July 7, 2015

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Pent-up Demand

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Pent-up Demand

July 7, 2015

When it comes to demographics, Utah is unique for its youthful population, young average marriage age and above-average household sizes. Our state’s millennial population is unique for another reason: Utah millennials are much more likely to own a home than their national counterparts.

That’s according to the Utah Foundation, which says that 41 percent of Utah millennial households own their own home, compared to 30 percent nationally. But current housing trends are going to make it harder for these young Utahns to become home owners.

First of all, the rate of new home construction has not recovered from the hit it took during the Great Recession.  A quick look at the numbers shows how dramatic this slump has been. The first half of 2006 saw 11,700 permits issued for new single-family homes to be built along the Wasatch Front, according to the Construction Monitor. But in 2008, a year into the Great Recession, only 3,000 permits were issued—about a quarter of the permits issued just two years earlier.

Fast forward to the first half of 2015, and the Wasatch Front saw about 5,000 permits for new home construction—a big improvement over the recessionary numbers, but still a far cry from the 11,700 that were built in 2006.

In addition to that, the inventory of homes on the market is flat—if not falling. Salt Lake County saw an inventory increase of only .8 percent during the first half of this year, while Utah County had a decrease of about 24 percent. New homes are not being built at a tremendous pace, and a new wave of millennial buyers are keeping inventory painfully low.

Are Utah millennials going to be able to continue joining the ranks of home owners? Either the pent-up demand for homes will unleash a wave of construction and real estate activity, or these young families will have a harder and harder time attaining the dream of home ownership.

You can find a snapshot of Utah’s current housing market, including closed home sales, median prices and new home construction permits, beginning on page 98 in the 2015 Utah Housing Report.

Dave Robison, president of the Salt Lake Board of Realtors, says the tight inventory is going to keep a lid on real estate activity through the rest of the year. What do you foresee for Utah’s housing market? What are the trends in your neighborhood? Give me your pulse of the situation at heather@utahbusiness.com.

From the Editor
Heather Dawn Stewart

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