People who keep up with the housing industry and its regular fluctuations know that prices go up and down in response to demand. Some may not understand why, but they at least recognize the link. That link is even more prevalent when population growth is added to the equation. In short, there is a definite correlation between increased property values and population growth.
Salt Lake City, Utah is one glaring example of this correlation. Across the U.S., the average price of a single-family home has increased just slightly more than 9% over the last year. But in Salt Lake City, home prices are up more than 13%. Salt Lake City’s population is also increasing at a rate of about 1.1%.
Utah’s capital is one of the fastest growing cities in the U.S. right now. It offers economic opportunity, good jobs, and a host of cultural and leisure activities. People are flocking to the area in droves. Housing prices are responding accordingly.
Needs at All Income Levels
CityHome Collective, a local real estate brokerage that also offers interior design services, says that there are housing needs at all income levels in the city. Upscale buyers are looking for luxury homes and condos. Families are looking for single-family homes with green space. Young couples just starting out need affordable starter homes close to work.
Unfortunately, the reality in Salt Lake City is that there is not enough new housing to go around. With demand high and supply low, the only direction for prices to move is up. The trend should continue this way for the foreseeable future. Until supply and demand even out, buying a home in Salt Lake City will be a pricey proposition.
Migration Is Shifting the U.S. Population
While many people are flocking to Salt Lake City, others are also choosing different destinations. People from California are leaving the Golden State in favor of Texas, Arizona, and Nevada. Residents fed up with the Northeast are packing up and heading to the Carolinas, Georgia, and Florida. Housing prices are responding accordingly.
Without a doubt, migration is shifting the U.S. population drastically. California and New York are among the states losing the most residents. Idaho, Florida, and Texas are among the big gainers. You can see the population shifts reflected in home prices.
A Seller’s Market
CityHome Collective confirms that it is a seller’s market in Salt Lake City right now. It should remain that way for the time being. Moreover, sellers should have the advantage in most markets across the U.S. this spring and summer. As surprising as it might be, people are looking to buy even as the country seeks to emerge from coronavirus. Retreating interest rates are a big part of that.
If you are planning to buy, be prepared to pay dearly this year. If you are selling, you’re probably going to realize quite a bit of a profit from your equity. But don’t forget that you’re going to have to turn around and buy as well. All of the equity you make on your existing home is going to go into your new home. But that’s what equity is for, right?
In the meantime, right now is a good time to be either a builder or real estate broker. You can bet both industries will be working overtime to take advantage of this market before it cools down again. And make no mistake, it will cool. As migration slows and populations stabilize, demand in the hottest markets will cool. Elsewhere, prices will stabilize – and perhaps even fall – as we lose some of our economic steam.