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This story is part of The Salt Lake Tribunes’ ongoing commitment to identifying solutions to Utah’s greatest challenges through the work of the Innovation Lab.
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Winter and Danesha Mead have lived in California for almost a decade. They then hopped into an RV and traveled all over the place before stopping in Salt Lake City.
The Meads knew they wanted to live closer to the mountains, and Winter wanted to be a bit closer to the east coast, where her family lives. They settled in the 9th and 9th neighborhoods of the city, around the intersection of highways 900 East and 900 South, and were ready to bid on a house that had been on the market for two years. But this weekend, two other parties filed offers.
Something we thought was a slam-dunk ended up being a potential bidding war, and we ended up not getting that house, Winter said. It was very clear that all of a sudden it was an extremely hot market.
What the Meads, who ended up in another home around the 9th and 9th, experienced has become reality for buyers in Utah and out of state.
During the Great Recession, there were about 18,000 inventory listings in Salt Lake County, according to real estate agent David Kevitch of Wasatch Homes & Estates. A few weeks ago, there were 632.
A normal market has a supply of homes of around six months, which means that if we stop listing new homes, there will be around six months until we run out, said another agent, Brian Tripoli of City. Home Collective. And right now, they were running around a month’s supply. So it’s hyper-, hyper-competitive.
A hyper-, hyper-competitive market raises questions: What explains the housing shortage in Utah? Is it purely a lack of supplies, insofar as residents do not give up their homes? Or is it the oft-cited influx of Californians?
Many people make the latter point, but a recent study from the Utah Foundation argues that it’s not the case as most of this population growth is linked to fewer departures.
According to agent Brett Wilde of Wilde Real Estate, most of the out-of-state newcomers to Salt Lake County are, like the Meads, from California.
Winter started his own business in Salt Lake City, but it’s something completely distant that he never thought of until the pandemic normalized Zoom’s work.
It’s a trend that has sent a lot of Californians to Utah. Wilde noted that California lost over 300,000 residents last year, and they certainly weren’t going west.
As they headed east, strong economy states such as Idaho, Utah and Texas were the beneficiaries of this influx, Wilde said. While this was good in many ways, it also put a lot more additional pressure on this part of the buyer’s market.
The rise of impulse offers
(Briana Scroggins | Special for The Tribune) An Ogden house has a contracted sign posted in the front yard on Wednesday, June 23, 2021. The Utah housing market is exploding and many buyers from outside the State blame, including those in California. The truth behind the “hyper-competitive” real estate environment in and around Salt Lake City is much more complicated.
The model of Californians moving to Utah does not tell the whole story.
First of all, it is not only Californians, even if they constitute a plurality of newcomers. Realtors say people are from New York, Boston, Vermont, Austin, Texas and elsewhere.
In fact, Californians have been coming to Utah for years. One of those Golden State families is the Finns. Mariko Finn and her husband came to Salt Lake City years ago. They loved the neighborhoods, the food, the outdoors. Eventually, however, they decided to return to the Bay Area. As they sold their Salt Lake City home, Finn noted, the once deliberate and thoughtful task of placing a bid has changed in a time of a pandemic.
Right now, if you see it and like it, you make the offer, Finn said. There is absolutely no hesitation. It’s kind of free for everyone.
The impulse bid strategy means that in order to get a home, buyers in the current market often have to agree to abnormal buying terms. Some sellers will ask the party to wait several months to move in, so that the sellers can have enough time to find their next home.
Until last year, this was unheard of, City Home Collective’s Tripoli said. You might have a seller who might ask a few days after closing. And, you know, most buyers are very excited to walk into the house they just bought.
Months away from his life in Utah, Finn recognizes the impact of people like his family moving to the state. She noted that when they first arrived, California license plates were less common. Now, she says, they seem to be everywhere, although some, like the Finns, are moving. This will have an impact on the demographics of the city.
This is going to change dramatically, she said. The sad thing is that the people who are going to become first-time home buyers in Utah are going to be kicked out of the market by people from other states.
It’s all about supply and demand
(Briana Scroggins | Special for The Tribune) This house on Jefferson Avenue in Ogden is for sale on Wednesday, June 23, 2021.
But it’s not just Californians or Vermonters, New Yorkers and Texans who are affecting the market. Recent research from the Utah Foundation noted that the Salt Lake metropolitan area experienced the fifth most extreme growth rate of 100 cities measured, but added that fewer people arrived in 2020 than in previous years. On the contrary, more people stay in the state.
Are Californians the engine of this growth? Unlikely, wrote Christopher Collard, research analyst at the foundation. It turns out that for 2020, residents of the Salt Lake metro are responsible (at least in part) for rising house prices and rents, as they haven’t moved at the same rate as in previous years.
When asked for their reactions to the foundation’s conclusion, realtors said they were in agreement. Kind of.
It’s funny, because I used to blame the market, mostly on people moving to Salt Lake, Tripoli said. But for him, the research makes sense.
Wilde agreed. He noted that the region is still experiencing massive growth, but most urgently … we have two-thirds of the amount of inventory we did last year. That’s 100 percent of the engine of this economy, because demand is one piece, but supply is the engine of the train.
Kevitch wasn’t happy that the Utahns didn’t sell simplification. He said the demand is still huge and the problem is that the supply has not been able to catch up.
It’s not that they don’t want to sell. There are still quite a few sales. The problem is that the demand is so high that the inventory cannot reach a level that would show that there is a good supply.
But if, as the Utah Foundation says, Salt Lake metro residents are to blame, do they have enough faith in the market to sell?
Tripoli said the supply problem is self-reinforcing. Because there is so little supply, the Utahns feel uncomfortable sticking this sign for sale into the ground. They know they couldn’t turn around and buy in the market they live in, he said.
I know, personally, that I have several clients who, in a normal universe, would have been inclined to sell, but who said it made no sense to sell, Tripoli said. Because, yes, they might win the best price, but then they’d be caught in the vortex of trying to buy a seat and pay top dollar for it.
Wilde acknowledged that it is difficult to find accommodation in this market. But it’s not impossible, he said, and shouldn’t discourage salespeople.
It’s a myth that they can’t sell because they can’t find a new place to buy, Wilde said. Simply not the case. They need the right services; they need the right agency to help them.
Coldwell Banker Realty agent Heidi Gillmor admitted, however, that there was a lot of stress in the market.
If you have a house and you’re trying to move, said Gillmor, the question arises: where should I move?
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