Moving to Utah was an easy task for Leola Broussard.

Broussard, who previously rented a house from a friend in the expensive Stanford-Palo Alto neighborhood south of San Francisco, where the cost of living, she told MarketWatch, is “outrageous.”

In the two years of the pandemic, many Americans like Broussard have flocked to Utah in search of more living space and less crowds. For Broussard, it was bittersweet because of her love of life in Northern California.

However, a tidal wave of Californians, a growing millennial population, and a shortage of building materials have combined to explosion in house prices in Utah, which basically reflects the national trend.

What Broussard, an information technology researcher, doesn’t lose sight of in the San Francisco Bay Area is “hustle, bustle, and craziness.” In Utah, she says, “there’s more work-life balance.”

This influx comes at a price: Recent studies by Florida Atlantic University and Florida International University show that, based on historical prices, real estate in several Utah cities, including Ogden and Provo, could be overvalued by as much as 50%.

“If we are not at the peak of the current housing cycle, we are very close.”

— Ken Johnson, Florida Atlantic University

According to Zillow, the median home price in Salt Lake County, which includes Salt Lake City, Riverton, Draper, West Valley, West Jordan, and other municipalities, was approximately $512,850 in May 2022, which is 27% more than last year. By comparison, the median home price nationwide in May 2022 was $349,816, up 20.7% from last year.

“Near-record low mortgage rates have fueled demand for housing, especially during the pandemic, and competition for housing has pushed prices higher. But now the Federal Reserve is raising rates to curb inflation, and that is already dampening demand.” Ken Johnsonresearch co-author and economist at Florida Atlantic University College of Business, told the Florida Atlantic news outlet..

“If we are not at the peak of the current housing cycle, we are very close,” he added. “Recent buyers in many of these cities may have to deal with stagnating or falling home values ​​until the market settles – and that’s not what they would want to hear if they were planning to resell anytime soon.”

Another concern for the housing market: On Wednesday, the US Federal Reserve raised its benchmark interest rate by 0.75 percentage points, the biggest increase since 1994, as it tries to tame inflation from a 40-year high.

Recent studies show that, based on historical prices, properties in several Utah cities, including Ogden and Provo, have been overvalued by as much as 50%.

George Frey/Getty Images

However, local experts disagree that Provo houses are overpriced and doomed to decline. Instead, they say, prices are actually likely to rise even more given the surge in interest in the Hive State.

But one thing is clear: the market there is cooling down. Dejan Eskik, a senior fellow at the University of Utah, told MarketWatch that instead of a house getting 15 listings, sellers are now listing three or four.

This is still a significant number of proposals, Eskich stressed. Real estate in Utah stays on the market for an average of nine days. Rudd Data. In Salt Lake City, homes have been up for sale for about a week; in Pleasant Grove, five days.

Eskich said that before the housing boom, homes were on the market for two to three and a half weeks. Thus, “we’ve had about 18 months of price growth,” he added, “and we’re still moving in that direction.”

The question is how long? Case in point: At one point during the pandemic, Andrew Ford, a realtor in Provo, told MarketWatch that it’s not uncommon for real estate to get 50 listings. “It was crazy to send offers to our salespeople,” he said.

In fact, he put the offers on a spreadsheet “so that the seller can look through it and select the best ones.” Just two or three months ago, he saw 10 offers per house. Now he sees ads getting unambiguous offers. The number of people competing for the house is decreasing, Ford said, but they are still bidding more than the asking price.

Provo is the third largest city in Utah after Salt Lake City and West Valley City.

Getty Images/iStockphoto

Across the country, the US housing market appears to be slowing, in part due to higher interest rates by the Federal Reserve. The builders are out window, Garage Doors; they withstood the surge in lumber prices.

Economists at Florida Atlantic and Florida International have issued some cautionary advice to buyers in other real estate markets that they believe are overpriced. These markets include Boise, Idaho; Austin, Texas; Ogden, Utah; and Las Vegas, all of which were identified as overvalued by more than 60%.

The authors add that just because a market is overvalued by 50% or 60% based on historical price movements doesn’t mean it will fall by that amount, but they don’t dismiss the painful wake-up call for buyers and sellers in these markets.

One recurring problem propping up prices in Utah is the lack of housing materials combined with strong local millennial population buying housingEskik said.

When he asks builders in Utah what supplies they’re missing, “Over the past year, I’ve probably gotten a different answer every month,” Esquik said.

And while supply has lagged, demand for homes remains so strong that it’s creating an affordability crisis, economists say.

“Ridiculous” pricing

Last year, competition for homes reached a fever pitch. “As prices rise in 2021, more than half of Utah households [were] unable to afford a house at an average price,” wrote Eskich in October 2021 report. Average Annual Household Income in 2020 most recent data from the St. Louis Federal Reserveamounted to 83,670 dollars.

Leola Broussard said her experience buying and selling homes in Utah gave her her first first-hand look at the local housing market.

Last May, she bought an apartment in a condominium in Pleasant Grove, which is part of the Provo-Orem metro area. When she was selling it in February, she remembered that on the first day it was put up for sale, her agent got a couple of calls and three offers. In just two days they had almost 10 offers.

“The prices are absolutely ridiculous,” Broussard said. In April, she moved into her second home in Utah, a three-bedroom home she bought for over $450,000 in Eagle Mountain, closer to her family. (In 2021, Google’s parent company Alphabet GOOG,

bought 300 acres in Eagle Mountain for a new data center, It is reported by the Salt Lake Tribune. FB platform meta
a division of Facebook also has a data center in the area.)

Rising house prices in Provo during the pandemic seem oddly familiar to Broussard. “It’s like I left California for California,” she said.

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