April 22, 2021

The temperature of an already hot housing market has gone up even more this spring as home sales increase, prices rise and buyers compete for a limited number of properties for sale.

March data from the Utah Association of Realtors (UAR) shows the median sales price rising nearly 20% from last year while the number of homes for sale has fallen nearly 70%.

The housing shortage has made it tough for buyers to get homes, but even with those challenges, sales still increased nearly 5% compared to March 2020. Utah Realtors sold 4,390 homes, setting a record for the most homes sold during March, according to Utah Association of Realtors data, which dates back to 2003.

Sales increased the most in Uintah County, where they went up 117% from last year.

Utah also set a record for the highest median price on record. At $405,000, this is an all-time high, according to UAR data.

The rising prices, booming market and lack of homes for sale is a similar occurrence in housing markets throughout the country.

The National Association of Realtors (NAR) reported on Thursday that the U.S. median sales price increased 17% in March. The organization said it is a record-breaking annual pace, and $329,100 is a record-high median sales price.

“Consumers are facing much higher home prices, rising mortgage rates, and falling affordability; however, buyers are still actively in the market,” said Lawrence Yun, chief economist of the National Association of Realtors.

The lack of homes for sale is pushing up the prices. With only 3,978 properties for sale in Utah at the end of March, this is a record low, according to UAR data. Previously in balanced markets that favored both buyers and sellers, there were around 20,000 available properties.

Currently, there is less than one month of supply. That’s down 71% from last year and represents an extreme seller’s market. In a balanced market, there’s a supply of about six months.

In some cases, the lack of choices and opportunity to get a home are holding buyers back. Yun says there would be more sales if there were more houses on the market.

In Utah, the most competitive areas are Tooele County, Washington County, Davis County, Cache County, Weber County and Salt Lake County. Each of these counties only has 0.6 months of supply.

“The sales for March would have been measurably higher, had there been more inventory,” Yun said. “Days-on-market are swift, multiple offers are prevalent, and buyer confidence is rising.”

In Utah, the time it takes to sell a home plummeted. The average days on market fell 44% from last year.

Meanwhile, most sellers are getting more than their asking price. The average percent of asking price for all properties sold was 102%. That’s also a record high.

Along with Utah, the U.S. is also facing a housing supply shortage. U.S. housing inventory is down 28% from a year ago.

“Without an increase in supply, the society wealth division will widen with homeowners enjoying sizable equity gains while renters will struggle to become homeowners,” Yun said.

While the lack of housing supply remains a problem, Yun said there are positive signs for the economy and home-building.

“At least half of the adult population has received a COVID-19 vaccination, according to reports, and recent housing starts and job creation data show encouraging dynamics of more supply and strong demand in the housing sector,” Yun said.

To learn more about the housing conditions in your own area and for help navigating this low-inventory market, contact a local Realtor.

March sets records for sales, prices, inventory

April 22, 2021

The temperature of an already hot housing market has gone up even more this spring as home sales increase, prices rise and buyers compete for a limited number of properties for sale.

March data from the Utah Association of Realtors (UAR) shows the median sales price rising nearly 20% from last year while the number of homes for sale has fallen nearly 70%.

The housing shortage has made it tough for buyers to get homes, but even with those challenges, sales still increased nearly 5% compared to March 2020. Utah Realtors sold 4,390 homes, setting a record for the most homes sold during March, according to Utah Association of Realtors data, which dates back to 2003.

Sales increased the most in Uintah County, where they went up 117% from last year.

Utah also set a record for the highest median price on record. At $405,000, this is an all-time high, according to UAR data.

The rising prices, booming market and lack of homes for sale is a similar occurrence in housing markets throughout the country.

The National Association of Realtors (NAR) reported on Thursday that the U.S. median sales price increased 17% in March. The organization said it is a record-breaking annual pace, and $329,100 is a record-high median sales price.

“Consumers are facing much higher home prices, rising mortgage rates, and falling affordability; however, buyers are still actively in the market,” said Lawrence Yun, chief economist of the National Association of Realtors.

The lack of homes for sale is pushing up the prices. With only 3,978 properties for sale in Utah at the end of March, this is a record low, according to UAR data. Previously in balanced markets that favored both buyers and sellers, there were around 20,000 available properties.

Currently, there is less than one month of supply. That’s down 71% from last year and represents an extreme seller’s market. In a balanced market, there’s a supply of about six months.

