Ogden, Utah
The “Junction City” Market Leads the Way as the Market Shifts
By Carole VanSickle Ellis
Ogden, Utah, boasts a “wild” city motto: Still Untamed. That motto, adopted in 2016, refers to the area’s unconventional roots. As Roger Brooks, whose company rebranded Ogden six years ago, explained to a bemused audience at the time, “While we replaced bootlegging, prostitution, and gambling with skiing, kayaking, and mountain biking, Ogden’s soul will always remain untamed.”
Since that time, the Ogden real estate market adopted the motto as well. Average home prices in June 2016 hovered just over $250,000; in June 2022, that number was just shy of $450,000. Then, things began to change, and Ogden’s untamed market geared up for another round of wild, post-pandemic swings.
By September 2022, Ogden home prices were falling as the national housing market began to soften in response to the Federal Reserve’s rate-hiking policies. Median list prices hovered just over $370,000, a 17% decline in home values that stands out compared to the reaction of other markets around the country where demand has softened but prices have yet to decline. In Ogden, the city’s massive, pandemic-fueled boom is starting to wind down, with Realtor.com reporting more than a quarter of all listings posted at least one price reduction during Q2 2022 and ranking Ogden sixth on its “10 Cities Where Sellers are Slashing Home Prices the Most.”
“With buyers pulling back, homes linger for a longer time on the market and more homeowners have to slice prices to get a deal done,” said George Ratiu, senior economist for Realtor.com. He added, “Price cuts are hitting hardest in markets which have been on a hot streak during the pandemic – cities which saw an influx of buyers looking for quality of life, more space, and affordability.”
Ratiu also cited Ogden’s “fast ramp-up in prices due to the inadequate supply of housing” as a source of the price-slashing now and noted that the city experienced higher appreciation during the COVID-19
pandemic through June 2022 than the national 26.6% increase over the same period. In September, Moody’s Analytics appeared to concur; it ranked the Ogden-Clearfield metro area as the “most overvalued market in the state” with overvaluations in excess of 50%.
“Soaring prices were largely due to out-of-town homebuyers moving in during the pandemic, competing with locals for a limited supply of homes,” observed Redfin analysts in a report published in July of this year. At peak, prices in Ogden reached $500,000, 57.2% higher than they were in May 2020. Now, the trend is starting to reverse.
In response to that reversal, savvy sellers are suddenly willing to be flexible on their pricing, said Redfin chief economist Daryl Fairweather. He observed, “There are two kinds of sellers in today’s market: Those who already know the market has cooled, and those learning about the cooling market as they go through the selling process.” For real estate investors in Ogden, both types of sellers may be more willing to make a deal in order to sell quickly if they are beginning to be concerned about the market shifting downward.
Not Just a “Zoomtown”
Although the Ogden market certainly benefited from pandemic-induced buying over the past two years, the area itself appears poised to weather the post-pandemic softening with a fair amount of resilience. Prior to 2020, Ogden had already been experiencing migration into the city from nearby Salt Lake City and Provo, with more than 8,600 people moving to Ogden from SLC between 2014 and 2018. Because Ogden, SLC, and Provo are all connected by commuter trains, light rail lines, and interstates, movement between the cities is relatively smooth and painless, making it less likely that calls for employees to return to local offices will result in high-volume departures.
The city has also dedicated resources to developing its own “Silicon Slopes,” bringing in tech growth during the pandemic as tech startups looking for access to the outdoors and relatively affordable (compared to Silicon Valley) space in which to grow began considering Ogden when putting down roots. Although the nomenclature “Silicon Slopes” typically refers to the Provo/Salt Lake City/Park City area, Silicon Slopes Ogden is the city’s deliberate effort to expand the area and be included in the region.
In 2020, The Brookings Institution named Ogden one of its “lifestyle cities [likely] to see accelerated tech growth in 2020,” and this prediction was borne out over the following two years.
Sara Mees, one of the city’s business development managers, said at the time in response to the Brookings research, “We have seen two trends. One of them is from smaller software companies that have been founded and grown here in Ogden…. A number of them have been pretty successful at scaling growth here, [and] the other is related to shifts at Hill Air Force Base.” She continued, “A lot of new programs [at the base] have a significant software development component.”
The result was that many software companies and aerospace defense contractors began seriously considering expanding to Utah, and Ogden experienced a 7% growth in tech-related jobs between 2019 and 2020. Between 2020 and 2022, that growth continued, with the city’s tech incubator, Catalyst Campus, facilitating connections between local startups and other tech businesses and the Air Force.
Catalyst Campus is based in Colorado Springs, Colorado, and opened its Ogden branch in 2021. In 2022, it partnered with local Weber State University and the city to secure $20 million from the state of Utah to build a Sensitive Compartmented Information Facility (SCIF) to store sensitive work from external surveillance. An additional $65 million in private investments and $30 million in “local funding” will contribute to the effort as well.
The facility will improve security for companies in the incubator hoping to work with the Air Force and makes them more attractive as contractors. “We wanted to remove the barrier of having to go on base, so all these small businesses who don’t have classified environments to work in now do,” explained Catalyst Campus executive director Aniza Brown. Ultimately, the SCIF facility is expected to create about 1,000 new jobs, generate $25 million in tax revenue, and boost the city’s GDP by about $125 million.
