The Greater Salt Lake market, which includes the seven major counties along the Wasatch Front and Back, has been growing at an astonishing rate over the past few years. This recent massive influx of demand makes it important to understand what makes the Salt Lake City market attractive to so many people and major companies. One of the most notable areas along the Wasatch Front, strategically named “Silicon Slopes,” has been a major draw for technology companies from across the country and is bringing highly desirable jobs to the Salt Lake market. Prior to the COVID-19 pandemic, the market was on average creating approximately 35,000 new jobs per year. Once the pandemic hit, the market lost 86,200 jobs as of April 2020. Based on the most recent numbers from the Bureau of Labor Statistics, the Greater Salt Lake market has had a net increase of 5,500 jobs over the past 12 months, ending December 2020.
Aside from the strong economic growth the market is experiencing, the Greater Salt Lake market is also known for its unmatched access to recreation. In the summer months, activities like hiking, biking, and golf are attracting people to the market, and there are 11 ski resorts within an hour drive of the Salt Lake City International Airport, making it easily accessible to the outdoor enthusiast. Speaking of the airport, the first phases of its redevelopment program were recently completed, with more expansion to come. The airport will become another icon in the market and speaks to dedication and commitment to accommodate more growth in the future.
Equally as important as jobs and recreation, the housing market throughout the Greater Salt Lake market has also been enticing to those outside of the market. Annual new-home starts in the Greater Salt Lake market increased 24% during 2020 compared with 2019, for a total of 15,822 due to strengthening demand. While annual new-home starts have not reached the previous peak of 17,558 starts set in 2006, the buyers in today's market appear to be primary home buyers (along with some secondary buyers in the Wasatch Back), with a very limited number of investors.
With demand for homes surging, new-home and resale inventory in the market has been pushed to extremely tight levels. During the process of our quarterly lot-by-lot survey of every subdivision, Zonda tracks all new homes that are under construction and those that are finished and vacant (otherwise known as spec homes). An acceptable level of under construction inventory should range between six and nine months. Currently, there is a 7.0-month supply of new homes under construction inventory, both attached and detached product, which is at the lower end of equilibrium. One of the most important numbers we monitor is finished vacant inventory. The number of finished and vacant homes in the market has decreased 47% compared with this time last year and currently sits at 0.5 months. As a reference, we consider this equilibrium to range between two and two and half months, making the current level extremely low. While builders have tried to deliver more finished vacant homes to the market, they have struggled as consumers continue buying these homes as fast as they can be built.
While surging homes sales is beneficial for the overall market, there is one drawback: an increase in home prices. Using our Zonda app, we observe that the average listing price for a new home in the Greater Salt Lake market is $400,900, which has increased 21% compared with this time last year. While local new-home prices continue to increase and put the squeeze on affordability, out-of-state buyers are attracted to the area as the prices are significantly lower than in larger metropolitan markets across the country. Therefore, when out-of-state buyers come into the Salt Lake market their equity goes a long way. As of December, approximately 29% of all new-home sales were purchased with cash.
