Report shows high prices, slowing home sales as Park City buyers opt for new construction
February 18, 2019
In a town marked by high housing costs, the prices keep on rising.
The Park City Board of Realtors recently released a report showing a steady increase in housing costs and a decrease in the amount of houses sold during 2018 compared to 2017. Officials said the combination of people wanting new homes and the rising costs of construction labor influenced the trends. Still, the housing market remains relatively stable, said Sheila Hall, president of the Park City Board of Realtors.
The report showed the median cost of a home rose by 7 percent in the Wasatch Back during 2018, while the number of sales decreased by the same percentage.
"Our prices have been pretty consistently rising for the last six years coming out of the recession," Hall said. "They have been steadily moving up, which is normally what you would see."
In 2018, the median price of a single-family home in the Park City limits was $2.09 million, a 10 percent increase from 2017. The median price in the Snyderville Basin rose 21 percent to $1.23 million.
While some of those numbers might seem steep, Hall said it is important to remember that the statistics do not reflect the value of all homes in the area. Instead, the statistics take into account only the prices of homes sold last year.
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"It just means that is what is on the market today, and that's what's selling today," she said.
More expensive homes were on the market last year, and because of the relatively healthy U.S. economy, people had the money to buy newer and pricier homes, she said.
Yet, the Wasatch Back saw a fairly significant drop in volume of single-family home sales.
In Park City, Old Town and Park Meadows had the highest number of home sales, but there were still 18 percent fewer sales in city limits compared to 2017. In Snyderville Basin, Promontory had the highest number of sales with 68 homes. It also had a 21 percent increase in median price, reaching $2.08 million.
Condominiums sales had similar patterns. The number of units sold within Park City went down by 7 percent, while the median price jumped 24 percent to $886,000. In the Basin, the median price increased 8 percent against a 12 percent decline in total sales.
Todd Anderson, who was president of the Board of Realtors in 2018, said it is common for sales to fall when prices go up. But, some other factors appear to be playing a role.
Hall said the decrease in overall sales can in part be attributed to the high demand for new construction.
"People just want new," she said. "And they are willing to wait for that right house to be built by somebody else, or they will buy land."
According to the report, vacant lot sales in the Park City limits were up 21 percent compared to 2017. There was also a 26 percent increase in the median price, settling at $1.03 million.
Hall said the increase in land sales shows people would rather build their dream home than pay to remodel and existing one. Several of her clients tell her they don't have excess funds to afford a remodel after spending money on a down payment.
And, with a shortage of houses throughout the state, including Summit County, Hall said her customers have to be patient.
Anderson agreed that more buyers are opting for vacant land because they are not finding what they want on the housing market. Contractors are more likely to do a project from the ground up than remodel a house, which makes it easier for buyers to find workers for their project.
Hall said large commercial construction projects in the Salt Lake Valley, such as the Salt Lake International Airport, are pulling workers away from building new housing. Plus, with low unemployment and a small labor pool, she said developers are having to pay their workers more. That leads to higher construction costs and, ultimately, new homes with higher price tags.
Anderson said the cost of materials to build new homes, such as lumber and steel, has risen by almost 30 percent, which has also contributed to price increases.
"The value and the cost of new construction is rising more dramatically than the value of existing homes," he said.
Hall said growth is expected to continue, and she predicts that housing costs will keep rising over the next few years in Summit County.
"Everything seems to be pointing toward a stable housing market for at least the next three years," she said.
She said one of the factors that will dictate healthy growth is new development in the area. That is why the Board of Realtors has been present during Summit and Wasatch Counties' future planning discussions to push for more housing, particularly in areas where there is room for growth.