Competition in the boiling Provo, Utah housing market
Nestled between Utah Lake and the towering peaks of the Wasatch Mountain Range, it’s hard to imagine anything in the Provo-Orem metropolitan area could be anything but calm. But for the past 12 months, the subway housing market has been in complete chaos.
“It’s hot, hot, hot here,” Clay Winder, real estate agent for Keller Williams Westfield, called. “The Provo Orem market is growing faster per capita than anywhere else in Utah, including our capital, Salt Lake City.”
The average home price in Provo rose 24.4% year over year to $ 410,000 in August, while in Orem it was reportedly up 22.2% to $ 440,000 Red woman. In comparison, the national median rose by only 16.2% year-on-year.
On average, homes in the area sold about 2.5% above list price in August 2021 and were on the market about 11 days before pending. However, newer homes and fully modernized older homes sold for about 6% above demand on average and only stood there for six days before becoming pending.
“If the home is on the market for above average days, buyers can offer list price, but if it’s new on an opening weekend they can go in excess of $ 5,000 to $ 10,000,” said Becca Summers, a local Williams Cellar -Agent. “It is therefore more important than in previous months for sellers to ensure that their home is ready for the opening weekend.
As with most other subways around the country, the rapid price increases have been driven by strong demand and low inventory levels. Several real estate agents and brokers speaking to HousingWire cited three main reasons for this surge in demand: Utah’s high birth rate, the surge in “silicon slopes” and COVID-19, and state government policies related to the pandemic.
With a large Mormon population, Utah has the highest birth rate in the country. This means that the number of millennials reaching the average age to buy a home is even greater in Utah than anywhere else in the country.
“Net migration has really added to the mix of factors driving demand for housing in the state,” said Matt Barton, principal agent Century 21 Everest Realty Group. “Various factors come together, but the naturally high birth rate has been around forever and the population is only just beginning to grow.”
Although intra-state migration was part of the surge in demand, the rapid influx of tech companies into the area north of Provo-Orem, nicknamed “Silicon Slopes”, has been a major source of interstate migration. Companies with branches in “Silicon Slopes” include Domo, Adobe, eBay and Facebook.
“We’ve had an explosion in technology and other businesses in the past three to four years,” said Barton. “I mean, when I drive down I-15, it’s like every other week seeing a new building … So we’ve had an unusual influx of people from states like California, even the Northwest, who came in because of the Take the cost of living before it all goes crazy and said, ‘Hey, Utah is affordable and it’s not congested, let’s go there.’ “
While those first two reasons could at any time have increased movement to Provo-Orem, the COVID-19 pandemic brought special circumstances that further spurred migration to the subway. Compared to California, Utah was pretty relaxed with the COVID-19 restrictions. The governor only introduced a mask mandate at the beginning of November 2020 and students in many districts were able to attend school in person for the entire 2020/21 school year.
“I have a lot of people I spoke to who came here because we’re in school full-time,” Summers said. “Children don’t do distant things. You can wear a mask, but you don’t have to wear a mask. That’s why a lot of people who wanted to have more opportunities with Covid moved to Utah for it, but especially schooling – that was a big deal. “
However, since July the housing market in Provo-Orem has finally slowed. In the spring and early summer of 2021, many real estate professionals who spoke to HousingWire said it was not uncommon to receive 20-30 offers on a property within a few days of a launch. Now they see hot properties getting three or four bids, but certain properties are still generating more than 10 bids, reflecting a nationwide decline in bidders battles.
“May and June of this year we saw in the realm of the crazy, where you set up an achievable property right and you maybe get somewhere between, no joke, 20 to 30 offers, with floating evaluation quotas, non-repayable serious money with acceptance and acceleration clauses” said Barton. “That was the norm from last summer until the end of this summer, but as we’ve seen, things have slowly slowed down. My agents are still getting three or four offers for a house. There are still some buyers out there, but it’s not nearly as aggressive as it was a few months ago. “
However, agents and brokers in the area do not believe this slowdown is a major cause for concern.
“It’s a little bit slower statistically, but the relationship between supply and demand is still tight,” Devin Haub, a local RE / MAX said the broker. “So overall there will likely be fewer deals in the fourth quarter, but there are fewer offers and fewer buyers, so the balance of supply and demand is still very tight, which makes it a competitive market.”
Residents and home buyers alike are faced with a new problem: they are running out of land to build on.
“If you look at our geography, we don’t have much land left to build,” said Haub. “Although nobody likes these prices, if he wants to continue living here, there is no other place for him than the vicinity of the city. It’s not like Texas, where you can just put a ring around the city and just keep expanding – you can’t do that here. You have the mountains and the lake, so all the houses are squeezed between the lake and the mountains, and unless you want to go to the other side of the mountain and drive for an hour or two, they all aim for the same location. “
Looking to the future, area representatives and brokers expect prices in the region to continue to rise, but not as accelerated as last year.
“If we assume that we are going back to normal market patterns, with sales slowing from October through January and mortgage rates rising nearly a full point by the end of next year, that will have an interesting effect because when prices start to rise “You see a flurry of activity because people kind of panic and prices are going to go up again,” said Barton. “So you get this first rush of people doing whatever they have to do to get into a house and then it will calm down. I think we will know what this market really is by the end of next summer. “