Many industries have fallen victim to 2020 and Coronavirus’s woes, but Utah real estate isn’t one. Utah County, arguably the heart of Utah’s economy, has experienced record-breaking performance in the housing market with technology innovation widespread from Lehi to Provo. Why?
Low inventory of homes-for-sale is the driving force behind the continually rising housing prices in Utah County. In Utah County, the average home price was $429,301 in November, up from $374,965 one year ago. On December 7, there were only 271 existing homes listed for sale on the Multiple Listing Service (MLS) in Utah County. That supply is an insufficient number of available homes for a countywide population of over 620,000. While only 271 homes were for sale, 861 were under contract. These facts show a significant squeeze on supply.
Not only are existing homes hard to find, but new construction is also in extremely high demand. As you drive around town and see thousands of new homes being constructed, keep in mind, those homes are all already sold. Seriously. Homebuilders can’t keep up with demand and are even seeing multiple offers on new phase releases, even before lots have been excavated.
“We released a new phase in Lehi on December 2 and had fierce competition with multiple offers for newly released lots with a completion date into July of 2021,” said an Edge Homes representative.
“It is emotionally exhausting,” said one Utah County home buyer, referring to the current environment of house shopping that not only requires swift action but also includes bidding wars far exceeding the original listing price. Utah County’s average home sale price compared to list price topped 100% in November.
Increased demand is not just due to a supply shortage. The demand to live in Utah County is at an all-time high for several reasons. According to the National Association of Realtors, millennials are now the largest home-buying generation, and Utah has no lack of millennials after leading the nation’s birth rate throughout the 1980s and 1990s.
Along with Utah’s born-and-raised choosing to stay here and purchase a home, the secret is out, and Utah is the place to be for out-of-state residents as well. With the COVID-19 pandemic forcing millions across the nation to work from home, the ability to live where you want is driving migration to places like Utah County, where the cost of living is low, compared to coastal cities like San Francisco, Los Angeles and Seattle.
Another driving factor for the increased housing demand is record low interest rates. Buyers are taking advantage of rates that hover under 3%. With interest rates at historic lows, buyers can stretch their buying power and may also enjoy a lower mortgage payment compared to just a year ago.
Industry professionals typically see a winter slowdown during the holidays, but “not this year,” they say, as the local real estate market anticipates a booming start to 2021.