Home prices in N. Utah continue to fall, but not everywhere

Home sales along the Wasatch front have continued to fall this year after falling dramatically through late 2022 as interest rates rose, but that trend has so far provided patchy relief from sky-high prices.

In January, Salt Lake County had the fewest home changes (590) in a single month since January 2011, after the Great Recession pushed that monthly volume down to 571 homes. Sales last month were also nearly 36% below total single-family home, townhouse and condo sales achieved just a year earlier, as pandemic-driven demand and historically low mortgage rates boosted sales.

New data released this week shows similar declines in the wider five-county area centered in Salt Lake City, with sales in the last three months of 2022 falling 41.5% year-on-year.

[Go to www.sltrib.com/homeprices to see home prices and sales along the Wasatch Front by ZIP code.]

Much of this can be attributed to months of steady rate hikes aimed at curbing inflation, which took the nationwide median rate on a 30-year mortgage to 6.77% on Friday, nearly double what it was at the start of 2022.

Rob Ockey, president of the Salt Lake Board of Realtors and a broker at Presidio Real Estate in Pleasant Grove, said demand for homes remains strong. “The limiting factor,” he said, “is higher interest rates.”

Despite signals from the Federal Reserve that more rate hikes are imminent, Ockey predicted that mortgage rates will eventually trend lower this year, possibly to around 5.5%, “which is still a great rate.” And given the prospects of a thriving state economy, record-low unemployment and steady population growth, Ockey said he was optimistic over the long term.

For now, however, 30-year mortgage rates continue to hamper sales. That has boosted the available inventory of homes and appears to be slowing the rise in prices after an unprecedented rise, but hasn’t sent it into a free fall.

New numbers show the homebuying spurt that began in March 2020 with the outbreak of COVID-19 and extended through May 2022, effectively boosting Salt Lake County home prices by almost 60% — after nearly a decade of steady gains.

“This,” Ockey said, “is not normal in any way.”

After peaking at about $650,000 in May, the average single-family home price in Utah’s most populous county hit $533,500 in January, down 9% year over year. Other prices have also fallen significantly, according to new data, but not everywhere. And the Beehive State still faces a shortage of affordable housing, much like the rest of the country.

Follow the jumping interest rates

According to Taylor Marr, deputy chief economist at real estate website Redfin, high housing costs and limited inventory have dampened home sales nationwide, but that impact is beginning to slow.

A temporary softening in mortgage rates in December and January lured some buyers back into the market, he said, but that didn’t last as February brought more signs of persistent inflation, sparking the prospect of more rate hikes by the Fed.

“The housing market took two steps forward in December and January,” Marr said, “but took a step back in February.”

Fewer homes were listed for sale across the country in January than at any time since the pandemic began, he added, meaning “many of the buyers who were still in the market were struggling to find a home that suited their needs corresponded”.

Utah’s current shortage of affordable housing is estimated at 35,000 to 45,000 units statewide. And as interest rates have risen, the state’s homebuilders are pulling back to fill that gap — monthly building permits for new private housing units have fallen dramatically, from 3,811 in May to 1,776 in January, according to data from the Federal Reserve Bank of St. Ludwig.

“The big dogs have significantly reduced their production this year,” said Dejan Eskic, an economist and housing researcher at the University of Utah’s Kem C. Gardner Policy Institute.

“I feel like January gave a sense of false hope,” Eskic said, “then inflation readings took the wind out of those sails.

“But,” he added, “there are still offers out there. If you are a buyer who can afford it now, you have an advantage.”

Ups, downs and where the bargains are

Home sales fell in all 85 ZIP codes along the Wasatch Front for the last three months of 2022 compared to the same period last year. But home prices rose in 47 of those 85 ZIP codes, new figures show, and were lower or unchanged in the other 38.

Prices for all home types combined increased 5.6% in Utah County, 3.2% in Weber County, and 1.3% in Tooele County for the fourth quarter of 2022 year-over-year. They increased only slightly in Salt Lake County and stayed the same in Davis County.

Homes rose the most in price on Avenues and Capitol Hill in Salt Lake County (84103), up about 24% to a median of $927,500. In Utah County, Goshen (84633) saw the biggest gains, up 19.5%, pushing the median there to $413,300.

In Davis County, the largest wins were in Farmington (84025), which averaged $671,500. Eden (84310) in Weber County saw that county’s top median price increase 21.3% to $958,500. The largest increases in Tooele County were in the city of Tooele (84074), up a little less than 1% year over year to a median of $430,000.

The latest data shows Salt Lake County’s cheapest ZIP codes for home prices were 84104, which covers Glendale at a median of $370,000, and 84118, which covers Taylorsville and Kearns at $387,000. The relative bargains in Utah County were found in Goshen (84633) with a median of $413,300 and Mona (84645) with a median of $422,000.

Davis County’s cheapest zip code was Clearfield (84015) at $425,000, new figures show, while Weber County’s South Ogden location (84403) was $358,300. Tooele County’s lowest median was in the town of Tooele (84074) at $430,000.