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From housing crisis to emergency: Salt Lake County home prices spike 31% in one year

In the latest sign of Utah’s housing crisis, Wasatch Front real estate agents Thursday decried the dire lack of homes on the market as prices climb to shocking new records and sales continue to bog down.

Salt Lake County’s median price on a single-family home inched past the eye-catching $500,000 mark sometime in March and then reached $535,000 last month, new data shows — up a staggering $128,000 from a year ago, a 31% jump.

That major damper of spiraling prices pushed May’s volume of homes sold across the five-county region way down, to below levels for the same month last year, when home shopping was temporarily snuffed out by COVID-19.

With the average new home listing now drawing 30 to 40 offers and sold in five days, real estate agents in Utah’s main metropolitan area issued a rare emergency statement, saying decades of underinvestment had left the region “heavily under-built” and facing severe declines in affordability.

“More construction of all housing types is needed so more people can realize the American dream of homeownership,” said Matt Ulrich, president of the Salt Lake Board of Realtors, covering Salt Lake, Utah, Weber, Davis and Tooele counties.

“It’s just too tough out there,” Ulrich said in an interview. “There’s just not enough inventory because there’s so much demand.”

That cry for help keyed off a new report released Wednesday that estimates the nation’s housing deficit at roughly 5.5 million units. The industry study calls for ramping up the rate of U.S. homebuilding to add 2 million homes yearly over the next decade, compared with last year’s 1.3 million units built.

America’s housing stock has been widely neglected for nearly two decades, the report from the National Association of Realtors said, with a severe lack of new construction leaving an acute shortage, an “ever-worsening” affordability crisis, and an inventory of existing homes that is aging and in need of repair.

Calling the scale of lagging construction and the resulting demand-supply gap “enormous,” the report said the crisis “will require a major national commitment to build more housing of all types.”

In Utah, the housing gap is pegged at between 45,000 and 50,000 single-family homes, apartments and other housing types, with an especially acute need for more affordable homes accessible to residents making average wages.

Utah homebuilders have record numbers of units underway but say they are not catching up in the face deeply pent-up demand, a lack of supply and soaring prices for land, building materials and construction labor.

Along the Wasatch Front, spiraling prices have been slowing sales off and on since 2019, according to economists, but pandemic-driven demand for homes with more rooms and larger backyards have drawn down housing supplies to new lows.

The resulting sales slowdown worsened in May, with the effect of double-digit price gains now turning it into more of a crawl and intensifying the stress levels of buyers.

Home sales in May fell to 2,396, down 7% from the same month last year, itself a historically bleak sales month that was down 19% from 2019 due to pandemic lockdowns. The five-county median single-family home price is now at $485,000, up $109,640 from the same time last year.

While those declining sales are obviously a bread-and-butter issue for the region’s 10,000 or so real estate agents, who work on commission, a spokesman for the Salt Lake Board of Realtors said its members were speaking out on behalf of would-be homebuyers.

“We’re headed to California prices if we keep on this path,” warned spokesman Dave Anderton. “And that’s a really tough situation for the first-time buyer in particular.”

The National Association of Realtors report blamed the crisis on “prolonged underinvestment” in every major region of the country, flowing from economic conditions after the 2009 Great Recession. That downturn wrought severe job losses in the construction sector and tightened lending standards for builders and buyers, both major setbacks for homebuilding that lasted for years.

While the report describes this as a crisis of national scale, Ulrich noted that Utah, Nevada and Idaho — some of the country’s fastest-growing states since 2010 — had also seen its worst declines in affordability.

The Cottonwood Heights-based broker and homebuilder echoed calls from the wider real estate sector in Utah, urging cities to eliminate “onerous” building requirements and streamline permitting to lower construction costs. Ulrich also called for stepped-up incentives to attract more workers into skilled building trades — such as framers, electricians, plumbers and roofers — now in short supply.

The national report also touted potential benefits to the U.S. economy of increased homebuilding, including relief for cost-burdened renters and nearly $400 billion in added economic activity.

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