All the recent talk of a bubble and the cooling off of the markets on left and right coasts seems to have only strengthened the local market for Utah. Many of the people selling in the coastal regions are moving inland, away from the natural disasters and high cost of living and realizing how beautiful a place like Utah really is. And real estate is local and is effected by local factors as much as by general factors, such as interest rates.
Here’s the most recent story about the Utah market from the Salt Lake Tribune. They mention that some areas have appreciated more than 40% during the last twelve months, but don’t let that fool you into thinking that the market is headed for a bubble. It’s not- and here are some reasons why:
First, the Utah market is not only appreciating- it’s correcting from the last few years of being flat while the rest of the country went up in value.
Secondly, being undervalued has brought in some investors, but most of the homes are being sold to homeowners. When markets get too many investors buying and flipping properties, like what’s happened in Vegas the last couple years, the appreciation is hollow. It’s self-created by the market and doesn’t have a solid foundation, so eventually the market has to correct downward. Utah’s market has not been mainly because of investors
Job growth is stronger than normal now and will continue to be during the next few years. An influx of businesses moving to the area and the low employment rate mean that there is, and will be a need for homes. This is a natural and healthy way for a market to appreciate.
Utah has the youngest median age of any state in the nation. Larger families and more children means more future housing needs for the area. A large percentage of the population in any area will continue to live in that area even after becoming adults, but the rate is higher than average in Utah, probably in large part because of the focus on family in the state.
There is still room to grow. Many areas around the country are running out of room, but Utah is still relatively rural and the metro areas, such as Salt Lake, Provo and Ogden still have some elbow room that allows new communities to be built and allows for homes in the first time buyer range to be built, getting these kids and young families started in the market so they can later move up (and pay more) for a future home.
What this all means is that the overall market in Utah is healthy and will continue to be strong for a while, regardless of what happens on the coasts, where most media is focused.