The Salt Lake Board of Realtors recently hosted its annual Economic Forecast event, featuring insights from leading experts, including James Wood, Ivory-Boyer Senior Fellow at The Kem C. Gardner Policy Institute, and Lawrence Yun, chief economist of the National Association of Realtors.
Wood told attendees that the overheated asset markets of 2020-22 contributed to today’s high inflation, rose home prices and elevated mortgage rates. As a result, home price growth has moderated, with the Salt Lake metro area ranking 28th out of 227 U.S. metros for the highest home prices.
“We are now in a hangover period from those anomalous years,” Wood said. “In 2021 alone, Salt Lake County home prices jumped $108,000 — a 25 percent increase.”
Looking ahead, Wood projected that demographic and economic growth will slow in 2025, while the decline in housing affordability — driven by the excesses of the 2020-22 market — will continue to challenge home sales. Despite these headwinds, condominium sales in Salt Lake County are expected to rise by 8 percent this year, while single-family home sales are forecasted to increase by 3 percent.
The median sales price of a single-family home in Salt Lake County is projected to reach $620,000, a 2 percent increase, while the median price of a condominium is expected to rise by 6 percent to $450,000. The combined price increase for homes and condominiums is anticipated to be 3.3 percent.
Yun noted that nationwide home sales have struggled over the past two years due to mortgage rates remaining just below 7 percent. However, homebuilders — who account for about 10 percent of all sales — have rebounded to pre-pandemic levels. Nationally, monthly home sales began showing increases in October of last year, with year-over-year growth continuing in November, December and January, Yun said.
“Even at a higher interest rate, we are seeing a bit more activity because inventory levels have started to recover,” Yun said. “If we can find a way to contain the national debt, mortgage rates could potentially dip below 6 percent.”
Nationwide, Yun predicted existing home sales will rise by 9 percent this year, with Utah expected to outperform the national average. “The conditions for more home sales are clearly developing,” he said. “I anticipate mortgage rates will range from 6.5 percent to 6 percent after we pass through the spring homebuying season.”