By: James Wood
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™.
For over 40 years, I have made an annual forecast of Utah’s housing market. Never have the economic conditions underlying my forecast been as uncertain and fast-moving as the COVID-19 market, due to the extreme volatility expected in Utah’s job market over the next several months. The good news is that in the second half of the year employment growth returns, bringing the 2020 annual employment estimate to 1,529,000 jobs, down only 31,000 jobs from 2019. The unemployment forecast for 2020 is 5.3%, much lower than the peak unemployment rate of 8.1% during the Great Recession.
This housing forecast assumes job recovery by the fourth quarter, which of course also assumes the economic recovery will be preceded by near containment of COVID-19 through testing, treatment, and isolation of cases, however, much uncertainty remains regarding the virus.
I expect the number of residential permits in 2020 to fall by about 8%, a decline of 2,600 units. Economic contractions cause buyers and sellers to head for the sidelines. The suddenness, severity, and uncertainty of this downturn will cause some developers and buyers to postpone transactions that would have occurred in the spring and summer of 2020. Another factor that could hamper residential construction is disruption in the construction industry supply chain. China supplies 30% of construction materials. Furthermore, the approval process