Home News Some homes in Provo, Utah received 50 offers at the peak of housing boom. Economists now warn of many such ‘overvalued’ property markets

Some homes in Provo, Utah received 50 offers at the peak of housing boom. Economists now warn of many such ‘overvalued’ property markets

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Traveling to Utah was easy for Leola Broussard.

Brotherd, who had previously rented a house from a friend in the expensive Stanford-Palo Alto area, told MarketWatch that the price there was “totally ridiculous.”

In the last two years of the pandemic, many Americans like Brusard flocked to Utah, seeking more living space and less congestion. She was bittersweet because she loves Northern California.

Still, the combined tsunami of Californians, the growing population of millennials, and the shortage of housing construction materials, explosion Utah’s home price ratio primarily reflects national trends.

“”“I miss certain things about California, but I don’t miss the hustle and bustle.”

— Leola Broussard, a researcher in the IT department

“I miss something specific about California, but I don’t miss the hustle and bustle,” said Broussard, a researcher in the IT department. In Utah, she added, “there is a better balance between work and life.”

The influx comes at a cost. According to a recent study by Florida Atlantic University and Florida International University, based on past prices in several cities in Utah (including Ogden and Provo), Overestimation As much as 50%.

According to Zillow, median housing in Salt Lake County, Utah was around $ 512,850 in May 2022, up 27% from the past year. This is a 20.7% increase over the past year, compared to the median national home price of $ 349,816 in May 2022.

“The lowest mortgage rates ever helped fuel demand for homes, especially during the pandemic, and competition for homes pushed up prices. But now the federal reserve is raising rates to curb inflation. Already it is cooling demand. ” Ken JohnsonCo-author of the study and economist at Florida Atlantic University Business College, Told Florida Atlantic University..

“If we haven’t reached the peak of the current housing cycle, we’re terribly close,” he added. “Many recent buyers in these cities may have to endure stagnant or declining home prices until the market settles down, and if they were planning to resell immediately, it would be them. Is not what you want to hear. “

According to a recent study, real estate in some cities in Utah (including Ogden and Provo) was significantly overvalued by as much as 50%, based on historical prices.

George Frey / Getty Images

However, local experts do not agree that Pro Bo’s home prices are being overvalued and heading down. Instead, they say prices are actually likely to rise further given the growing interest in Beehive.

But there is one thing that is clear. It’s a cold market. Dejan Eskic, a senior researcher at the University of Utah, told MarketWatch that instead of the house receiving 15 offers, the seller received three or four offers.

It’s still quite a few offers, Eskic emphasized.Utah real estate is said to remain on the market for a median of 9 days Redfin data.. In Salt Lake City, homes have been on the market for about a week. 5 days in Pleasant Grove.

Before the housing boom, Eskic said housing was on the market for two to 3.5 weeks. So, “there was a price increase of about 18 months, but we’re still heading in that direction,” he added.

The question is how long will prices continue to rise? Case Study: At some point in the pandemic, Pro Bono realtor Andrew Ford told MarketWatch that it was not uncommon for real estate to receive 50 offers. “It was crazy to submit an offer to the seller,” he said.

In fact, he posted an offer in a spreadsheet “so that sellers could look it up and choose the best one.” Just a few months ago, he saw 10 offers per house. Now he is watching the list get a single digit offer. The number of people competing for homes is declining, but they are still offering above the asking price, Ford said.

Provo is the third largest city in Utah, United States.

Getty Images / iStockphoto

Nationally, the US housing market appears to be slowing, partly because the Fed has raised interest rates.There was a shortage of homebuilders Windows, Garage doorThey overcame the surge Lumber price..

Economists at Florida Atlantic University and Florida International University have given careful advice to other real estate market buyers who believe they are overvalued. These markets include Boise, Idaho, Austin, Texas, Ogden, Utah, Las Vegas and Nevada, all of which are overvalued by more than 60%, they say.

The authors say that just because a market is overvalued by 50% or 60% based on past price fluctuations does not necessarily mean that it will go down by that amount, but it is a painful awakening call to buyers and sellers in those markets. I add that I do not disregard.

One lasting issue that underpins prices: as with many of these markets, with a shortage of housing materials Powerful Native Millennial Home Buyer Population Both keep prices high in the Utah real estate market, according to Esquitch.

When he asked a Utah homebuilder what he was missing, “last year, maybe every month, I get a different answer,” Esquitch said. Demand for housing remains so strong during supply delays that is causing an affordable crisis, economists say.

“Stupid” pricing

Last year, the competition for housing reached an enthusiastic pitch. “More than half of Utah’s households are due to price acceleration in 2021. [were] I can’t afford a median home, “Eskick wrote. Report for October 2021. According to the median annual household income in 2020 Latest data from the St. Louis Federal ReserveIt was $ 83,670.

Leola Broussard says he was the first to directly explore the local housing market from his experience buying and selling homes in Utah.

Last May, she bought a condo at Pleasant Grove, which is part of the Provoorem metro area. When she was in the process of selling it in February, she remembered that on her first day it was listed, her agent received a few calls and three offers. Within two days, we received a total of nearly 10 offers.

“Pricing is completely ridiculous,” said Broussard. In April, she moved to her second Utah home. The three-bedroom home was purchased at Eagle Mountain near her family for over $ 450,000. (In 2021, Google purchased 300 acres at Eagle Mountain as a new data center. Reported by Salt Lake Tribune. Facebook also has a data center in this area. )

The rise in Pro Bono home prices during the pandemic seems strangely familiar to Broussard. “It’s like I’m leaving California and going to California,” she said.

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