2019 Dueling Housing Forecasts
Published On: January 14, 2019 Posted by: Jeremy Peterson
The Northern Wasatch Association of Realtors recently held its annual Economic Forecast Breakfast at the Davis Conference Center in Layton. As has happened in previous meetings, the Kem C. Gardner Policy Institute at the University of Utah presented their best guesses as to what would happen in the housing market for 2019.
A couple years ago I attended the summit and they predicted that house prices would go up about 10% for that year. I didn’t believe them. But they were right. House prices did the same thing last year too. But, before I get to their predictions, and my rebuttal, her are a couple charts to illustrate the situation we face in Utah right now.
First off, Utah has been enjoying a significant economic expansion for the past seven years. While not explosive in nature, the growth has been steady.
Another interesting figure shows the number of building permits being pulled for housing. While 24,000 is impressive, it still pales in comparison to the deficit in housing we are experiencing. Currently we are an incredible 54,000 housing units short of demand.
Here you can see the breakdown in the mix of building permits that are being pulled. During the peak year of 2006, 28,285 permits were pulled with only 5,100 of those being multi units. Today, multi housing unit permits are twice that amount with single family home permits are still languishing below the trend line set from 1994 through 2003. Single family construction still has not fully recovered from the Great Recession. Yet, multi-unit housing (i.e. apartment complexes) are making up the difference and catapulting the permit count.
Because of these factors, here is KGPI’s 2019 prediction:
Kem C. Gardner Policy Institute’s Crystal Ball
Weber County House Prices Up 10%
Weber County Home Sales Volume Up 4%
I am a skeptic. Signs are everywhere that we are in the beginning of the shift in the housing market. Increasing interest rates, credit market palpitations, and a softening consumer optimism will take a toll in 2019, I believe. Here is my prediction:
Jeremy’s Crystal Ball
Weber County Prices Up 3%
Weber County Home Sales Volume Down 5%
Let’s see what 2019 brings!