In some cases, the lack of choices and opportunity to get a home are holding buyers back. Yun says there would be more sales if there were more houses on the market.

In Utah, the most competitive areas are Tooele County, Washington County, Davis County, Cache County, Weber County and Salt Lake County. Each of these counties only has 0.6 months of supply.

“The sales for March would have been measurably higher, had there been more inventory,” Yun said. “Days-on-market are swift, multiple offers are prevalent, and buyer confidence is rising.”

In Utah, the time it takes to sell a home plummeted. The average days on market fell 44% from last year.

Meanwhile, most sellers are getting more than their asking price. The average percent of asking price for all properties sold was 102%. That’s also a record high.

Along with Utah, the U.S. is also facing a housing supply shortage. U.S. housing inventory is down 28% from a year ago.

“Without an increase in supply, the society wealth division will widen with homeowners enjoying sizable equity gains while renters will struggle to become homeowners,” Yun said.

While the lack of housing supply remains a problem, Yun said there are positive signs for the economy and home-building.

“At least half of the adult population has received a COVID-19 vaccination, according to reports, and recent housing starts and job creation data show encouraging dynamics of more supply and strong demand in the housing sector,” Yun said.

To learn more about the housing conditions in your own area and for help navigating this low-inventory market, contact a local Realtor.

Pitfalls to avoid in a low inventory market

April 15, 2021

The weather is heating up and so is Utah’s housing market. Sales are booming, prices are rising and the number of homes for sale has tumbled.

In April, the average number of active listings fell 72% from one year ago, according to preliminary data from UtahRealEstate.com. In other words, for every three to four homes that were on the market last year, this year there’s only one.

With an unprecedented number of buyers actively searching for homes, it means there’s likely going to be intense competition for every home that goes on the market.

It’s creating a situation where buyers are making aggressive offers. For example, some buyers are agreeing to purchase real estate without contingencies. Others are agreeing to forfeit their earnest money as soon as the seller accepts their offer, and some are offering to pay cash above the appraised value.

These aggressive offers create risk for the buyer. Before you decide to use one of these strategies, make sure you understand the associated pitfalls.

Making earnest money non-refundable

In order to make their offers look more attractive, some buyers are choosing to forfeit their earnest money as soon as the seller accepts the offer. That means if they decide to back out of the purchase for any reason at any time, they will not get their money back.

One risk of doing this is that you might discover during your inspections that there is damage to the home that is significant enough that you no longer want to buy the house. If the earnest money is non-refundable, you will lose your deposit should you walk away from the deal.

For buyers who are putting down thousands of dollars, the risk may be substantial. To help minimize your risk, here are some tips:

  • Avoid making earnest money non-refundable if you’re making on offer on a house that you’ve never visited in person.
  • Ask to see the seller disclosures before you make your offer.
  • Make it clear in the contract that the earnest money will be returned if the seller does not follow through with their contractual obligations.
  • Specify in the contract the circumstances when the earnest money would be returned.
  • Make sure you are truly committed to buying the house and will have the financial means to do so.

Waiving contingencies

Some buyers are choosing to waive the due diligence condition, appraisal condition and financing condition that are found in the standard Real Estate Purchase Contract.

Waiving these conditions is risky because you’re offering to purchase a property without inspecting it, without knowing how much it’s worth and without the opportunity to know if you’ll get financing.

If you are thinking about using these strategies, here are some tips:

  • Clarify that you still have the right to cancel even if you forfeit your earnest money.
  • Clarify that you still have the right to inspect the property and get an appraisal on the property.

Paying above appraised value

Some buyers will offer to pay above the house’s appraised value. While this strategy will help your offer stand out, it’s important to clearly specify what you’re offering to do.

Here are a few tips:

  • Clearly specify a purchase price and an appraisal floor. An appraisal floor is the lowest appraisal value you’re willing to accept. Make sure you can cancel if the appraisal comes in lower than this amount.
  • Make sure you have cash to pay the difference between the appraisal floor and the amount you’re willing to pay above that floor.
  • Make sure you are comfortable paying more for a property than it may be worth.

When making aggressive real estate offers, there are many additional risks and risk mitigation measures not included in this article. Make sure you a working with an experienced Realtor who can help guide you through the pitfalls of this current market. Use our directory to find a local Realtor.