Due to an influx of tech business and the unusual circumstances of Covid, 2021 broke previous homes-sales and -price records along the Wasatch Front. Utah saw an astounding year-over-year 27% increase in housing prices in 2021! Previously the record high in Utah was at 20.1% in 1979. With prices at an all-time high, interest rates on the rise, inventory still lagging, and inflation and construction costs through the roof, the future of the SLC housing market feels uncertain. What’s to come for the Wasatch Front housing market this year? Here are our SLC real estate market predictions for 2022.
The SLC Metro will be a Top Market in 2022
Lifetime Salt Lakers have known for quite some time that This is the Place. Outsiders are now just discovering amazing outdoor living, excellent schools and the high quality of life that comes with a Utah address. In fact, Salt Lake City was recently named by Realtor.com as the “Top City of 2022” and anticipates our city will have top sales and price growth in the nation this coming year. Quoting local economist James Wood, Ivory Boyer Fellow, “Not surprisingly, the housing price increase in the Salt Lake Metropolitan Area now ranks among the highest of all major metropolitan areas.”
Expect SLC Home Price and Sales Growth
Realtor.com anticipates Salt Lake City metro home-price growth will be at 8.5% and home-sales growth at 15.2% in 2022. Median home price for Salt Lake residents over the last year was $564,062. Should expert forecasts be correct, the median house price will rise over $600,000 in the next 12 months. Affirming this projection, Wood asserts, “The price momentum [of 2022] will trend lower than , but another year of double-digit home-price increases is likely to be [around] 10-12%.” Demand from the existing population, out-of-state investors and newcomers will continue to impact availability and price.
Interest Rate Hikes Won’t Reverse Wasatch Front Home Price Increases
The Federal Reserve announced at the beginning of January that they are planning three, ¼% point interest rate hikes by the end of 2022 to counteract growing inflation concerns. Experts are predicting interest rates at 3.55-4.00% for a conventional 30-year fixed rate this year. While this cost-of-money increase will dampen demand, it will not be enough to dampen sales and price increases in the Salt Lake metro area. Economists factor possible rate hikes into their home-sale and -price assertions. Interest-rate increases are accounted for in the 10-15% home-price increases expected along the Wasatch Front.
Cash Is Still King In 2022
Last year we noted the unusual uptick in cash transactions along the Wasatch Front. In 2021, 29% of home-sale transactions in Salt Lake were in cash. With interest rates going up, and home prices still rising, we expect this number will stay the same or increase. Interest rate hikes are inapplicable to those with cash to burn. If you are looking to buy, get ready to go up against competitors with cash in hand. Read our 8 Tips For Wasatch Front Home Buyers. It is as relevant today as it was last year!
Increased Real Estate Investment Along the Wasatch Front is Coming
If you bought a home in the Greater Salt Lake area just five years ago, chances are your property has almost doubled in value. Utah’s population is only expected to keep growing, doubling by 2050. The Salt Lake metro housing market has been flagged by out-of-state investors as a high-growth, high-return market. An influx of investor capital will continue to flow into our region as wealth managers increasingly advise clients to vary their asset portfolio and take advantage of real estate deferment taxes. Even with prices rising, now is the time to invest in Salt Lake real estate.
Inventory Will Continue to Lag and Remodeling Will Continue to Boom
Wasatch Front developers and builders are still playing catch up to the Wasatch Front’s population boom. In 2020, SLC saw the largest annual drop in inventory in the nation at -48.9%. Economists are projecting that supply chain and other market disruptions will continue to resolve themselves in the coming years. But inventory increases will be slow. This demand is pushing buyers to pay more than expected for a home. We are finding many of our clients are buying homes below their budget and spending the difference remodeling to bring their home up to expectation. We project buying and remodeling before occupancy to be a hot housing-market trend in Salt Lake in 2022. Even with construction costs at an all-time high, buying and remodeling may be the best path to getting exactly what a home buyer wants when supply is low.
Salt Lake’s Housing Market is Not a Bubble to be Burst
The Wasatch Front has seen consistent home-price increases since the Great Recession, with the incline steeply rising over the last five years. Demand from out-of-state investors, out-of-state newcomers, Millennial, & Gen Z buyers is only expected to keep rising. According to Wood, “A housing bubble is highly unlikely.”
As Karly Nielsen, President and Broker of Niche Homes, likes to tell her clients, “The secret about Utah is out. People typically don’t leave Utah and we continue to see tremendous growth along the Wasatch Front because we attract and keep employers, we have a moderate and stable economy, we have land to build on, people keep having babies, people are living longer and we are inviting friends and family to move here!”