2017 was been quite a year for SLC’s economic growth and real estate development. According to Realtor.com, it’s just the beginning for a hot market that will continue to steadily grow. Salt Lake is ranked number six of the top ten US cities expected to dominate the real estate market in 2018. With a secure and growing economy, new inventory entering the market, and a steady increase in home values, it’s no surprise that Salt Lake’s real estate outlook for 2018 is sunny. Expect to see these five real estate trends as 2018 unfolds.
#1. The Economy is On the Rise, and So Are Home Sales
People from all over the country are being drawn to Salt Lake City. The city’s economy is thriving, and our unemployment rate reflects that. The unemployment rate is currently 3.3%, while the national average is nearly 4.1%. People have good jobs, and they’re ready to buy homes. Danielle Hale, chief economist at Realtor.com, expects a 4.6% increase in home sales in 2018.
#2. Inventory is Slowly Catching Up with Demand
Multiple factors have caused Utah’s housing shortage, but one of the biggest problems is a shortage of homebuilders. An article in the Salt Lake Tribune attributes part of the current housing shortage to the Great Recession. About 40% of Utah’s construction workers left the industry during that time, and many haven’t returned. The good news is that Utah is doing an amazing job rebounding. While growth is slow, more inventory is expected to hit the market by the fall of next year.
#3. The Market is A Little More Balanced
The affordable starter home has been elusive over the past few years. Lack of inventory has been the major cause, and the market has been skewed in sellers’ favor. Lower percentage rates enticed homeowners to refinance and stay put. With millennials growing up and getting better jobs, they’re ready to buy, and supply just hasn’t kept up with the demand.
The good news for buyers in 2018? The market is beginning to see a balance between buyers and sellers, despite the lack of inventory, according to Fox13 Salt Lake. While home prices continue to steadily rise, sellers are generally a little more willing to give slightly on price unless there are multiple offers on the table. Multi-family options are also becoming more popular and are usually more affordable than single-family homes. Of course, downtown homes may be an exception as city living becomes more and more popular.
#4. Home Values Are Steadily Increasing
Nationally, home values are expected to increase by 3.2% in 2018, while Salt Lake could see a 4.5% increase in price. People are moving to Salt Lake for its great schools, beautiful scenery, and growing employment opportunities. With high demand and a growing economy, real estate value is also expected to grow at a steady, uninflated, and healthy pace.
#5. Tax Reform
While tax reform ping-pongs on Capitol Hill, the future of the housing market is unclear. The current proposal sets the cap for the mortgage interest deduction at $750,000 (for future home sales only), but that could change before the new law is finalized. Since this is far above the value of nearly all Salt Lake homes, it shouldn’t have a big impact on our market.
On the other hand, potential tax cuts could increase take-home pay for many middle-income Americans. With a little extra cash each month (near $2,078 for a single, childless taxpayer earning $75,000 a year) potential buyers may feel more confident in taking on home ownership. Another plus for 2018 real estate.
The 2018 market forecast for Salt Lake looks sunny. The economy is strong, new construction is on the rise, and home values are increasing. Salt Lake City’s real estate market is firing on all four cylinders and is ready for a great ride in 2018.