SALT LAKE CITY — Utah's capital city is being pegged as one of the "hot" homebuying markets to watch for the coming year.
Online real estate website Realtor.com ranked Salt Lake City as the No. 6 metro area among the Top Housing Markets in its 2018 National Housing Forecast released Wednesday.
Citing inventory constraints that have fueled a sharp rise in home prices and made it challenging for potential buyers to enter the robust real estate market, the report stated that circumstances should start to improve next year due to wide-ranging market enhancements, explained Realtor.com chief economist Danielle Hale.
The easing of the inventory shortage, which is expected to result in more manageable increases in home prices and a modest acceleration of home sales, is based on an inventory growth trend that began in August 2017, the report stated.
"The Salt Lake market has had several years of really strong economic growth. The housing market is reflecting that,” Hale said. “Prices and sales are expected to do well in 2018. We’re expecting 4.5 percent growth.”
Starting a few months ago, the U.S. housing market started to see a higher than normal month-over-month increase in the number of homes on the market, the report showed. Based on that trend, Realtor.com projected U.S. year-over-year inventory growth to inch up into positive territory by fall of next year for the first time in three years. Inventory declines are expected to decelerate slowly throughout the year, the report stated.
Hale said data indicates that home prices nationally will grow 3.2 percent over the prior year — down from an estimated 5.5 percent in 2017.
The higher-priced segment of the market will feel most of the easing as more available inventory in that price range and a smaller pool of buyers forcing sellers to price more competitively, according to the report. Sellers of entry-level homes should continue to see price gains due to increased affordability for a larger number of buyers and limited housing stock for sale in the lower price range.
The report stated that mortgage rates are expected to reach 5 percent by late next year due to stronger economic growth, inflationary pressure and monetary policy normalization in the year ahead.
In Utah, home prices were strong this year, with the median sales process climbing 10 percent in Salt Lake County, according to Jim Wood, Ivory-Boyer Senior Fellow at the University of Utah's Kem C. Gardner Policy Institute.
Conversely, Wood said home sales were down slightly in 2017. Regarding Realtor.com’s predictions for next year, he said both demographic growth and economic growth are robust, which should bode well for the coming year.
“I’d have to agree on prices, but sales have been sticky," Wood said. “I hope they are right.”
Median prices in Salt Lake County have risen 55 percent since 2012, the lowest point of the recession — from $210,000 to $325,000, he said. That sharp rise is creating an affordability concern within the local housing market, Wood said.6 comments on this story
"Housing affordability is a big-time issue, particularly for those who are at less than the median income — that's half the households," he said. "It's a worry. A 55-percent increase, it raises a red flag."
2018 top housing markets
- Las Vegas-Henderson-Paradise, Nevada
- Dallas-Fort Worth-Arlington, Texas
- Deltona-Daytona Beach-Ormond Beach, Florida
- Stockton-Lodi, California
- Lakeland-Winter Haven, Florida
- Salt Lake City
- Charlotte-Concord-Gastonia, North Carolina/South Carolina
- Colorado Springs, Colorado
- Nashville-Davidson-Murfreesboro-Franklin, Tennessee
- Tulsa, Oklahoma