Typically, housing shortages are considered the norm in places like San Francisco, Miami, Boston and New York. But Provo, Utah? Utah County is experiencing short supplies and rising housing costs and it is a simple lesson in supply and demand.
Even though the supply of homes and apartments in Utah County is rising, it still isn’t fast enough to meet the demand.
Not since the 1970s has the number of households exceeded the total housing inventory in Utah. As a result, home prices have been driven upward, which has made it difficult for many younger people to realize the goal of buying a home and establishing a family residence
Aaron Drussel, president of the Utah Central Association of Realtors, told the Daily Herald a strong economy in the county has fueled demand.
“You have a lot of people that have moved here, a lot of companies that are growing and there’s a huge influx of both people relocating and also people graduating schools here and starting families and starting their professional careers,” he said.
Last year, the state continued to see its population increase as it hit 3 million residents. Moreover, the economy brought growth that has come with some issues: Utah continued to see home prices increase while the number of homes on the market dwindled.
According to information from the Utah Association of Realtors, the median sales price of homes sold in Utah County in February was nearly $10,000 higher than the same period a year ago.
According to data released by Trulia, between 2012 and 2017, Salt Lake City saw a 69.5 percent drop in housing inventory over the five-year period.
In Salt Lake County, housing prices have increased over the last three years, with 2016 seeing the largest growth at 8.1 percent, according to a separate study conducted Jim Wood, the Ivory-Boyer senior fellow at the Kem C. Gardner Institute at the University of Utah and commissioned by the Salt Lake Board of Realtors.
According to Wood, the growth is interesting because it pushed single-family prices to $295,000, which he said was “slightly above the previous record high of $290,000 in 2007 (when adjusted for inflation).”
In 2017, builders remain conservative, some still shell-shocked by the housing collapse of a decade ago.
However, the previous boom was driven by speculation and driven by unethical appraisers and mortgage lenders who approved loans for buyers who were not qualified. This time around, the rising costs are being viewed as the function of a robust economy and a growing population.
Even if they wanted to keep pace with population growth, it would be a challenge. There are simply not enough construction workers available for builders to keep pace with the demand.
“People have got to have a place to live,” Wood said. “What are your choices? The existing home market, which is already built and are used homes; second, a new home market; third, is the apartment market.”