As prices rise, Utah housing market less of a bargain

As movers flock to secondary cities in search of more land for less cash, the Utah housing market – land of ski slopes and mountain trails – has become a popular destination, especially for those leaving California. The town of Logan, which has 50,000 residents and sits about 90 minutes north of Salt Lake City, is just one example of red-hot demand in the Beehive state.

“I think I’ve worked with more out-of-state buyers in the past 12 months than actual Utah residents,” said Caylee Bess of Bess Real Estate, located in Ogden, which sits between Salt Lake City and Logan. “It’s a lot of people from California, but also Washington, Texas, and Oregon. Our prices obviously weren’t as high as California’s at the beginning [of the pandemic], but we’re definitely catching up thanks to demand.”

Bess described the bidding wars in Logan and central Utah as “insane,” with homes on the market for only 12 hours receiving anywhere from 20 to 40 offers – and all well above asking price.

“People are offering $10,000, $20,000, $30,000, up to $60,000 above listing price,” Bess said. “Honestly, in most cases, $10,000 over asking isn’t even going to cut it. Logan is growing a lot and has a ton of room to build, so it’s really competitive.”

Per Realtor.com, homes in Logan are being listed at a median price of $290,000 and being sold for an average of $300,000. Both of those numbers are approximately 20% higher year-over-year. Those high prices are being felt locally, as only 31 homes were sold in March this year as opposed to 44 sold in March 2020.

But when houses do hit the Utah housing market, they’re snatched up in a hurry. Homes in Logan are only staying on the market for an average of eight days; in 2020, homes were staying on the market for an average of 25 days.

Logan homes are quite spacious, factoring in that most homes in the city have basements. It’s not uncommon to find a plethora of homes between 2,200 and 5,000 square feet, said Kristine Fronk, agent with Dwell Realty Group in Logan.

“The issue up here is we just can’t keep any inventory,” Fronk said. “There’s usually 700 to 900 homes on the market in Logan, and right now, we have 41. And that includes everything – townhomes, houses, mobile homes, you name it. It’s very crazy.”

So crazy, in fact, that people are putting down offers up to $25,000 above asking price, but not always having enough cash for a down payment, Fronk said.

“Our appraisers aren’t just appraising for whatever – they’re still being pretty careful with the market how it is,” Fronk said. “It’s not always a good idea in Logan to throw an offer at the wall and hope that it sticks. It’s more common for me to see people willing to pay up to $5,000 over the asking price up to a maximum amount.”

Fronk said she saw one home in Logan receive 23 offers before it sold for $75,000 over asking price.

“And it was a cash offer,” she said. “The backup offer could have gotten the seller a little bit more, but it was a site-unseen offer and the seller felt a little more comfortable going with the first offer.”

Like many towns across the country, builders in Logan – and all over Utah, for that matter – are struggling to keep up with demand amid the high cost of building materials and lumber. Brooke Hyer, a new home consultant with Visionary Homes in Logan, said her builders were worried about making sales at the beginning of 2020, but that fear quickly evaporated by the summer.

“From July to October we had the highest sales volume that we literally have ever had,” she said. “But it got to a point where we began falling behind. Logan is a slightly smaller population than Salt Lake City, so our trade base is smaller and our building time was being stretched out too far. It got to be that we didn’t want to plan builds so far out anymore.”

Hyer said Visionary Homes actually shut down all sales in February and March 2021 to catch up, and that building schedules are still crazy as the calendar flips to April.

“All these buyers want a place or need a place, so usually they say ‘I’ll just build.’ But it’s too crazy right now and too difficult to meet demand,” she said. “It used to be that homebuilders were the last resort. Buyers would say ‘There’s always land to build on,’ but now we can’t save people. And every builder in Utah is in the same boat. We don’t have the land developed and we don’t have the labor force.”

There’s currently no end in site, per multiple agents – people are still flocking to Utah’s housing market for the affordable homes, bigger lots, the scenery and the outdoor activities. But it won’t be long before high prices even out the playing field, Bess said.

“People like Utah because of the skiing, and the fact that we have four seasons,” she said. “But our prices are not too far away from really going higher. There’s just too much demand.”

The post As prices rise, Utah housing market less of a bargain appeared first on HousingWire.

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