SALT LAKE COUNTY – A new study shows there’s not enough housing to meet the needs of Salt Lake’s growing communities.
Eric Allen is the director for MetroStudy for the Utah-Idaho region.
Allen studies the market conditions for the Salt Lake Valley. In his latest report, he concluded that in 2016, a growing demand for homes, coupled with low inventory due to a labor shortage is driving prices up.
“We're kinda underbuilding in the market. We're not building enough to keep up with the demand. The problem that the market has right now is we just don't have enough labor," Allen said.
While new home production was strong during 2016, up 15 percent over 2015, finding new homes under $200,000 is challenging. The median price for a new single-family home is $348,500 – up three percent from last year.
“Unfortunately, the builders and developers don't have much control over that because the landowners are increasing their prices very quickly, and the labor is short. So, they're increasing their prices,” Allen said.
The report also highlights the concern of affordability. Allen says the trend shows more people turning to condo’s or townhomes. The median price for the newly attached unit is $233,000 – five percent increase from last year, up 1.4 percent from last month supply.
“The affordable housing crisis could very much be on the horizon because we are certainly pricing people out of the market," Allen said.
Chad Wagstaff is an associate broker for Century 21 Everest Realty Group. His clients are often looking for used homes, but the problem is, there’s not a lot on the market.
“Right now, it really is trending towards the seller’s market,” said Wagstaff. “Buyers that want a great deal or a steal, that's not really happening, unfortunately, you're paying for full price," Wagstaff said.
Wagstaff was able to find Keaton Baughan a home in Cottonwood Heights.
“With rising interest rates and everything, I thought it was a good time to get in,” Baughan said.
Baughan did his homework and it worked out.
“The most important things were the location. As I looked at home prices, I had to increase that more and more," Baughan said.
It’s an investment a lot of people are forced to consider, due to a tight market where it’s unlikely interest rates will come down anytime soon.
Check out the study here.