Utah’s housing market benefits from the state's stable economy
Heading into 2024, interest rates should drop and buyers are expected return to the market, but first-time home buyers will continue to struggle to find affordable housing. (Adobe stock photo)
Peri Kinder
peri.k@thecityjournals.com
Over the past 18 months, the housing market in Utah has seen a big shift. The past six months have been a bit more stable, but since the middle of 2022, it’s been a roller coaster ride for buyers, sellers and real estate agents.
Utah is doing well compared to national numbers. In fact, housing transactions in the state continue to rise while national trends show a decrease. Cheri Salazar, principal broker and owner at RE/MAX Lighthouse in Provo, said there are several reasons for this, but the main reason is Utah’s strong economy.
“Our unemployment numbers are still very, very low. Our economy is still thriving; things are still working,” Salazar said. “Because of our local governments and what they’ve done, they’ve built a stable environment. That’s where we’re starting to see that things aren’t shifting as much as they might be in other places. But across the country, things have come back in the past couple months. So it’s not just Utah that’s experienced a reprieve from the drop.”
Interest rates have been a driving force in the housing market. Many potential buyers put off committing to a home loan with the high interest rates, but are coming back to the table as they realize rates won’t drop back to 3 percent anytime soon.
Problems arise when homeowners, who are locked into a low interest rate, decide not to sell, taking a lot of inventory off the market. Salazar doesn’t want to go back to 2021 when low inventory drew buyers into bidding wars.
“[Those homeowners] don’t have to sell and if they don’t have a life change or something that makes them need a new home, they’re just going to stay put,” she said. “So that’s where we could end up seeing more of a crunch again. And that’s something that we have to watch very carefully.”
In Utah, 30 percent of people with mortgages have more than 50 percent equity in their homes. Nearly 40 percent of people in the state own their homes outright. Salazar said that much equity actually gives homeowners a lot of options. Using equity, homeowners could upgrade — or downgrade — their housing situation without much change to their current payment.
Heading into 2024, interest rates should drop and buyers are expected to return to the market. But first-time home buyers will continue to struggle to find affordable housing. Salazar said with first-time buyers, agents must get creative with options to help these young buyers realize any investment in property is a good investment.
Many first-time buyers might need to lower expectations for a starter home, Salazar said. It might not be a single-family dwelling, but maybe a twin home or townhome. Once they realize their investment will build equity to help get them into a bigger home in the future, they’re more willing to compromise.
“It’s about helping people find the best opportunities for them to put their families in a better situation to build some wealth through real estate,” she said. “You’re building wealth every time you buy a home, whether you’re an investor or just a regular buyer. When we learn how to educate them and to show them the opportunities that are out there, that’s where we can thrive in this market. So for agents, it’s all about your mindset and it’s all about what you’re willing to do.”