If you ask someone how the real estate market is doing, you’ll get 10 different responses from 10 people. Each person will have an opinion based on their perspective. People looking to sell may be much more upbeat than people looking to buy their first home. A property developer looking to build a new housing subdivision will have a different perspective from a bank appraiser, a real estate agent, or a renter.
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Looking at a variety of online sources available in mid-2022, Utah’s economy is doing well, unemployment is low, and there is a net in-migration of citizens to the state. Housing demand is strong and is likely to remain so. As long as more buyers are looking to buy homes and there is an insufficient supply of homes for sale, we will remain in a supplier’s market, and property prices will continue to rise. Times are tough for the buyers hoping to buy a property in 2022.
It would be stating the obvious to say that more homes need to be built if the demands of buyers are going to be met. As long as the population of Utah is growing, the existing stock of homes available will not be enough. The construction industry has been hit with supply chain disruptions since the beginning of the COVID pandemic, and new construction starts are delayed due to uncertainty. Developers don’t know if they can get their hands on the materials they need, or how much those materials will cost.
As the Federal Reserve starts to increase interest rates, mortgage rates are going to follow suit. Those that have low, fixed interest rates are sitting comfortably. New buyers are understandably nervous and hoping to still buy homes before rates rise much further. A positive view of this situation is that higher interest rates might slow down demand and cause current double-digit percentage increases in property prices to slow down just a little.
As of May 2022, the median house price in Utah is $574,600. According to a report published by the University of Utah, more than half of Utah households are not able to afford a median-priced home. This trend is only increasing. Rising prices mean more people can’t afford to buy a home and are likely to continue to rent. Another impact of decreasing affordability is that people might move towards more affordable markets as remote working becomes increasingly possible.
Which Way For Utah Real Estate?
At this point, we are in a race between factors that can increase supply (new construction) and factors that could cause a decrease in demand (mortgage rates and affordability of homes). How you view these developments will depend on your perspective.