges impact everything. You know, whether it’s global events, what’s happening in the Middle East, Ukraine — that impacts all financial markets, which then bounces into mortgage rates.”

Everyone has probably heard the phrase “demographics is destiny,” he said. “It comes in waves. For example when the baby boomers entered the market in the late ’70s and ’80s there was a lot of demand on housing. We face similar challenges now with our demographics, especially being a young state with a relatively high birth rate compared to the rest of the country.”

Utah has a lot of kids, said Eskic. “So it’s always going to be challenging for housing.”

When COVID hit, the whole economy shut down overnight and millions of people died, he said. “The challenges of turning back on the global economy post-COVID is what we’re going through right now.”

The average homeowner in the U.S. has a net worth of about $400,000, said Eskic. “The average renter in the U.S. has a net worth of just under $11,000. The cost of renting versus owning along the Wasatch Front for a single-family home, the median monthly payment is $3,581. The median monthly rent is $2,092. People are not going to be able to get into the housing market unless they have a lot of equity.”

The state is going to age, he said. “A lot of you are retired. When there’s not a younger generation that’s growing their wealth, you folks that are retiring, you’re going to be missing out on services. There’s going to be a gap in the economy.”

After COVID there was an increase in people 55-plus that retired and didn’t go back to work, said Eskic. “They’re just consuming, but not producing.”

There are short-term consequences and then there are also long-term consequences, he said. “But you know, the theme of the presentation is the 'good, bad and the hopeful.' So you know one of the good things is the economy is outperforming way better than anybody thought.”

Economists predicted a recession but so far they’ve been wrong, he said. “I think the odds of a recession continue to be further back in the rearview mirror.”

A lot of momentum is happening in the state, said Eskic. “Housing pains are the unintended consequences of a great economy. I’d much rather have a problem like that. We’ll figure it out.”

Has the plane landed? “I don’t know but it hasn’t crashed,” he said. “So that’s sort of my optimistic takeaway.”