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Escalating house prices are showing signs of stabilizing in Ogden, Provo and a few other US cities that have seen significant spikes in recent months, suggests a new analysis.
At the same time, going rental rates continue to climb, other reports show, especially in Salt Lake City, which by some metrics is seeing some of the highest apartment rent increases in the country.
Florida economists who study the top 100 housing markets say data for the Wasatch Front metropolitan areas north and south of the Utah capital as well as for Boise, Phoenix and Austin, Texas show evidence of a “crown” of prices in these cities, meaning the home values that have skyrocketed in recent months may have started to level off.
“It appears that several parts of the country are at an inflection point,” said Ken Johnson, an economist at the College of Business at Florida Atlantic University, located in Boca Raton. The apparent crowning motif “is common when markets are at the peak of their current real estate cycles.”
Their findings emerge as the median price of a single-family home in Salt Lake County soared 24% in the past year, to just under $ 542,250 in October.
The study may provide some comfort to some frustrated potential homebuyers in Utah, where low interest rates, rising demand and shrinking supply of available homes have pushed prices to new highs and slowed sales significantly. spectacular.
A recent Utah study of home price trends found little evidence that the overheated Wasatch Front markets were going to cool anytime soon. Job growth, population growth and a 10-year delay in housing construction mean the state’s housing markets could remain tight for years, Kem C. Gardner economists said. Policy Institute at the University of Utah.
This one-of-a-kind analysis also found that, despite record interest rates, more than 72% of renters in the state were no longer able to afford a down payment and mortgage for an affordable home.
A separate study from the Utah Nonprofit Foundation found that more than 80% of Utah residents believe house prices and rents are too high. Most of the survey respondents said they couldn’t afford their own home if they wanted to buy it at today’s prices.
Johnson and Eli Beracha, professor of real estate at Florida International University in Miami, released findings in late September that homes in Salt Lake City, Provo and Ogden were among the most expensive in the United States, with buyers paying premiums between 44% and 51% above expected long-term price trends.
This study found that all but a handful of U.S. real estate markets were likely too expensive, with buyers in more than half of those cities paying estimated price premiums of 20% or more. Boise led the way at the time, with homes said to have been 81% overvalued over historical past prices.
Utah’s top home builders took issue with this analysis, noting that prices these days reflect relatively high costs for land, labor, and building materials – many of which have been inflated by the effects. pandemic on supply chains.
“Everyone thinks builders are getting bigger, but it’s a worse year for us than last year,” said Clark Ivory, CEO of Ivory Homes, Utah’s largest homebuilder. “And the reason is that the costs went up 29% and our average price went up 22%.”
Johnson and Beracha warn buyers in overvalued markets may have to own their homes longer before reselling to realize financial gains on their purchase.
Florida researchers say the five most overvalued US real estate markets today – including the Ogden and Provo metropolitan areas, ranked third and fourth, respectively – have all shown signs of crowning glory, based on data from 1996 to October.
Their study, which can be viewed online, covers single-family homes, condominiums, townhouses and co-ops.
The data shows that prices are rising rapidly in cities like Dallas and Atlanta, the researchers said, leading to price premiums even larger than those seen during the build-up of the housing crash that helped produce the Great Recession. In other cities, including Los Angeles and Miami, they said, price increases have slowed, producing premiums well below what they were before the market downturn more than a decade ago.
“All of this suggests that some parts of the country have learned a valuable lesson about prices,” Johnson said in a press release, “while others are sticking to the stubborn belief that house prices are rising towards the bottom. sky”.
As affordable homes for sale seem to become increasingly inaccessible for many Utah residents, the situation for moderate-income renters could be just as difficult.
Overall, average monthly rents have doubled since before the Great Recession along the Wasatch Front and, according to sources, now hover above $ 1,205 statewide.
A recent study by the Utah Foundation found rent increases from January 2019 to July 2021 of more than 50% in the counties of Utah and Davis.
Online site Zumper said this week that the Salt Lake City metropolitan area now ranks among the fastest growing US cities in rents. Rents for one-bedroom apartments rose 15.4% in Salt Lake City in the past year, the site said, while rents for an average two-bedroom apartment rose 12.7% . In Ogden, rents increased from 15.6% to 23% over the same period.
Rental property listing site Dwellsy, meanwhile, said median asking rents in Salt Lake City are now $ 325 higher than in early 2021, rising 26.5% since January, from 1,225. $ to $ 1,550 per month.
Apartment vacancy rates remain at historic lows of around 2% or less on the Wasatch Front, although apartment construction continues to grow.