Wednesday, December 21, 2022
Year-end Housing News is Both Naughty and Nice
Urban Living
Posted By Babs De Lay on December 21, 2022, 4:00 AM
Holiday season here in Utah brings a mix of good and bad news. You may have missed it, but the Larry H. & Gail Miller Family Foundation donated $5 million to the nonprofit Utah Housing Preservation Fund to find, purchase and renovate aging rental units. The Clark and Christine Ivory Foundation started this fund with Intermountain Healthcare, Zions Bank and the Workers' Compensation Fund, along with money from the Legislature in 2020.
In the past few years, the fund has preserved over 600 aged homes located along the Wasatch Front from Park City to Tooele, including in Sandy, Midvale, West Valley City and Salt Lake City.
Why create such a program? It basically is a smart way to deal with rising housing costs and gentrification that pushes out renters and fixed-income folks. It's cheaper and faster than building some new six-story, market-rate box of apartments.
The $5 million is thought to be able to save an additional 100 affordable homes, duplexes and apartment complexes across the state.
The National Association of Realtors reported in its Profile of Home Buyers and Sellers that first-time buyers made up only 26% of all buyers, which is down from 34% in 2021 and a peak of 50% in 2010. Interest rates have had a lot to do with buyers entering or leaving the market to purchase homes. Right now, rates are below 7% for a 30-year mortgage, but predictors are saying rates could be 11% by next December.
The Fed raised its key rate last week to the highest level in 14 years—the seventh rate hike in 2022. The average age of a first-time homebuyer is now 36 years old, and it's believed that buyers are waiting longer in order to save more money for a down payment and loan closing costs.
Yet, as the market softens, sellers are starting to offer to pay buyers' closing costs, which is attractive when the average sale price is $529,000 as of November, prompting sales with a 2-to-1 buydown to an interest rate of 5% the first year, 6% for the second year and 7% for the 27 remaining years.
Closing costs can be 3% of the sales price, and a seller concession over $15,000 helps a lot to get a loan these days. Still, the Census Bureau reports that 3 in 4 households can't afford the average home here.
We end the year still in extreme drought in the state, with insanely cheap water and electricity rates. Utah has the third lowest residential electricity rate in the U.S., as Sofi.com reports that the average utility costs in the state (per month) are: water—$38, gas—$52, and electricity—$80.
The governor and public and private groups have virtually begged citizens to save water and, in some areas, it's working, with programs to buy back water rights or help homeowners to flip their landscaping strips. Personally, I think if my water bill were doubled or tripled, I'd pay it but would try even harder than I am now to save water.
About The Author
Babs De Lay
A full-time broker/owner of Urban Utah Homes and Estates, Babs De Lay serves on the Salt Lake City Historic Landmark Commission. A writer and golfer, you'll find them working as a staff guardian at the Temple at Burning Man each year.
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