Skyrocketing home prices in Cache County are rapidly transforming a local economy long celebrated for its low cost of living, and to hear real estate agents tell it, the trend is leaving young first-time homebuyers in the lurch.
“It’s a serious problem,” said Grey Wilson of Dwell Realty Group. “Home prices have more than doubled in the last 10 years, and incomes really haven’t changed that much, especially when you average in the cost of living and health care and food and everything else. We are pricing our buyers out of the market. It’s really sad.”
To illustrate the problem, Wilson offered one example from the local townhouse market, which is where many first-time homebuyers get their start.
“You could buy a Blackhawk townhome for $68,000 not that long ago. There are none on the market right now, and one under contract at $195,000,” he said.
Similarly, in the realm of new starter homes, Wilson noted prices on three-bedroom tract houses from one local builder have risen more than $100,000 since 2010.
Although the upward trend in home prices goes back a decade, the past four years have seen the most dramatic rises. According to real estate industry figures, the average home sale price in Cache Valley jumped from $214,000 in 2016 to $333,000 as of this week.
In tandem with the home-price spike has come a sharp rise in rental rates. Ads for rentals appearing online this week show most two- and three-bedroom units in Cache Valley going for over $1,000 per month and in some cases approaching $1,500.
Wilson and fellow valley Realtor Jette Youngblood of Engle & Volkers Real Estate say the main factor driving up housing prices is a dramatic rise in demand, and this can be attributed to both the valley’s rising population and an avalanche of outsiders wanting to move into the valley.
“Honestly I think a big part of it is people moving here from busier places, from bigger cities or high-density areas who have now realized from COVID that they are going to be able to work remotely,” Youngblood said. “A lot of our buyers are out-of-state, and with interest rates, people can afford more, they have a lot of equity in their house. They’re taking that equity and moving up, taking advantage of low interest rates. So I think it’s a combination of low rates and growing population.”
Among demographics researchers, the trend — which actually predates coronavirus pandemic — has become known as “amenity migration,” and it is impacting small communities throughout the Intermountain West. A recent series of symposiums hosted by Utah State University dealt with the topic and included a look at how COVID-19 is accelerating the migration and its accompanying challenges.
The latest state population figures reflect the trend. Estimates released this month by the Utah State Data Center indicate that in the fiscal year ending July 1, 2020, Cache County added 2,355 new residents. An estimated 858 of that number is attributed to net migration (in-migrants minus out-migrants). The other 1,497 came from natural increase (births minus deaths).
In the Cache Valley home market, the perfect storm has brought intense competition for available properties.
“I’ve never seen anything like it in my 24-year career,” Youngblood said. “We’re experiencing multiple offers on most properties under $500,000, and with multiple offers we’re seeing a lot of buyers willing to go above list price, and we’re selling homes for higher than list price because we have five buyers for every house that comes on the market. Properties are going under contract within the first four or five days and closing within 30 days.”
With potential buyers poised to strike immediately on nearly every available home, the inventory of homes for sale has dropped to unheard-of levels. On Thursday of this week, there were only 42 homes listed for sale in Cache Valley, and the number has gone as low as 30 at times in the past year.
“During a balanced market here, like in 2015 and ‘16, we typically had 450 homes on the market, so it’s a dramatic difference,” Youngblood said. “In 2010 and ‘11, after the mortgage crisis, we had up to 900 on any given day.”
But Wilson pointed out homes are not in tremendously short supply locally as compared to past years, as evidenced by the fact that 76 homes sold here in January and 135 are currently under contract.
“What that’s showing us is that the number of homes coming on the market really has not fallen that far. People are selling their homes. The problem isn’t a lack of supply, the problem is a much higher demand. That’s our big issue, especially in the under-$300,000 range, or even under $350,000,” he said.
Prices are also soaring on high-end homes — those listed at $750,000 and up — and Wilson attributes this “almost wholly” to out-of-state buyers.
“A lot of people are fleeing areas of political unrest and lockdowns. There’s a fleeing attitude, and they see Utah as a safe haven for them,” he said.
Conversely, a lot of people Wilson helps to sell their homes here are bound for towns in the Midwest, where homes are more affordable and they can realize a profit on their equity.
U.S. Census Bureau data shows that many Cache County move-outs do indeed settle in the Midwest. For the years 2014-18, net migration between here to Kansas was 163, between here to Nebraska was 144, and between here to Iowa was 96. Among move-ins in those four years, California was the outside state with the largest net migration to Cache County, with an estimated total of 250 in the plus column.
For real estate agents, finding homes for customers in today’s tight market has gone beyond just tracking the listings. Many are making cold calls to current homeowners, asking if they want to sell their homes with the prospect of making a large profit.
“I had an agent call and ask about my home. It’s pretty enticing, but then where am I going to live?” one local resident told The Herald Journal this week.
As the demand for homes has risen, homebuilders have been busy and had a hard time keeping up.
“They are so far behind, they are building homes as fast as they can. I know one builder who has told his salespeople they are not allowed to sell a single home in the month of February because they are so far behind,” Wilson said. “I’m working on a new subdivision right now — 135 lots and 192 condos. We’re going as fast as we can. It’s just that the demand is so high.”
Logan Community Development Director Mike DeSimone said Logan has seen a significant “uptick” in permits for residential construction, for both single-family and multi-family housing.
“There’s a demand out there now for a wide range of housing, and we’re seeing a response to that demand, whether it’s a townhome or an apartment in a complex, whether it’s student housing or big house on half-acre lot,” he said. “There’s limited supply and higher demand, and it’s an interesting phenomena to watch because the price of lumber has gone sky high, and the price of materials has gone up.”
Higher lumber costs is a nationwide trend that analysts link to a number of factors, including increased housing starts triggered by low interest rates and a marked increase in home remodeling projects started by Americans spending more time at home during the coronavirus pandemic. Low supply is also being blamed, with many mills misreading the market and cutting back on production at the start of the pandemic.