By: Dejan Eskic
Note: The opinions expressed are those of the author alone and do not reflect an institutional position of the Gardner Institute. We hope the opinions shared contribute to the marketplace of ideas and help people as they formulate their own INFORMED DECISIONS™.
Last April, as the economy was spiraling down and unemployment claims hit what looked like a made-up number, I thought, “Well, at least home prices will drop and we can buy our dream home.” Here I am, nine months into a home search, continuing to be outbid, living with my in-laws. How wrong and naïve I was! But at least I wasn’t alone—most national economists thought we would see a slight price decline early in the pandemic.
Instead, housing prices in Utah and the nation accelerated to new heights. I wrote about the main drivers of the housing price acceleration last fall. It boiled down to three things. First, the pent-up demand from our decade-long housing shortage was further exacerbated by a surge in in-migration. Second, as the number of COVID-19 cases grew and the economy worsened, the hesitation of existing homeowners to put their properties on the market led to record low inventory. Third, record low mortgage rates incentivized buyers to make higher offers while keeping the monthly payment steady.
Fast forward to February 2021, and housing prices are up 15.5% from February 2020 across the state. As of last week, the 30-year mortgage rose into the 3.3% range, a pre-pandemic figure and up from a 2.65% low. And demand continues, as reflected by the single-d