It’s no secret that home prices nationwide are soaring, and Utah is right there among the top states for the residential cost inflation, according to data released by CoreLogic, a global property information, analytics and data-enabled solutions provider based in Irvine, California. The information is contained in the CoreLogic Home Price Index.
Through May, Utah’s year-over year increase in the cost of purchased homes sat at 20.4 percent. Only Arizona at an astounding 30.3 percent and Idaho at 23.4 percent had higher increases than Utah. Analysts at CoreLogic said Utah homebuyers sought out more affordable locations with lower population density and attractive outdoor amenities.
Converging pressures of severe inventory shortages and sustained demand pushed home prices to record highs in May, CoreLogic said, with the year-over-year increase in home prices at its highest level since 2005. While many millennials and Gen Z home buyers continue to move into the hot market thanks to low borrowing rates, high prices are likely deterring increasing numbers of prospective buyers — especially first-time and low-income families. Currently, 82 percent of consumers note housing affordability as a key problem, according to a recent CoreLogic survey. Additionally, 33 percent of respondents said they would wait to buy or not buy at all rather than make sacrifices on their purchase.
“First-time buyers are hitting a wall in many places around the country as the pace of home price rises outpace the benefits of lower borrowing costs,” said Frank Martell, president and CEO of CoreLogic. “Younger and first-time buyers, including younger millennials, are faced with the challenge of having sufficient savings for a down payment, closing costs and cash reserves. As we look to the balance of 2021, we expect price rises to continue, which could very well push prospective buyers out of the market in many areas and slow home price growth over the next year.”
Nationally, home prices increased 15.4 percent in May, compared with May 2020. On a month-over-month basis, home prices increased by 2.3 percent compared to April. Appreciation of detached properties (17.2 percent) was nearly double that of attached properties (9.1 percent) in May as prospective buyers continue to seek out more space.
The fastest home price increases were found in the West, with Twin Falls, Idaho, experiencing the highest year-over-year increase in the nation at 35 percent.
According to the CoreLogic Home Price Forecast, prices are projected to increase 3.4 percent by May 2022, as affordability challenges deter potential buyers and cause a slowdown in home price growth.
“There are marked differences in today’s run-up in prices compared to 2005, which was a bubble fueled by risky loans and lenient underwriting,” said Frank Nothaft, chief economist at CoreLogic. “Today, loans with high-risk features are absent and mortgage underwriting is prudent. However, demand and supply imbalances — fueled by a drop in mortgage rates to less than one-half what they were in 2005 and a scarcity of for-sale homes — has fed the latest run-up in sales prices.”
