Housing market: Here’s what 2021 taught us, and what to expect in 2022

For Utah’s housing market, 2021 may not have outpaced or even matched 2020’s record-breaking year for sheer number of home sales.

But it did shatter last year’s wild records in one realm: price increases.

That’s what clearly makes 2021 the year of the price increase when it comes to Utah and the West’s raging housing markets.

“For people that have lived in Utah all their life to see what (sellers) want … that’s shocking, to see how high home prices have gone. That’s how I would characterize 2021,” said Dave Anderton, spokesman for the Salt Lake Board of Realtors.

Why did home sales slow in 2021?

As 2021 comes to a close, 2020 remains the No. 1 best year in Utah’s history for home sales, with 19,202 homes sold in the state’s most populous county, Salt Lake County, according to the Salt Lake Board of Realtors. Even though earlier in the year 2021 was pacing to rank right behind 2020 as the No. 2 best year for home sales, Anderton said sales slowed in the last four to six months of year.

Why? It’s likely because record-high prices and low inventory have turned some buyers off from the market,

“Sales have slowed,” Anderton said. “We’re coming off a record year, 2020, which we thought was going to be a recession year (amid economic fears caused by the pandemic). It turned out the complete opposite.”

The pandemic upended the whole nation’s housing market as thousands of Americans reevaluated their lives and moved out of big cities in search of more space at lower price points. Many looked West, especially to states like Utah (where jobs flourish) and Idaho where housing was comparably more affordable.

Construction is underway at Brookside Estates in Heber City on Thursday, May 6, 2021.
Kristin Murphy, Deseret News

As a result, states like Utah and Idaho have seen record-shattering years for their house sales and price increases. In Utah, experts have warned of a “severely imbalanced” housing market as demand continues to woefully outpace supply.

While the pandemic accelerated and compounded the problem, the West’s housing shortage began years ago amid the Great Recession, after the subprime mortgage crisis sent the nation and the world’s economy into a death spiral. After the crash, homebuilding contracted, and the market has been struggling to keep up with demand ever since.

So 2020 remains the top best year for house sales in Salt Lake County’s history, according to the Salt Lake Board of Realtors — even outpacing some years that preceded the Great Recession.

While still coasting from 2020’s wave of demand, 2021 has lagged behind. However, it still ranks amid the top 10 years (No. 8) in Salt Lake County’s history, and when sales slowed it fell behind some pre-Great Recession years.

Here’s how Salt Lake County’s top 10 best years for home sales rank (including all housing types sold):

  1. 2020 — 19,202 homes sold.
  2. 2005 — 18,907 homes sold.
  3. 2006 — 18,656 homes sold.
  4. 2018 — 18,189 homes sold.
  5. 2019 — 18,126 homes sold.
  6. 2016 — 18,099 homes sold.
  7. 2017 — 18,042 homes sold.
  8. 2021 — 17,375 homes sold.
  9. 2015 — 17,332 homes sold.
  10. 2013 — 14,848 homes sold.

Statewide, 2021’s closed sales (46,014 home sales across all 29 of Utah’s counties) lagged about 7.8% behind 2020’s total sales of 49,881 in 2020, according to the Utah Association of Realtor’s latest report released in October.

2021 sales slowed, but prices kept climbing to unprecedented levels

However, 2021 outranks other years in the Salt Lake Board of Realtor’s books for median prices of homes sold.

“2021 is the strongest growth of prices that we’ve ever seen in the history of Salt Lake County. We’ve never seen prices go up that fast in such a short period,” Anderton said. “So that’s ’21 for you.”

In June of this year, Salt Lake County’s median single-family home price even surpassed the half-a-million-dollar mark. It hit $551,000, up 31% from $420,000 in June of 2020, according to the Salt Lake Board of Realtors.

Here’s how Salt Lake County’s median home sale price has climbed over the past seven years, according to the Salt Lake Board of Realtors.

  1. 2021 median home price — $465,000 (projected when year closes Dec. 31).
  2. 2020 median home price — $378,250.
  3. 2019 median home price — $342,000.
  4. 2018 median home price — $319,260.
  5. 2017 median home price — $292,000.
  6. 2016 median home price — $265,000.
  7. 2015 median home price — $248,500.

Compare that to prices in pre-Great Recession years, now the second- and third-highest ranking years for volume of home sales in Salt Lake County. In 2005, the median home sales price was $175,000. In 2006, it was $208,150, according to the Salt Lake Board of Realtors.

Statewide, the median sales price of a home in Utah was $435,000 as of October of this year, according to the Utah Association of Realtors. That’s up a striking 24.3% from 2020’s median price of $350,000.

Where does Utah’s housing market go from here?

