The burden of prosperity is forcing home buyers along the Wasatch Front to move quickly to find a house on the market before it's gone.
According to the Utah Central Association of Realtors, homes for sale in Eagle Mountain are staying on the market an average of just 17 days.
“It’s unbelievable. There is just more buyers than there are [buildings] in the marketplace,” said Steven Bond, a Re/Max Equity broker in Provo. “Almost every home that hits the market is in a bidding war in just a couple of days.”
Unlike the economics of the recent Great Recession, cities, developers and builders are overloaded with the high housing demand in Utah.
There are several reasons for the high demand in the housing market. First, there was the recession of 2008, when single-family and multi-family home building skidded to a halt.
People either stayed at home with parents or doubled up with friends while waiting for the market to improve, Bond said.
Second, the state has had people migrating into Utah because of the technology growth along the Silicon Slopes in north Utah County and south Salt Lake County.
Third, mortgage rates are still very low.
Two cities especially known for fast growth are Eagle Mountain and Saratoga Springs.
According to UCAR assistant executive officer Susie Kepo’o, in the first quarter of 2015 homes in Eagle Mountain averaged 34 days on the market before being sold. In 2016, the days on the market are half that.
A similar trend is occurring in Saratoga Springs. The first quarter of 2015 saw homes averaging 53 days on the market, now it's 30.
A stabilized housing market has between a 4-5 percent vacancy rate. In Utah County, the vacancy rate is currently 2.5 percent.
“They’re not catching up with the demand,” Kepo’o said.
“Saratoga Springs, Lehi, anywhere from Lehi to Provo to Spanish Fork down south. Pretty much anywhere,” Re/Max Provo real estate agent Chase Leavitt said of the housing shortage.
“You have a little more breathing room if you go far south around Santaquin where they’re still competitive but there are houses down there,” Leavitt added. “Even Eagle Mountain, Eagle Mountain City Center is way out there and we’re still selling homes.”
Saratoga Springs has also seen a jump in multi-family units being built. In the first quarter of 2015, there were 10 multi-family units that needed permits in the city. The same quarter in 2016 has 69 open for applications.
“I know we’ll have at least 12 more that are under review right now,” said Leesa Holland, permit technician for the Eagle Mountain.
While there are a lot of multi-family units being built, the market for single-family homes is also strong.
“Last month we had our highest numbers since 2007,” Holland said.
Right now, it's a seller’s market because of the low inventory of single-family homes. Leavitt said it is extremely difficult to find homes in the $250,000 to $350,000 price range on the market.
“It’s moving very fast,” he said. “You can find townhouses, but a single-family home is very hard to find.”
“We are seeing the same demand all along the Wasatch Front,” Bond said before giving the figures for Salt Lake and Utah counties.
In Utah County, there are 1,142 active homes on the listing service and 1,797 under contract to buy. In Salt Lake County there are 2,118 active and 3,101 under contract.
“So there are more homes under contract than there are homes to buy,” Bond said.
He doesn’t think the housing market is ready to fall apart as it did in mid-2007, however.
“No, not at all. The recession was built on bad fundamentals, speculation and bad lending practices,” Bond said.
Chris Gamvroulas, Ivory Development president, agreed, saying the current boom features a different set of circumstances.
“I don’t think we’re headed for disaster, but it is definitely a hot market,” Gamvroulas said.
One challenge for builders is having a skilled construction labor shortage keeping them from meeting buyer demand.
“It’s a little bit out of equilibrium right now, where it’s not that it can’t be built, it’s just taking longer to build,” Gamvroulas said.
Unemployment in Utah is at 3 percent, and there was an increase in jobs available in 2015 by 3.5 percent.
“Which is almost full employment and so anyone who wants a job, can get a job right now,” Gamvroulas said.
He cited an example of what happens with a construction labor shortage.
“Let’s say a company is set up to build 10 homes a month, what happens when they get 13 sales? It stretches the capacity. It simply takes longer,” he said. “We’re seeing construction times pushed out by 30, 60 to 90 days longer to get a home built.”
Cities are backed up too because of similar issues, Gamvroulas said.
“It is taking longer than ever to get a building permit out of the city,” he said. “It used to be you could count on 1-2 weeks to get a building permit, now it’s 5-6 weeks before a city will issue a building permit.”
If a municipality is set up to process 50 homes a month and the demand is 90, it will take the staff longer to process the permit applications.
While the housing market is what builders term as “hot,” it’s better than when the housing market collapsed in 2007, Gamvroulas said.
“It’s night and day," he said. "Obviously, it’s better to have a strong economy than a weak economy. They both pose challenges, these are just better challenges to have. No one in their right mind wants a challenging market.
“It’s been a little overheated and everybody that I know in the industry would rather have it consistent and stable and strong, but not overheated.”