Oh, the good ol' days of summer. Back in August of 2016, the median sales price of a home in Utah was $252,000. The humble abode was a median size of 2,192 square feet and sold for $113 per square foot, with four bedrooms and three baths and was only on the market 15 days.
Move forward to last summer in the midst of the Covid-19 pandemic, and in August of 2020 the same home sold in 12 days for $359,900, or $167 per square foot. This August has just ended and we'll have statistics any time, but it looks like the median sale in Utah took less than seven days to go under contract, and the median sales price is around $455,000.
This is for the entire state, not just Park City or the capital city where prices are cray-cray. Salt Lake City has gone from a median sales price of $271,135 in July 2016 to $470,000 in July 2021.
Basically, property values in many metropolitan areas of our state have doubled in five years. Buyers should be jumping for joy because interest rates on mortgages have been between 3-4% during those five years, but they aren't. Why? Simple math will show you that your income must have increased for you to buy a more expensive home, and wages certainly have not doubled in five years like house values have.
A 30-year mortgage at 3.25% on a loan of $252,000 would have a principal and interest payment of $1,098 per month. The same terms on a $470,000 loan would cost $2,423 per month. Lenders will tell you to use a third of your monthly income as a rough calculation of the maximum mortgage payment you would be allowed under lender guidelines. To qualify for the $2,423 monthly payment, you'd have to be pulling in $7,269 per month.
I'm not a lender, so just take this as a rough example. I didn't include property taxes, mortgage insurance or—if it was a condo—home owners association fees.
President Biden has been pushing for a national minimum wage of $15 per hour. If you worked 40 hours per week—for four weeks in a month—you would bring in a gross salary of $2,400. Divide that by three and you would qualify for a mortgage payment of $800 a month on a mortgage amount of $147,500. Currently there are no single family homes listed in the MLS in all of Salt Lake County—and only one in the state—listed between $200,000 and $250,000.
Even that $15 per hour isn't going to help you buy a home unless you partner up with a friend or family member to combine your gross income. At $4,800 per month, divided by three, you'd qualify for a payment of $1,600 per month and a mortgage just over $300,000. There are a whopping TWO homes for sale in the Salt Lake Valley priced under $300,000. Home ownership dreams may just be dreams for buyers in today's market. Sigh.