I have been checking the rates for Utah Real Estate the last few years and have been shocked, like many people, by what some houses are going for in certain areas.

Utah’s real estate is expensive due to the supply and demand economic principle. Housing prices have risen so high over the last few years that most people cannot afford to buy a house in Utah, especially if they earn just the average or even above-average wage.

Table of Contents

• Utah Real Estate And The Supply And Demand Principle
• Utah Real Estate Examples and Reality
• Utah Wages and Living Costs
• Frequently Asked Questions
• Related Question
  • How Hard Is The Utah Real Estate Exam?
  • The Real Estate Bundle Of Rights Explained

Utah Real Estate And The Supply And Demand Principle

Utah is one of the states in the West that continues to have record-breaking housing price increases. Many experts predict this can cause a severe imbalance in the housing market.

In Utah, housing prices have increased so much that half of the Utah state households can not afford the median housing price in Utah.

The reason is the supply and demand principle of economics. Supply and demand of economics is a fundamental economic principle that affects prices. When the demand is high, and there is not enough supply, this will drive up the prices.

The principle of supply and demand is not as simple as it seems since, when the price goes up, demand will decrease as fewer people can afford the set prices.

This could happen in the state of Utah. Utah real estate prices could get so high that few people can afford the costs.

Also, if the supply goes up as there is a lot of new construction, so suddenly people have more choices, the price could fall.

Here are a few basic principles of supply and demand that could happen with the Utah housing market:

• If the housing supply increases and demand remain the same, the prices could decrease. The consumer will have better buying power and can bargain.
• If the housing supply decreases and demand remains the same, prices will increase. In this context, the seller has the buying power and can take the highest offer.
• If the housing market supply remains the same, but demand increases, the price will increase. The seller will have the buying power.
• If the housing market supply remains the same and the demand decreases, the housing prices will decrease.

These fundamental economic principles could happen to Utah or any housing market. As supply and demand change, so can housing prices.

On the other hand, there also comes a time when prices are so high that people who want to live in Utah may not be able to afford it unless wages and salaries in Utah increase to keep pace with the housing market.

Utah Real Estate Examples and Reality

Take, for example, a home in Provo, Utah, which is not even Salt Lake City. This house is four bedrooms, two bathrooms, and 2,740 square feet. In 2001 this house was accessed for taxes at 180,429 USD. Today the asking price for the same house is 725,000 USD.

Most people do not realize that the taxes also went up significantly with the increase, so the person who buys that house will end up paying far more in taxes today than in 2001.

A house that maybe you would have had a monthly cost of 1,500 USD per month ins 2001 will now cost you over 3,400 USD per month to keep your home and be able to pay a standard mortgage.

The housing costs do not include other things such as electricity, water, telephone, internet, and cable television which most Americans consider to be a standard part of living.

Today, this same house has a monthly rental value of about 2,300 USD. This means the cost you pay for it today; you may not be able to cover your rent each month if you decide to buy it for a rental property without paying out a large deposit, so your mortgage is not so high.

That is a massive increase by any standard and means it will be harder for people to enter the housing market, especially if this increases. It also means many in Utah cannot afford to continue to live in Utah if they sell their houses and try to buy a new home.

Utah Wages and Living Costs

I find it interesting that Utah wages are not increasing to cover these increased costs for the housing market, and the question is if they will increase or remain the same.

The more expensive Utah wages become, companies may start looking for locations and places without high costs and salaries. There must be an economic reason why companies would pay more wages than other locations.

Here are some basics as to what the wages are now in Utah. As with everything else, some people are earning more, and others are earning less than this amount:

This is lower than a state like California, which would have an average of $62,356, meaning that California’s average wage is closer to the top 75% of earners in Utah. If you are a Californian and can work remotely, you move to Utah, you may find Utah housing and living much cheaper than in many parts of California.

The average wage in Utah is right about the US average national salary, which is $55,629. This tells us that wages in Utah are right at the US national average.

The median price for homes in the United States is at an all-time high of about 350,000 USD. In Utah, the average cost of home prices is $486,000.

The danger is that if wages do not increase to compensate for these increases in home prices, the dream for most Americans to own and have their own home will not be possible.

And this will be especially true in Utah, which is on the national average for wages but on the high side for home prices. Here is what we learn from these statistics:

• Utah at the National Average for Wages – Utah is right at the national wage average.
• On average, home prices in Utah are 39% higher than the National Average. Utah residents must spend more to afford a home for the same wage as others in other parts of the United States.

But If you are a Utah resident earning the average Utah pay, you may find the cost of housing in Utah extraordinarily high and, in many cases, out of your price range.

In reality, if you have a large family and you earned the average in Utah and wanted to buy that house for your large family today, almost 64% of your salary would go towards your home, which would not leave you very much at the end of the month for many other expenses.

You probably will not be able to afford your home and will need to move to a much smaller house and property. Even those considered top earners in Utah would be spending, on average, at least 50% of their income on housing, which would put them over the national average.

In America, housing accounts for 37% of the average American budget, with the standard measure being 30% of their pretax income.

The 30% is the ideal, but most Americans spend over 50% of their income on housing. In Utah, where housing is higher, most Utah residents pay at least 50% of their incomes for housing.

I spend a lot of time studying real estate in Utah, and I am shocked by the state’s housing cost, especially when compared to the salary levels. To see the enormous increase, you have to wonder when and how it will end or it will start to see a decrease as more people can not afford housing in Utah.

Being house rich is a good thing, but if you sell your home to move into a new house in Utah, the truth is that most people in Utah cannot afford to move. The housing market continues to be too high for most people to be able to live and afford a home on their present wage.

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Frequently Asked Questions

Related Question

How Hard Is The Utah Real Estate Exam?

Utah’s real estate is expensive due to the supply and demand economic principle. Housing prices have risen so high over the last few years that most people cannot afford to buy a house in Utah, especially if they earn just the average or even above-average wage.

By clicking here, you can read more about How Hard Is The Utah Real Estate Exam?

The Real Estate Bundle Of Rights Explained

A bundle of rights is your right as a property owner. It is all your rights to your property as the rightful and outright owner. It is essential to understand these rates and understand if you’re full access to all your rights or if there may be HOA or local laws that may put exceptions onto your bundle of rights.

By clicking here, you can read more about The Real Estate Bundle Of Rights Explained.