The strong housing markets in Weber and Davis counties should continue in 2020. That’s according to economist Jim Wood, an Ivory-Boyer senior fellow at the University of Utah’s Kem C. Gardner Policy Institute, who recently spoke to Northern Wasatch Realtors.
“It should be a year as good as last year,” Wood said during a January speech. “I hope we get more construction. Prices should be up overall about 7% over the two counties.”
For Davis County, Wood is predicting a 5-7% increase in the median sales price of single-family homes and condos. In 2019, the median sales price of Davis County single-family homes was $345,000.
Because of its affordability, strong demand will push up prices by a greater percentage in Weber County, where the median price was $270,000 in 2019. Wood is expecting an increase of at least 10% in 2020. That’s in line with Weber County trends over the past few years as area prices have increased at least 10% every year since 2016.
Rising home values are affecting the demand for housing. As prices have increased, buyers are wanting more affordable options, such as high-density and multi-family housing. In fact, for the first time since 2014, the number of multi-family building permits in Utah exceeded the number for single-family units.
“We’re in a transition period where our changing demographics and changing affordability affects demand for housing,” Wood said.
Builders have responded to the challenges and are building more affordable, high-density units. In fact, condominiums and townhomes are making up a larger percentage of builders’ production. Single-family homes are also being constructed on much smaller lots that are priced affordably.
“Currently we’ve got more high-density housing being built in Utah than at any other time,” Wood said.
Over the past two years, building has picked up; however, the housing shortage still persists. Based on household growth, Davis County needs 2,200 housing units constructed each year, but builders added only 1,300 last year. Similarly, Weber County needs 1,800 new housing units each year, but builders constructed 900 — only half of what was needed.
“We’re just not getting the kind of growth in the housing inventory that we need,” Wood said.
In light of strong employment, a growing population and the housing shortage, the real estate market will continue to be competitive. Wood expects a 5% increase in sales of Weber County single-family homes to 4,200 transactions. Davis County single-family sales should stay consistent at about 4,500.
“We will still have really good numbers in 2020,” he said.
In 2019, about 82% of listings were sold. That should increase in 2020 to approximately 85%. The average days it takes to sell a home in Davis and Weber counties should stay consistent at just over 20 days.
“Almost everything that’s listed is sold, and it’s sold in pretty short order,” Wood said.
In this hot housing market, it’s likely even more homes could be sold if there were more houses for sale in affordable price ranges.
In the face of high home prices, many households are doubling up. Wood says the number of 25- to 34-year-olds living with parents has increased from about 10% to 13% over the past 10 years, and the number of relatives living together has increased 20%. Non-related individuals living together has increased 50% in 10 years.
Fortunately, low mortgage rates during the coming year will help those who are looking to get out on their own. The forecast from seven national groups that track housing is that interest rates will average 3.75% this year.
“We’re going to see probably a really favorable interest rate environment,” Wood said.
Buyers and sellers can take advantage of this unique housing market by talking to their local Realtor, who can help them navigate the supply and demand challenges in their area. A directory of local Realtors is available at NWAOR.com.