A National Junction Once Again
Ogden got its nickname, “The Junction City,” in the early 1900s when it served as the transfer point between the Union Pacific Railroad and the Central Pacific Railroad. Although the advent of air travel brought about the end of the rail era, by the early 2000s, the city was rebuilding itself around the idea that “captains of industry [would] converge on Ogden once again” in order to “share their ideas, dreams, and strategies that will shape the future” in a beautiful outdoor setting, as the local government described the concept. To that end, municipal planning tends to emphasize Ogden’s self-described identity as an “outdoor recreation mecca” and, once again, a “junction” for visitors and business opportunities.
Ogden is home to a variety of business and industrial parks as a result of these planning initiatives. The Ogden Business Exchange, Business Depot Ogden, and Kemp Ogden Gateway Center all offer attractive proximity to the Ogden-Hinckley Airport, which itself offers site space for aerospace and aviation businesses like Northrup Grumman and Williams International, and specialize in catering to local industries. For example, the Ogden Business Exchange is designed around “outdoor lifestyle amenities” and “sustainability principles,” making it appealing to brands like ENVE Composites and Selle Royal, both leading cycling brands whose employees make active use of the adjacent network of trails.
Business Depot Ogden, which is home to White Clouds 3D Printing, Barnes Aerospace, Capstone Nutrition, Honeyville Grain, Esurance, and HomeDepot.com, on the other hand, is a master-planned industrial park with more than 9 million square feet and another 300 acres available for development. The Kemp Ogden Gateway Center, located at the airport, offers 1.3 million square feet for aerospace and aviation uses.
With so many welcoming locations for new and existing businesses, the real issue for most Ogden residents is, not surprisingly, finding and obtaining housing. As prices fall in the area (they are still up year-over-year), real estate investors may find opportunities to acquire long-term rentals that will appeal to renters earning tech-industry salaries simply because those individuals may be unwilling or unable to handle a mortgage under the currently rising interest rates. Although Redfin reported 125 homes sold in Ogden in August (down from 190 in 2021), falling prices month-over-month are indicating the market
could be loosening despite still-falling inventory volumes.
Utah is considered to be on the leading edge of the post-pandemic housing correction and has been labeled “ground zero for…shifting housing market dynamics,” which means Ogden will likely be an ideal location for investors interested in long-term acquisitions to monitor over the next 12 to 24 months. Ogden has been a relative hotbed for fix-and-flip transactions thanks to meteoric rises in home prices, but with flipping returns declining and more consumers opting to wait to buy, long-term holds may be a better option for investors.
The End of “Peak Euphoria” in Ogden May Still Mean Delayed Gratification for Investors
Although Rick Palacios, Jr., head of research at John Burns Real Estate Consulting, recently declared the housing boom over, saying, “Peak euphoria is behind us. We are giving back some of the euphoria pricing that was rolling over every housing market,” Ogden investors will likely benefit from what Nick Bailey, president and CEO of RE/MAX, called “greater balance” in the marketplace.
However, with higher mortgage rates and an increase in listings will come nervous tension for sellers accustomed to multiple offers and short times on market. Most analysts predict far worse slides in markets like Boise, Idaho, which many expect will actually reach negative territory sometime in 2024 if not before.
Utah markets, including Ogden, were experiencing clear, directional growth and serious housing shortages before the COVID-19 pandemic. This means that even in overheated markets like Ogden’s, prices are more likely to level off than go negative. Interestingly, recent data from StorageCafe indicates that Ogden remains one of the top affordable cities for life scientists, who earn more there than in most other areas of the country. This could create niche opportunities for flipping in neighborhoods with good access to life-science employers and facilities.
“There are certainly going to be properties changing hands, but with the buildup of equity over the past couple of years, we do not see traditional foreclosures and short sales,” said Robert Syverson, president and CEO of BlueBook, a national valuation platform providing real-time, ZIP-code specific cost estimates for home improvement materials and labor to investors around the country. “There could be a lot of investors — both fix-and-flip investors and rental investors — buying in the coming months.”
Rental investors, in particular, stand to see long-term gains in the new market, said Dejan Eskic, senior research fellow at the Kem C. Gardner Policy Institute at the University of Utah. “The housing market is coming back to reality because there was this frenzy… [but] I don’t see rents coming back down to earth,” he said.
Sidebar 1
Top 10 Employers in Ogden, Utah
Office of the Inspector General for Tax (IRS)
McKay Dee Hospital Center
Autoliv
Weber State University
America First Credit Union
Fresenius USA
Nutraceutical
Associated Food Stores
Columbia Ogden Medical Center
Corporate Connection International
Sidebar 2
Homegrown Tech Meets Military Investments for Silicon Success
Ogden, Utah, is uniquely positioned to attract software technology companies and startups to the area due to its proximity to Hill Air Force Base (HAFB). The base has been an ongoing source of recession- and pandemic-resistant jobs in the city due to the combination of a massive essential workforce supporting it and the need for innovative software technology and platforms to support the defense-tech industry.
According to the Ogden Office of Business Development, the presence of the base has resulted in the presence of the following:
» 663 software and technology businesses
» 5,957 software and technology jobs
» $64,403 annual wage
» 4.3% of Ogden’s job growth between 2010 and 2020
The software and technology workforce helps create a stable foundation for the local economy, with salaries ranging, on average, between $50,000 (web developers and digital interface designers) and $130,000 (computer and information systems managers). Local high schools and colleges have developed “pathway programs” to interest students in software technology and, once their degrees are completed, to keep them in the local workforce. Because software and technology jobs tend to create between seven and 11 “indirect,” supporting jobs elsewhere in the community, this industry plays a key role in the stability of Ogden’s economy.
