The Escape Home: What the red-hot real estate market has done to essential workers

In October, Bethany Anderson was browsing job openings for teaching positions and found one in Park City, Utah —  about 1 hour and 45 minutes south of where she was living — and didn’t think seriously about it.

“I just jokingly said to my husband ‘oh my gosh, could you even imagine living in Park City, there’s no way we could afford that.’ On a teacher’s salary it would be impossible.”

But after researching and speaking with human resources, Bethany, 27, and her husband Kaleb, 29, decided to just go for it. 

What they didn’t anticipate? How the COVID-19 driven migration of people to resort towns has created an inventory problem, further pricing out many working class folks.

“There are a lot of people who work here, who support the community — not only service workers but teachers and firefighters — and it’s very hard for them to be able to buy anything because you have all the people coming from big cities with money in their pockets that are driving the prices up,” said Park City-based real estate agent Nancy Tallman. 

The majority of recent buyers, she added, are paying in cash, giving them an advantage against people vying for the same property with a mortgage.

“We tend to have about half of our sales in cash, but the bigger difference that we’re seeing is maybe before it was for a $3 million or $5 million house,” Tallman said. “Now we’re seeing cash for a $400,000 condo. Someone is buying it as an investment.” 

That’s really hard to compete with. Anderson said selling their three-bedroom, three-bathroom home was easy. Finding a replacement in Park City proved more difficult than expected. 

With only a handful of properties available in their price range, she and her husband considered renting, only to discover there was nothing available. They ultimately found just three properties within their budget, but two didn’t allow dogs, a dealbreaker for the couple. They eventually made an offer on a two-bedroom, two-bathroom condo.

“It was pretty stressful. This condo ended up being at the very top end of our budget,” Anderson said. “We had to double-check with our lender and see, if the seller of the condo was to counteroffer us $5,000 or $10,000 more, would they still lend to us. There was definitely some stress in regards to whether we really, honestly, make this work and not be house broke. It’s such a competitive market, we got really lucky.”

Several of Anderson’s teacher colleagues have had to settle for homes in nearby Salt Lake City and Midway. Those who do own in Park City typically purchased 15 or 20 years ago. 

“Unless a working class or essential worker is lucky enough to catch something at the right time, I think they would have to live outside of Park City to make it work,” she added. “We almost did if this one hadn’t been on the market.”

According to data from Redfin, Park City home prices were up 49.2% in March of 2021 year-over-year, selling for a median price of $1.3 million.

It didn’t help that mortgage rates fell substantially during the course of pandemic. According to Jeff Tucker, a Zillow economist, typical 30-year fixed-rate loans started out at 3.50% in February 2020 and dropped to 2.65% around New Year’s. 

“There’s no doubt that low mortgage rates contributed to surging sales of second homes last year,” he said.

Park City’s mayor Andy Beerman calls these prices “insane” for the average person. 

“A lack of affordable housing is causing us to lose our working and middle class, which threatens the fabric of our community,” he said. “There is fear we will fall prey to ‘free market forces’ and lose our friends and neighbors along with our fun and quirky small town vibe.”

Creating more affordable housing, Beerman added, is one of the city’s top priorities, with the goal being 800 new units by 2026. So far the 88 have been built.

Furthermore, mortgage prices rising in 2021, as they have been to 3.18% in April compared to January, may dampen demand for second home purchases, Tucker said.

While the influx of out-of-towners has led to an unexpectedly booming economy, there is certainly resentment from locals toward their new neighbors, Tallman said. One local coffee shop began selling bumper stickers that read ‘I lived in Park City pre-COVID.’ 

Tallman said many of her neighbors have been asking her if all the Californians are going to sell and go back to California. “I say no, because they’re going to live here and see that it’s a better quality of life and stay.”

Despite the hassle of finding a home within her price range, Anderson and her husband agree with the sentiment.

“It’s such a happy and beautiful and just good place to be,” she said. “But I also am just hopeful that it will become less of a rich only market, only the affluent. It’s going to have to come down to the balance of providing enough housing for the workforce of essential workers and middle class workers to support the life force of the community because if that’s not present there won’t be any engine running for the affluent people to enjoy.”

This article is reprinted by permission from The Escape Home, a newsletter for second homeowners and those who want to be. Subscribe here. © 2021. All rights reserved.