The Salt Lake Board of Realtors commissioned James Wood from the University of Utah’s Kem C. Gardner Institute, to provide the Salt Lake Board with an economic and housing forecast for 2019. This is an annual thing, and James Wood is our go-to guy for this forecast.
Listed below are some of the highlights of the article, the economic forecast and the housing forecast for 2019. I did some additional research and have added information on specific points of interest.
Highlights from the article:
- We have had eight years of economic expansion in Salt Lake County. Economic expansion is defined as a period of economic growth, with employment growth above 3% annually.
- There have been three extended economic expansions in the last 50 years in Salt Lake County, one in the 1970’s, another in the 1990’s and this one, which started in 2010.
- During these economic expansions, the state of Utah has led the country for at least two years in job growth.
- 2018 saw the fourth highest amount of combined sales for single family and multi-family dwellings in Salt Lake County, at 17,956 units. Only 2016, 2005 and 2006 were higher.
- Salt Lake City saw the highest share of those sales in 2018, with a 21.8% share, followed by West Jordan with 10.5%, South Jordan with 8.4%, Sandy with 8.3% and West Valley City with 8.2%.
- The percent change in median sales price for a single family home in Salt Lake County has increased every year of the economic expansion starting in 2012 with a 6.5% increase, 15.6% in 2013, 4.1% in 2014, 7.0% in 2015, 8.1% in 2016, 10.2% in 2017 and 9.2% in 2018.
- Overall, the median price of a single family home in Salt Lake County increased from $195,000 in December 2011 to $355,000 in December 2018, a 82% increase.
- The average monthly payment for a home in Salt Lake County at the median price of $355,000 in 2018 was $2,014. Five years ago, the average monthly payment for a median priced home of $245,000 in 2014 was $1,299.
- The second half of 2018 saw a housing market slow down in Salt Lake County, with a 12% decline in the number of homes sold and a 6% decline in the median sales price of a single family home, due to decreased demand, increasing interest rates and lack of affordable housing. However, we still finished 2018 with a 9.2% increase in the median sales price, due to a robust first half.
Economic forecast for 2019 (Salt Lake Board of Realtors/James Wood U of U):
- The most recent economic forecast from the University of Utah (October 2018) shows continued solid growth for 2019, with a deceleration in the rate of growth.
- Job growth will continue to be robust, but is predicted to decline from 3.3% in 2018, to 3.1% in 2019.
- The labor market will continue to be tight, with unemployment dropping to 3%. In the last 70 years, only two years have been tighter, 2006 and 2007.
- Average pay increased by 3.8% in 2018, which was the largest increase since 2006. Average pay is expected to increase by 2.5% in 2019.
- Net-in migration, demographic growth, is expected to significantly decline in 2019. I back checked this to see how significant a decline they are predicting.
- Net-in migration during 2018 was 33,920 more people coming to Utah than leaving. The net-in migration projections are 31,469 for 2019 and 28,845 in 2020. 2018 was a big year for net-in migration. To put this in perspective, 21,994 more people coming to the state than left in 2015, 24,274 in 2016, 32,960 in 2017. So 2019 will still have significant net-in migration, even though it’s projected to decline by 7.2% compared to 2018.
- There have been only two years since 1990, that Utah has had a negative net-in migration, and they were 2009 and 2010, during the Great Recession.
Salt Lake County Housing forecast (Salt Lake Board of Realtors/James Wood):
- Due to the high cost of single family homes and increasing interest rates, single family home sales will decline from 13,100 to 12,000 units, an 8% decline in volume.
- Condominium and townhome sales will increase from 4,856 to 5,200 units, a 7% increase in volume as more buyers seek affordable housing.
- Overall residential sales will fall from 17,956 units to 17,200 units, a 4.2% decline.
- The median sales price of a single family home will increase by 5% to 7%, to approximately $375,000.
- The median sales price of a condo/townhouse will increase by 10% to $275,000.
- Residential construction will decline from $2.0 billion in 2018 to $1.75 billion in 2019, as interest rates increase, new home prices increase and demand for housing declines slightly.
- Non-residential construction of public projects are at record levels for 2019, including the new SLC International Airport, the Utah State Prison and major highway and road construction.
- The forecast for the 30-year mortgage rate from some of the largest housing and mortgage groups (Fannie Mae, Freddie Mac, National Association of Realtors…) comes in at an average of 5.25% by late 2019. The current average 30-year mortgage rate is at 4.35% per Freddie Mac.
So if you already own a home, the outlook is pretty good considering we are in the ninth year of a local economic boom and the eighth year of our housing boom. However, the cost for home buyers will be be going up later in the year with increasing home prices and interest rates, but for right now, the 30-year mortgage rate is still pretty good at 4.35%.
If you have any questions about buying or selling real estate in and around Salt Lake County, wonder what your home is worth, or have a friend that needs help buying or selling, please contact me. I’ve been a local Realtor since 1999, and absolutely love what I do, and I can’t do it without you.
Thank you!
Kevin Coyle
Realtor Broker MBA CRS
SLC Homes
M: (801) 243-0699
Kevin@SLCHomeBuyer.com
