For the cost of housing in Utah, the freeway to San Francisco is in full swing.
It’s the traffic going the other way that we should be concerned about.
When in doubt that the Wasatch front is leaning towards property prices in the Bay Area, consider the following:
Zillow, the real estate marketing company, reports that the typical Park City home is now selling for $ 1,027,216. In San Francisco, it’s $ 1,419,714.
The difference is that Park City home values rose 11.2% over the past year while San Francisco’s home values fell 3.2%.
If COVID-19 shed light on anything, it was the discontent of Bay Area residents. When the pandemic started, many people were told to work from home indefinitely and they decided to move to a place that didn’t cost that much.
The East Bay Times reports that around 114,600 people left the Bay Area in the fourth quarter of 2020 alone.
In Utah, the situation is reversed for the time being. Lots of people come here. But that won’t take long if no one can afford to stay or if they keep getting outbid while trying to buy a home.
David Robison, president of the Utah Association of Realtors, told me this week he doesn’t think the Wasatch front will match the Bay Area for at least 40 years, but he is concerned. As Utah’s own children grow up and people from other states come here, the demand continues to grow. According to some estimates, the state has a deficit of around 50,000 places of residence.
The only solution, Robison said, is to build higher density housing – which is exactly what angered suburban voters so much that they are throwing people out of office.
“If done wisely, it can be an effective way of meeting our inventory needs,” he said, citing the Daybreak development in South Jordan as an example. “But it’s hard when people only want a third of an acre.”
Robison said cities often require homes built on a third of an acre lot to be a minimum of square feet. This in turn means that these subsections contain expensive homes, which in turn drives up prices. “That won’t solve our problem.”
As if to emphasize how hot the market is here, Bankrate.com crowned Utah as the king of its national index for home heating this week.
“Utah has the strongest job growth in the country, along with extremely low unemployment, extremely low mortgage rates, few mortgage defaults, and low state and local taxes,” the publication said. “Residential real estate boomed during the coronavirus recession, and Utah has become a particularly desirable market.”
At the same time, Re / Max named the Salt Lake subway area as the place with the fastest-selling homes, with an average of just 16 days on the market. That is comparable to 36 days a year ago.
All of this is good news, of course. It’s a sign that the state is poised to make a strong recovery from the pandemic. But when all of this growth doesn’t correspond to places of residence, the state can find that wealth is limited, even if the cost of living soars.
Park City is an outlier, of course. In Salt Lake County, Zillow reports the typical home is $ 447,003. In Utah County it is $ 419,714. However, both mean an increase of more than 15% compared to the previous year.
COVID-19 is responsible for part of this. There are fewer homes in the market than there were before the pandemic, and much of the nation is facing similar price increases. Re / Max reports that during that period, a year ago inventory was down 45.2% across the country. When the pandemic ends, some of the crisis will ease.
Additionally, recently lawmakers have made it easier for people to rent parts of their homes – something that can help alleviate the housing shortage over time. And Robison pointed to signs that pandemic inflation may be easing as costs appear to have stabilized somewhat over the past month.
But then he said, “We have had a trend for a long time that people want to move to Utah. We already had an inventory problem a year ago before COVID. “The housing shortage here is not just linked to pandemics.
It’s not too late for Utah to get off the freeway into San Francisco, but it’ll take a lot of construction, a lot of innovative thinking, and a collective determination to grow up rather than get out.
Robison is optimistic that cities will understand that housing restrictions keep children and elderly relatives from relocating to nearby neighborhoods, even if they drive prices up.
“I am optimistic that we can solve the problem,” he said. “We need a lot more living space right now.”