While housing experts warn of a “severely imbalanced” housing market with regard to affordability, they don’t foresee prices dipping anytime soon.

“We’re not seeing prices drop. We’re still seeing price increases,” Anderton said, even with the sales pacing behind 2020. “I think sales have slowed because prices are so high, it’s cut first-time buyers out of the market. And I also think that the inventory is still not where it should be.”

To support that prediction, Anderton said one only has to look at Utah’s latest population statistics outlined in a recently released report from the University of Utah’s Kem C. Gardner Institute, which found now more than half of Utah’s population growth is coming from in-migration. Over the past year, net migration contributed to 59% of Utah’s population growth, up from 49% the year before, the report found.

With so many “out-of-staters” moving in, Anderton said, “we’re not going to see a slowdown at all” in prices. “We’re going to see even more price growth.”

The real estate site Realtor.com recently ranked the Salt Lake City metro area the No. 1 housing market in the nation positioned for growth in 2022, forecasting it to see a 15.2% year-over-year sales growth and a 8.5% year-over-year increase in prices. Its closest Western competitor, Boise, was ranked No. 2 for its housing forecast.

However, it’s possible prices could slip in some pockets of the state. Other research from Florida Atlantic University and Florida International University has indicated two cities in Utah — Ogden and Provo — are so overvalued their prices are “poised to flatten” and could level off.

But to Anderton, 2022 will likely by and large bring even more growth. He said the Utah market’s “biggest constraint is whether builders can build enough homes.” In today’s market, builders are beginning to build enough to match the number of new households being created in Utah’s market, “but it’s the matter of catching up for those seven to 10 years we didn’t build enough” amid the Great Recession.

That’s why Anderton predicts 2022 will bring even more demand to the housing market.

“I don’t see prices slowing down, and it’s because of all that growth,” he said. “We have so many out-of-staters coming in. There’s still competition. It’s not like 2020, but you can still get multiple offers on homes. Five offers on a home.”

Anderton said interest rates may impact sales in 2022, but they’re projected to remain in the mid- to high- 3% range into the end of the year. “They’re still wonderful rates,” he said.

“The challenge now is managing the growth,” Anderton said, which will impact Utah’s infrastructure and roads for years to come, “and where that growth is going to go.”

As Wasatch Front counties continue to boom — with Utah County among the fastest-growing counties in the nation — outlying areas are also “exploding right now with new home construction,” Anderton said.

New housing in Vineyard is pictured on Wednesday, Aug. 11, 2021.
Scott G Winterton, Deseret News

Is Utah becoming California?

The pressure is particularly tangible in areas like Heber City, one of the top areas out-of-state movers have relocated to.

“A lot of Californians love the Heber Valley, that’s what the realtors are telling me,” Anderton said.

The sheer number of people moving to Utah is becoming even more apparent by simply looking at license plates driving down I-15. Anderton said he “literally saw at least five different license plates” from states like California, Nevada and Oregon just during his commute to Sandy this week.

It’s a question that’s been floated before: Is Utah on track to be more like California, or is its future more comparable to another state, say Texas?

Anderton said it’s a difficult comparison because 80% of Utah’s population is condensed to its urban corridor along the Wasatch Front, but to him 2021’s price growth sure makes it seems like the Beehive State is becoming more like the Golden State.

“It seems to me that we’re becoming more like California,” he said. “When it comes to home prices, we’re more on a trajectory like California.”

Has Utah ‘oversold’ itself?

A new housing development in Huntsville, Weber County, is under construction on Wednesday, Oct. 6, 2021.
Spenser Heaps, Deseret News

It begs the question: How did Utah get here? Yes, the state continues to be the No. 1 consistently growing state in the nation. It’s No. 1 in the nation for its economy and unemployment rates. There’s a lot to like about Utah.

Anderton wonders perhaps has Utah “oversold” itself?

“I’m not anti-growth by any means. I would rather be a growing state than a state losing its population,” he said. “But how do you manage that growth going forward? I think those are going to be our biggest challenges.”

Now, previously more affordable outlying areas maybe 30 or 45 minutes away from downtown Salt Lake City are no longer as affordable, Anderton said. Now, people are having to look increasingly rural — in some cases over an hour away — to afford housing.

Utahns can’t escape those price increases.

To Anderton, that’s in striking contrast to what the state was grappling with amid the Great Recession.

“In the depths of the Great Recession we were hungry for growth because it was hard to sell a home. It took six months sometimes even a year to sell a home. So we did everything we could to get the growth. And now we’re leaders in the nation in economic growth,” He said.

“But now with that comes more people, more jobs, and unfortunately more housing unaffordability,” he said.

There’s certainly a price to pay for all of that growth. And 2021 proves it.