Economic Growth and Recreation Access Draw Home Buyers to Salt Lake City

The Greater Salt Lake market, which includes the seven major counties along the Wasatch Front and Back, has grown surprisingly fast in recent years. This recent massive stream of demand makes it important to understand what makes the Salt Lake City market attractive to so many people and large corporations. One of the most notable areas along the Wasatch Front, strategically named “Silicon Slopes,” has been a major draw for tech companies from across the country and brings extremely desirable jobs to the Salt Lake market. Before the COVID-19 pandemic, the market created an average of around 35,000 new jobs per year. After the pandemic, the market lost 86,200 jobs in April 2020. According to the latest figures from the Bureau of Labor Statistics, the Greater Salt Lake market saw a net increase of 5,500 jobs in the last 12 months through December 2020.

In addition to the strong economic growth of the market, the Greater Salt Lake market is also known for its unmatched access to recreation. In the summer months, activities such as hiking, cycling and golf are popular. There are 11 ski areas within an hour’s drive of Salt Lake City International Airport that are easily accessible for outdoor enthusiasts. Speaking of the airport, the first phases of the renovation program were recently completed and it is still being expanded. The airport is becoming another icon in the market and speaks for commitment and commitment to enable more growth in the future.

As important as jobs and recreation, the housing market across the Greater Salt Lake market has attracted those outside of the market as well. Annual new builds in the Greater Salt Lake market increased 24% in 2020 compared to 2019, to a total of 15,822, driven by increasing demand. While annual new home builds haven’t hit the previous high of 17,558 starts in 2006, buyers in the market today appear to be primary home buyers (along with some secondary buyers in the Wasatch Back), with a very limited number of investors.

Courtesy of Zonda

With home demand increasing, new home and resale inventories have risen to extremely low levels. During our quarterly lot-by-lot poll for each subdivision, Zonda tracks all new homes that are under construction, as well as those that are completed and vacant (also known as specification homes). An acceptable level of inventory under construction should be between six and nine months. There is currently a 7.0 month supply of new homes under construction, both grown and detached, that are at the lower end of the equilibrium. One of the most important numbers we monitor is the completion of the free inventory. The number of finished and vacant houses on the market has decreased by 47% compared to this time last year and is currently 0.5 months. For reference, we consider this balance to be between two and two and a half months, which makes the current level extremely low. While builders have tried to bring more ready-made vacant homes to market, they are struggling as consumers continue to buy these homes as quickly as they can be built.

While rising home sales are beneficial to the overall market, there is one downside: an increase in property prices. Using our Zonda app, we find that the average list price for a new home in the Greater Salt Lake market is $ 400,900, up 21% from that time last year. While local new home prices continue to rise, hurting affordability, outside of the state buyers are drawn to the area as prices are significantly lower than in larger metropolitan areas across the country. Therefore, when non-government buyers come into the Salt Lake market, their equity is of great concern. By December, around 29% of all new home sales were bought with cash.

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