Lately, I have been asked over and over again are home prices too high? Is the market over heated? Are we headed for another down turn?
My answer is I don’t think so, here is why: the first statistic I always look at is the Housing Starts Number. This shows the number of new houses beginning construction.
Interestingly, we have had a 10 year period of housing starts below 1.2 million. We have never had another 10 year period in the last 60 years below this point. You can see we have dipped below this level occasionally, specifically after a recession but we have never stayed below 1.2 million for longer than 12—18 months. Over the last 60 years a more normal housing starts number is around 1.6 million.
I am often asked about why we have such low inventory. This is why. We haven’t built enough houses for the last 10 years in a row. Low inventory is here to stay for the foreseeable future. This means home prices will continue going up.
The second statistic I always look at is the jobs number. When people have jobs they buy houses. Utah’s Unemployment rate is one of the best in the nation and it looks like it is going to keep getting stronger. In the last year Utah has seen job growth in almost every category . In 2016 Utah added 49,500 new jobs.
I expect to see home appreciation in the 4-6% range for the next few years. Now is a great time to be a homeowner. If you have any questions on where the market is headed, homeownership, or mortgages please give me a call.