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Demand and Growth Projections for Utah Real Estate in the Near Future

In the past year, Utah’s real estate sector has grown by leaps and bounds. But with demand quickly outstripping supply, new solutions are needed to foster sufficient growth in real estate inventory to satisfy the market.

The past year had been great for real estate growth in Utah, with record highs for the state’s home building and home sales as well as rental demand. Cities such as Provo, Salt Lake City, and Ogen are seeing a spike in demand from millennial home buyers, reflecting a trend across Utah that far outpaces that of cities in other states.

For developers and investors, this is a terrific time to get into the market, provided one hasn’t already been priced out. Home prices continue to rise, bringing with it the possibility of pricing out many prospective home buyers and tenants. Meeting this demand in the long term has serious implications for the continued development of the real estate industry and the state economy.

The Roots of the Issue

At its heart, the rising value of homes is tied to an increase in demand, which, like in several other states, is not matched with the growth of supply. A growing population and a burgeoning economy are driving the demand for new residences up across the state of Utah, which is concentrated in major metros like Salt Lake City and the areas near the Silicon Slopes. The allure of new jobs brings people in from elsewhere, and as more and more young people enter the workforce, the need for a place to live is driving the prices higher.

In these challenging markets, getting a mortgage loan pre-approved may be a crucial move to survive the incoming market shortage. In competitive markets like Utah, having a pre-approved loan can make all the difference in securing a new home.

Impact on Affordability

One of the main concerns about the growing real estate demand is the lack an ability to expand. Developers are having fewer areas available for residential construction. This would threaten the housing market in the long run as the lack of supply would lead to a gradual increase in prices, which can very quickly price out many of the initial buyers. The same pressure among rents in larger cities may also lead to renters being priced out.

The lack of new space for development is coaxing homebuilders to build homes on increasingly small lot cuts and redeveloping central urban areas to accommodate new multifamily homes in inner cities, which would, in turn, attract millennials, which have a general tendency to favor mixed-use developments and multifamily housing.

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Merely opening more land to urban development will not be an effective long-term solution to the issues of housing. Although the availability of new lots may satisfy some of the growing real estate demand, it could lead to other problems as people live further away from their places of work. New suburbs may lead to greater congestion without attendant infrastructure developments.The state cannot threaten its economic prospects through exurban sprawl.

Projected Trends and Future Developments

In the long run, more compact housing is the direction that most affordable single homes would go. The solution that planners and developers are looking at continue the trend toward more efficient land use, building smaller homes in more densely developed residential neighborhoods and shifting toward developing more medium-density townhouses and condominiums.

In addition, developers can focus on opening new areas to commercial and industrial development, which can bring development (and thus residential demand) to towns with more room for expansion in new areas across the state.