Utah housing market demoralizing and depressing for prospective buyers

This story is part of The Salt Lake Tribunes’ ongoing commitment to identify solutions to Utah’s biggest challenges through the work of the Innovation Lab. [Subscribe to our newsletter here]

Kris Crockett has a good salary and enough for a down payment on a house, but he can’t find a house he can afford in Salt Lake City’s Capitol Hill neighborhood.

She rents now in the Marmalade District and likes it, but hasn’t seen homes for sale under $600,000 or $700,000 and doesn’t feel comfortable paying $500,000 for a townhouse.

It’s kind of demoralizing and depressing how unaffordable it is now and how much money you have to make to afford it, Crockett said.

Other Utahns said it was discouraging and that they are considering leaving Utah for a place where they can afford to buy a home.

(Trent Nelson | The Salt Lake Tribune) Homes and construction in Riverton’s Mountain Ridge neighborhood on Friday, May 3, 2024.

Even Adam Kirkham, president of the Utah Association of Realtors, described the market as disappointing.

Housing affordability is top of mind for many Utahns. It was among the top concerns of registered voters in a recent poll by the Utah Foundation, which found that more Utahns think the state is headed in the wrong direction than in the right direction.

And home ownership is out of reach for most renters. Only 15% of Utah renter families can afford a home that costs between $300,000 and $400,000, according to a report on the state’s housing market. That’s $90,000 less than the average sales price for existing homes so far this year.

A Salt Lake Tribune analysis of data from the Utah Association of Realtors, the U.S. Census Bureau, the National Association of Realtors and CBRE found that the typical renter family can buy just one home and spend less than 28% of its of their income for a mortgage payment in Kastor County.

Even where homes are more affordable in other states, the average renter’s household income is too low to avoid a mortgage being a cost burden.

There are some positives, Kirkham said, including less competition and a chance to refinance for a better mortgage rate in the future.

People looking to buy homes in Utah also have options to find a home within their budget, he said, including widening their search net, looking for new construction, talking to a real estate agent and connecting with a lender. resourceful.

The ultimate solution, according to realtors, homebuilders, experts and lawmakers, is more housing inventory.

(Trent Nelson | The Salt Lake Tribune) Homes in Riverton’s Mountain Ridge neighborhood on Friday, May 3, 2024.

A typical renter can only afford to buy in Beaver County

Home prices are down from their peak in February 2022, but the median sales price is still close to $500,000. High interest rates make the problem worse.

The median sales price for the nearly 9,000 existing homes sold this year in Utah’s 29 counties was $490,000 as of March and ranged from $185,000 in Beaver County to $1.3 million in Summit County.

Assuming a 10% down payment and 6.43% interest rate, that means the typical Utah mortgage payment for new home owners is $3,043 and ranges from $1,149 in Beaver County to $8,026 in Summit County .

A higher down payment would mean a lower loan, but interest rates are now often higher than 6.43%. These payments also do not include property taxes or home insurance costs.

Combined, that means Utahns need to earn about $130,400 a year to afford a mortgage, though the number varies by county from $49,234 to $343,975.

The median income for a renter family is below the minimum wage in all but Beaver County, where it takes $49,234 to afford a mortgage on a home with a median sales price of $185,000, and a typical renter family has income of $68,482 per year.

In other counties, rental households do not have the required income with an average of about $75,000 and as high as $260,000.

Crockett is looking in Salt Lake City, where the average sales price so far this year is $536,000. This requires an income of $154,843, but the median renter’s household income is $51,710.

When Crockett bought her home in 2019 in Phoenix, it cost $295,000 with a 3% interest rate. She made money when she sold it and has enough to get a 20% down payment on a house.

It’s still hard for him to wrap his head around how much a house in Salt Lake City would cost.

The prices are crazy, Crockett said.

(Trent Nelson | The Salt Lake Tribune) Homes and construction in Riverton’s Mountain Ridge neighborhood on Friday, May 3, 2024.

Home ownership seems impossible, it would blow budgets

The awards could push Eric Blair to a new career or to another state.

Blair has been looking for a home in Davis County. His target home price is $200,000 significantly lower than the $505,000 median home sale price so far this year in that county.

He has been a nurse for just over two years and was thrilled when he became a registered nurse because it almost doubled his salary from other health care jobs.

