Nestled between Lake Utah and the towering peaks of the Wasatch Mountain Range, it’s hard to imagine anything in the Provo-Orem metro area could be anything but serene. But for 12 months, the metro real estate market has been in total chaos.
“It’s hot, hot, hot in here,” Clay Winder, real estate agent for Keller williams Westfield, noted. âThe Provo-Orem market is growing at a faster per capita rate than anywhere else in the state of Utah, including our capital, Salt Lake City.
The median home price in Provo rose 24.4% to $ 410,000 in August from the previous year, while in Orem it rose 22.2% to $ 440,000, according to reports of Red tuna. In comparison, the national median only increased 16.2% year-on-year.
On average, in August 2021, homes in the area sold around 2.5% above the list price and were on the market for about 11 days before being put on hold. However, newer homes and older fully renovated homes were selling on average around 6% above demand and were only left for six days before going on hold.
“If the home exceeds the average number of days on the market, buyers can quote list price, but if it’s new to the market on opening weekend, it could go over $ 5,000 at $ 10,000, “said Becca Summers, a local agent for Keller Williams. âSo for sellers, making sure their home is ready to go on opening weekend is more critical now than it has been in the past months, because if it stays after this weekend is over. At the opening, buyers are wondering what is wrong. “
As is the case with most other metros in the country, the rapid price increases were driven by high demand and low stocks. Several real estate brokers and agents who spoke to HousingWire cited three main reasons for this increase in demand: Utah’s high birth rate, the rise of “Silicon Slopes” and COVID-19 and government policies. state related to the pandemic.
With a large Mormon population, Utah has the highest birth rate in the country. This means that the number of millennials reaching the middle age of buying a home is even higher in Utah than elsewhere in the country.
âNet migration has really added to the mix of factors that are driving demand for housing in the state,â Matt Barton, senior brokerage firm. Century 21 Everest Realty Group. “It’s a confluence of different factors, but the naturally high birth rate has been around forever and the population is really starting to grow.”
Although intra-state migration has been part of the increase in demand, the rapid influx of tech companies to the area just north of Provo-Orem, which has been dubbed âSilicon Slopes,â has been a source main interstate migration. Companies with offices at âSilicon Slopesâ include Domo, Adobe, eBay, and Facebook.
âWe’ve had a blast over the past three to four years for tech and other businesses to come,â Barton said. “I mean going down I-15, it’s like seeing a new building come up every two weeksâ¦ So we had an abnormal influx of people from states like California, even from the Northwest, because companies looked at the cost of living before it all went crazy, and said, “Hey, Utah is affordable and it’s not crowded, let’s go.”
While these first two reasons could have increased trips to Provo-Orem at any time, the COVID-19 pandemic brought about a particular set of circumstances that further stimulated migration to the metro. Compared to California, Utah has been fairly relaxed with COVID-19 restrictions. The governor only implemented a mask mandate in early November 2020, and students in many districts were able to attend the school in person for the entire 2020-21 school year.
âI have a lot of people that I have spoken with who have come here because we are in school full time,â Summers said. âKids don’t do things from a distance. You can wear a mask, but you don’t have to wear a mask. So a lot of people who want more options with Covid have moved to Utah for this, but mostly schooling – it’s been a big deal. “
Since July, however, things have finally started to slow down in the Provo-Orem real estate market. In the spring and early summer of 2021, many real estate professionals who spoke to HousingWire said it was not uncommon to receive 20-30 offers on a property within days of it being put on the market. . Now they are seeing hot properties receiving three or four bids, but some properties are still generating more than 10 bids, reflecting a nationwide decrease in bidding wars.
âMay and June of this year we were still seeing in the realm of madness, where you put in a workable property right and you maybe get somewhere in between, no kidding, 20 to 30 deals, with contingencies of ‘assessment, making non-refundable deposit upon acceptance and acceleration clauses, âBarton said. âIt was the norm from last summer to the start of this summer, but as we saw things started to slow down. My agents always get three or four offers for a house. There are still a few buyers, but it’s nowhere near as aggressive as it was a few months ago.
However, agents and brokers across the region do not perceive this slowdown to be a huge cause for concern.
âIt’s statistically a little slower, but the supply / demand ratio is still tight,â said Devin Haub, a local. RE / MAX said the real estate agent. “So there will probably be fewer transactions in Q4 overall, but there are fewer registrations and fewer buyers, so the supply / demand ratio remains very tight, making it a competitive market. . “
But residents and home buyers face a new problem: they lack land on which to build.
âIf you look at our geography, we don’t have a lot of land to build on anymore,â Haub said. âSo despite the fact that no one likes these prices, if they keep wanting to live here, there’s nowhere else to go than close to town. It’s not like Texas where you can just add a ring around town and keep growing – you can’t do that here. You have the mountains and the lake so all the houses are wedged between the lake and the mountains and unless you want to go to the other side of the mountain and drive an hour or two everyone is aiming for the same place .
As they look to the future, agents and brokers across the region expect prices in the region to continue to rise, but not at the accelerated pace they experienced last year.
“If we assume that we go back to normal market patterns, with slower sales from October to January, and with discussions of a nearly full point hike in mortgage rates by the end of the year next and it’s going to have an interesting effect because when the rates start to go up you see a wave of activity because people are panicking and with that the prices will start to go up again too, “Barton said.” So you will have that initial flurry of people who will do whatever they need to, get into a house, and then it calms down. I think by the end of next summer, we’ll know what that market really is.