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What Is The Future Of The Utah Housing Market?

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There is so much going on right now in our economy. If you’re trying to decide on the best time to move out of your home, into a new 55+ community, the decision can be nerve-racking.

Will the President’s tax stimulus help keep the economy moving forward?

Is it about time for a down turn in the Market?

What’s happening with mortgage rates?

If I move into the active adult community of my dreams now, will the market timing be the best?

There’s a lot of uncertainty in the economy lately, as is evidenced by the recent up and downs of the stock market. Today, I want to address some of these concerns.

Is it a good time to move?

First, Utah’s economy:

Utah is a great place to live. We can boast of having one of the most, if not the most robust economy in the country. We’ve been growing faster than anybody and our unemployment is at or near the lowest in the nation.

The rest of the country is starting to catch up, but we’ve been enjoying this strength now for a few years. This is not a new story. Usually Utah fares better than the rest of the country. We just have better demographics. We have a faster growing population, with a highly educated and world savvy workforce.

If someone is unemployed in Utah, it’s not because there aren’t jobs for them, it’s because they’re just having a hard time finding the perfect job for themselves.

Across the country, most states are at or near what is considered full employment, meaning that the economy is strong everywhere, just more so here in Utah.

Second, political pressures:

While the economy has enjoyed phenomenal and mostly consistent gains since the last recession, the interest rates have remained surprisingly low up till now. However, this is starting to change.

The recent tax cuts a couple months ago, along with stricter controls of our migrant workforce are going to create some inflationary issues. How so? I’ll explain:

Tax cuts, in theory, put more money into individual’s hands, thus incentivizing them to spend more. More people spending money usually means that more jobs are created. More jobs makes for a higher GDP. A higher GDP makes for more tax revenue to offset the tax cuts (this is unlikely and I’ll explain why in a moment).

However, if we are already at full employment, and many experts would argue that we are now there, then policy meant to stimulate an already fully robust and stimulated economy is a little puzzling. When we’re at full employment, the only two places to subsidize the workforce is either by encouraging those who are not in the labor force to participate, or to hire migrant workers.

With increasing pressures against the migrant workforce and increased demand for goods and services, the available workers will go to the companies willing to pay more. If a company has to pay their employees more to keep them, then the price of goods and services will go up. This increase price may draw some back to the labor force, but mostly it is going to raise overall prices until an equilibrium is found where the cost of goods matches the demand for those goods. In the end, this is a short-term stimulus that just raises overall prices of everything, ie- inflation.

With inflation, the interest that people demand for their bonds will go up. Nobody wants to hold a bond that loses money to inflation. Obviously, since the U.S. Government is the biggest provider of these bonds, the rates at which the government can issue debt will increase. This means that any extra revenue generated from stimulating the economy at this point, will be more than eaten up in simply maintaining a higher interest rate. Of course, I’d be ignorant if I didn’t admit that higher inflation also devalues the current debt level, but we could go around in circles here all day.

So to recap, the tax cuts put more money in your pocket, making the masses happy, with the side-effect of increasing the government’s short term debt obligations.

Anyhow, now that we have an overall picture of where the economy is at, the Federal Reserve is going to step in and try to counteract the president’s over-stimulus, by removing their stimulus measures, which have been in place since the Great Recession.

In short, this means that they are going to start raising their interest rates. This will serve to decrease the money supply in the country. With less money available, they’ll hope to keep inflation low. Most countries consider a 2% inflation to be healthy.

With higher inflation and less money coming out of the Federal Reserve, banks will be lending less. The demand for mortgages and loans will still remain the same for the short term, so the only thing that can happen, is that mortgage rates are going to rise over the next couple of years.

We’ve all been spoiled over the last ten years or so with super low mortgage rates. No doubt there will be many of the younger generation who can’t imagine mortgage rates above 5%. Of course, if you’re reading this, you might very well remember mortgage rates in recent decades that got as high as 18-19%.

I think that was an extreme on the high end, just as 3.5% has been an extreme on the low end. I would expect interest rates to gravitate towards something more in the middle, possibly averaging around 8%. That’s a lot when you consider it’s nearly double today’s interest rates.

I won’t even go into what Trump’s possible Trade War is going to do to inflation, aside from saying that if he’s able to impose all the tariffs he’s shooting for, then the cost of goods will go up here in the USA, and that will be another source of inflation.

Third, is this the right time to move?

This is a good question and it’s a good time to ask it.

In Utah, the demand for homes is currently higher than the supply of homes. This has the tendency to push home prices up. Added to this will be the inflationary pressures of the overall economy. This would suggest that home prices will likely continue moving higher.

Home value however are a funny thing, especially if you already own a home. Selling your home now, to move into a home now, should create a wash. Thus, there is no benefit to timing the market on an equivalent sized home.

The real focus should be on, will I get a better interest rate on my mortgage by moving sooner?

From what I can see, if you’ve been thinking about moving, now is definitely the best time for it. I would predict that the economy will still remain strong, though considering the fact that we’re already at full employment, I don’t see how it can sustain the high levels of growth we’ve seen over the last several years. Also, since you can still get low mortgage rates, why would you want to wait until rates climb any higher.


Ever since the Great Recession, people worry about bubbles. There’s bubbles in the stock market, bubbles in housing, bubbles in your bathtub, just lots of bubbles in lots of places. In Utah, it’s no secret that home prices have been going up quickly. Nobody likes to see their equity wiped out overnight. So the big question a lot of people have, is: Are we seeing the beginning of a bubble in housing again?

I would suggest no.

I don’t know where the next bubble might be forming, but despite the rising cost of home prices, the evidences of a bubble just aren’t here, at least not in Utah.

As the growth of the economy flattens out, an inflation steps in, it’s likely that we’ll see prices of goods and services increase. This will likely include home prices, but over the next couple of years, I would predict that home prices don’t climb as fast as they have in the last five years. Time of course will tell.

The only thing to climb fast, might be mortgage rates. This is why I believe that now is a great time to buy a home. Since we happen to sell homes, if you are 55 years or older, are looking for a fun active adult community to move into, please stop by one of our newest developments. We’d love to show you around.

You can see for yourself why we are Utah’s top builder of senior communities.


This article contains economic predictions by a non-professional economist. These are only the opinions of the writer and should not be used for any financial decisions. Always consult a licensed financial advisor before making any significant financial decisions that are subject to economic influences.

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