SALT LAKE CITY (ABC4) – Recent record breaking median home prices have Utahns asking the same urgent questions: are we in a housing bubble, and if so, when will it pop?
Recalling memories of the 2008 housing market crash and confronted by astronomical house prices, its no wonder that people have concerns about investing their money into the market. Recent data indicates that the average Utahn would have to save for over ten years to even start to consider buying a home.
For reference, ABC4 also analyzed historical housing and income data from 1992 (30 years ago) Utah. The US Bureau of Labor Statistics reports Utahn’s average income in 1992 was about $20,000 annually. Adjusted for inflation, that equals about a $40,000 annual salary in today’s money. According to demographical data from 1990-1995, the average house in Utah would have cost around $70,000, or $151,000 in today’s money after adjustment for inflation.
According to our analysis, and accounting for a generally advisable down payment of about 10-15%, the average Utahn in 1992 would have to save a reasonable 10% of their annual income for about 3-4 years to afford a home. Obviously, this time frame would be adjusted up or down a couple of years depending on the cost of the individual home and individual income, but state-wide averages provide a useful benchmark for analysis.
With acknowledgement to the extreme nature of Utah’s current housing market and its proclivity to either crash or balance out in the next couple of years, the following analysis is based on average Utah home prices as of April 7th, 2022. They are, however, likely to change.
According to the ZipRecruiter’s data on salary, average income for Utahns as of 20221 is about $59,000 annually, a healthy $19,000 more than adjusted 1992 salaries. It does remain below their reported national annual salary of about $66,500.
This data is less hopeful, however, when considered in conjunction with average housing prices in Utah. According to Zillow, average home listing prices in Utah are about $540,000. According to these numbers, the average Utahn saving 10% of their annual income for 10-12 years straight to afford a down payment of about 10-15%. The average recent Utah college graduate, however, only makes about $39,000 annually, meaning they would have to save even longer to afford a home.
There are a couple of ways prospective homebuyers can shave time off of their time saving for a house. They could, of course, buy a much cheaper than average house, or put less money down—resulting in a higher monthly mortgage payment and overall interest cost. There are also several first-time homeowner programs that can assist with down payments, but most of them only offer about 5,000-8,000 dollars in assistance, taking about a year of saving off of most Utahns’ shoulders.
For now, it seems like most Utahns will be stuck renting. Not like that is much easier.