Short sales in the Salt Lake City-Murray metro area rose 12.2% from 2024 to 2025, and Utah now leads the nation in short-sale-to-foreclosure ratio, according to a Realtor.com report published Thursday, July 16. For buyers across the metro who purchased near the 2022 market peak with minimal down payments, the data points to growing risk of owing more than their homes are worth.

A short sale happens when a homeowner sells for less than they owe on their mortgage, with the lender's approval, to avoid foreclosure. The Salt Lake City-Murray metro, which includes Draper, had a 1.8% share of short sale transactions in 2025, according to the report. That share is small.

"The surge of purchases in SLC in recent years and the more recent retreat of home prices there put some recent buyers in danger of being underwater," Realtor.com Senior Economist Joel Berner told the Deseret News on Friday, July 17.

Utah's short-sale-to-foreclosure ratio stands at 3.3 to 1, the highest in the country, according to report author Glen Morgenstern. Only Idaho comes close at 2.9. Most states fall below 1, meaning Utah homeowners in distress overwhelmingly choose short sales over foreclosure.

Homes in the Salt Lake City area take about a third longer to sell than three years ago, and inventory is higher, Morgenstern wrote in the report. In a fast market, a struggling owner can sell and walk away whole. In a slower one, buyers who stretched at the peak have less cushion to cover selling costs.

Draper context

Draper's housing market amplifies the dynamic. The Salt Lake Board of Realtors announced the city's median home price reached $1 million in 2025, according to the Draper Journal. Laura Fidler of Summit Sotheby's, a Draper realtor who started her career in 2006 when the median was $350,000, told the Draper Journal in December 2025 that pandemic-era rates "set the housing market on fire" as buyers borrowed at 2.5% to 2.9% and bid up prices. That frenzy is exactly the pattern Morgenstern's report identifies as a precursor to short sales.

Draper's median household income of $128,910 is 35% above the state average, and 29% of households earn above $200,000, according to U.S. Census data cited in the city's FY2027 tentative budget. That income base offers some buffer against distressed sales. But the city's 2025 Moderate Income Housing Report noted elevated interest rates remain the primary obstacle to residential activity, with the average 30-year fixed rate hitting 7.04% in January 2025.

The city has 16,981 total households, with 69% owner-occupied, according to the budget document. No Draper-specific short sale count is publicly available; the Realtor.com data covers the broader metro.

National picture

Nationally, short sales remain far below crisis levels. Nearly 30,000 short sale transactions took place in 2025, representing 0.6% of conventional closings (non-distressed, market-rate sales) and 28% of distressed sales, according to Realtor.com. At the 2012 peak during the Great Recession, roughly 358,000 short sales made up 8.8% of all sales. Only 3.2% of mortgaged homes were underwater in the first quarter of 2026, compared with roughly 25% during the recession, according to ATTOM data cited in the report.

The pace is picking up. Short sales rose 4% from 2023 to 2024, nearly 10% from 2024 to 2025, and about 16% year over year in the first quarter of 2026.

What's next

Homeowners concerned about being underwater can contact their mortgage servicer to discuss options before missing payments. Draper realtor Pam Crow of Presidio Real Estate, who started her career in 2008 during the last wave of short sales and foreclosures, told the Draper Journal in December 2025 that the market still has range across price points. The next Realtor.com housing report covering metro-level distressed sales is expected in the fall.