Blair thought she had an opportunity to own at least a house or apartment in the city and worked with a real estate agent for more than a year before deciding it just wasn’t possible without a career change, getting married or partnership with a relative. or associate to purchase.

He’s living with family now to save for a down payment, but said he understands how unaffordable it is to buy a house in Utah and is trying to figure out where he needs to be or what job he needs to get to afford it.

Trinity Widdows is looking, along with her two roommates, for a home in or near Springville. Their target price is $380,000, she said, but they have to look in Emery County or Price to find something within their budget that also matches their needs.

But Widdows works in Bluffdale and wouldn’t want to travel every day on US-6 and through Spanish Fork Canyon.

If interest rates or homeowner association dues were lower, she said, they might be able to afford something, but that’s just not the case right now.

There is really nothing we can afford [here] in our price range for as much as we want, it won’t completely blow our budget, Widdows said.

Even some people who already own homes in Utah are discouraged by the current market.

Taylor Packer bought his house in 2020, just before prices went up, but it’s small and can’t be his permanent home.

He is looking for a home to upgrade, but will have to look far from the places I want to live here in Utah to find an affordable option.

It’s almost depressing, and then I get discouraged and then I look at the prices in other states and think, why do I live here? Packer said.

He added that while he knows he’s lucky to have found a place at all, he worries about his younger siblings.

Looking outside of Utah wouldn’t necessarily help unless people continue to make income similar to their salary here.

For example, Little Rock, Arkansas, is the most affordable city of the 42 metropolitan areas for which the Tribune analyzed data.

The median sales price for an existing home there at the end of 2023 was $200,000.

Assuming a 10% down payment and 6.43% mortgage, that would be a payment of $1,242 per month, requiring an income of about $53,200 to spend less than 28% of the monthly check on a mortgage.

That’s almost within reach for the typical renter in Salt Lake City, but out of reach for renters in Little Rock, where the median renter’s household income is about $39,000.

Utah needs thousands more units, construction has slowed

Utah is likely to face a shortage of at least 37,000 housing units after the pandemic produced the shortest and largest homebuilding expansion and contraction in history, two experts from the Kem C. Gardner Policy Institute wrote in their review housing market and the states outlook last year.

One lawmaker recently told The Tribune that the primary solution to Utah’s affordability crisis is to build more homes.

However, construction, which surged during the pandemic, is slowing.

Building permits for residential units jumped in 2021, then decreased in both 2022 and 2023, according to a database Gardner uses to track homebuilding trends.

Experts expected the building to rebound this year, but there is still a massive shortage, said Jessica Bryce, vice president of marketing for EDGEhomes.

(Trent Nelson | The Salt Lake Tribune) Jessica Bryce in one of EDGEhomes model homes in Riverton’s Mountain Ridge neighborhood on Friday, May 3, 2024.

The Utah-based homebuilder can have its Nora model, a three-bedroom house with about 2,400 square feet completed, in four to six months, Bryce said.

EDGEhomes hears three main concerns from potential buyers, she said: Interest rates, affordability and insurance that they buy at the right time.

Bryce encouraged people looking to buy to pre-qualify so they can set their budget and buy what they can afford instead of holding out for a dream home.

We see a lot of people who want to buy what their parents bought 40 years ago, she said.

Townhouses are on trend and can be lived in like a single-family home, Bryce said, and they’re a more affordable option, as are condos.

(Trent Nelson | The Salt Lake Tribune) Jessica Bryce in one of EDGEhomes model homes in Riverton’s Mountain Ridge neighborhood on Friday, May 3, 2024.

New construction in general can also help people stretch their budget, because of concessions and other incentives, Bryce said.

For example, builders can use the proceeds from home sales to buy back interest rates either for several years or in perpetuity, and many are doing so.

Builders want to work with people to get them into a home, Bryce said.

Our goal is not to turn any shoppers away, she said, by offering multiple options.

She encouraged people to buy as soon as they can instead of trying to game the market.

Kirkham with the Utah Association of Realtors said that could be a good idea. Once interest rates come down, he said, competition for homes will pick up again.

Buying now could mean getting concessions and a chance to refinance in the future, he said.

Kirkham and Bryce both recommend working with a lender to review options and find what works best with their budget.

Megan Banta is an enterprise data reporter for the Salt Lake Tribunes. a philanthropically supported position. Tribune retains control over all editorial decisions.

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