March 17, 2022

Record-low housing inventory has pushed Utah home prices to a new high. That’s according to the latest housing report from the Utah Association of Realtors, which examines market conditions as of February 2022.

The statewide median sales price hit a record high of $501,000 in February — up nearly 30% from 2021. That equates to a price increase of nearly $115,000 in one year. It also marks the 119th consecutive month of year-over-year price gains.

The average home price — which tends to be more volatile based on the mix of houses sold — rose nearly 25% to $633,968.

The rising prices are the result of not having enough houses for sale. At the end of February, there were fewer than 3,000 homes on the market statewide. That’s in contrast to more than 9,000 properties two years ago when there was also a housing shortage.

In Utah, there should be between 15,000 and 20,000 houses for sale to achieve balance between buyers and sellers. Right now — with just over half a month of inventory — the market highly favors sellers. In fact, conditions in January and February were the best conditions for sellers on record, according to UAR data going back to 2003.

As further evidence of the seller’s market, buyers are often paying more than the home’s asking price. On average, sellers get about 102% of their original list price — an increase from 101% last year.

“With inventory at an all-time low, buyers are still having a difficult time finding a home,” said Lawrence Yun, chief economist of the National Association of Realtors in a press release about pending home sales.

Nevertheless, even with the challenges, many buyers are still finding homes and purchasing them. Utah Realtors sold 3,219 homes during the month, making it the fourth-best February on record.

Sales fell about 8% from last year as they were held back because of low-inventory conditions. Had more homes been on the market, there likely would have been even more transactions.

In counties with at least 50 sales, Cache, Wasatch, Summit and Tooele counties had the highest gains with sales up 39%, 21%, 20% and 13% respectively.

The most affordable counties were Carbon, Emery, Daggett and Uintah with median sales prices of $159,150, $183,500, $205,000 and $232,450 respectively.

The most expensive counties were Summit, Wasatch, Grand and Morgan with median sales prices of $1,475,000, $890,650, $710,000 and $689,197.

Rising home prices along the anticipation of higher interest rates are adding to buyers’ sense of urgency. Pending sales were about even with last year with 3,821 buyers signing contracts to purchase homes.

Moving forward, buyers will be on the lookout for higher rates as the Federal Reserve concludes its asset purchase program and fights inflation.

“The 30-year fixed-rate mortgage exceeded four percent for the first time since May of 2019,” said Sam Khater, Freddie Mac’s chief economist in a March 17 press release. “The Federal Reserve raising short-term rates and signaling further increases means mortgage rates should continue to rise over the course of the year.”

Nevertheless, it’s important for buyers to remember that even at 4%, rates remain historically low.

“There’s also the possibility that investors may flee toward safer U.S. Treasury bonds, which may result in temporary short-term relief to interest rates,” Yun said.

Even though buyers face some headwinds, it’s important to remember that it’s still possible to get a home. Buyers looking for the best chance of success should work with a local Realtor to analyze market conditions and strategize.

New report compares Utah’s housing market to neighboring states

March 16, 2022

An economic report studies housing market indicators in Utah and neighboring states including Arizona, Colorado, New Mexico and Wyoming. The Utah Association of Realtors commissioned the report, which was written by Dejan Eskic, senior research fellow at the Kem C. Gardner Policy Institute.

Read the report

 

Utah median home price sets new record in January

February 24, 2022

As home buyers rushed to secure properties and avoid interest rate hikes, Utah’s median home price hit a new record in January, according to the Utah Association of Realtors.

The $486,000 statewide median is the highest recorded having jumped 28% in a year. That equates to an increase of $107,000 compared to the median of $379,000 in January 2021. This marks the 118th consecutive month of year-over-year increases.

Nationally, prices also rose but at a slower pace. The U.S. median existing-home price went up 15% to $350,300.

“Buyers were likely anticipating further rate increases and locking in at the low rates, and investors added to overall demand with all-cash offers,” said Lawrence Yun, chief economist of the National Association of Realtors, in a press release. “Consequently, housing prices continue to move solidly higher.”

Closed sales in Utah fell as buyers struggled to find properties. Utah Realtors sold 3,051 properties in January, down about 7% from the pandemic surge a year ago. Nevertheless, it was still very strong sales activity and is the fourth-best January on record.

There likely would have been even more sales except for the extremely low housing inventory. The number of properties for sale at the end of January fell to a record low of 2,742. That’s down about 28% from last year’s 3,789 active listings — also a record low at that time.

In a normal market where negotiating power is balanced between buyers and sellers, there would be 15,000-20,000 properties for sale and about six months of supply. This year, there was only 0.6 months of supply, which is also a record low.

That means housing market conditions remain difficult for buyers who face lots of competition for available properties.

“The inventory of homes on the market remains woefully depleted, and in fact is currently at an all-time low,” said Yun, who also mentioned that homes priced at $500,000 and below are disappearing.

“Clearly, more supply is needed at the lower-end of the market in order to achieve more equitable distribution of housing wealth,” Yun said.

In Utah, the number of homes for sale with price points below $500,000 was down 44% compared to last year. The inventory of homes priced above $500,000 had a smaller 11% decline. The $750,000-and-above category had the most listings available.

Yun expressed concern that the rising home prices along with rising interest rates might push some buyers out the market, especially in high-cost areas.

“First, some moderate-income buyers who barely qualified for a mortgage when interest rates were lower will now be unable to afford a mortgage,” Yun said. “Second, consumers in expensive markets, such as California and the New York City metro area, will feel the sting of nearly an additional $500 to $1,000 in monthly payments due to rising rates.”

In Utah, affordability has fallen 23% in the past year. As of January, a Utah family making the median income could not afford the median-priced home, having only 94% of what would be necessary for a purchase.

The counties with the most expensive home prices were Summit, Wasatch and Morgan with median sales prices of $1,325,000, $885,393 and $825,000 respectively.

The most affordable counties were Carbon, Millard and Duchesne with median sales prices of $184,000, $190,000 and $194,500 respectively.

The counties with the most competitive housing markets were Davis (0.3 months of supply), Salt Lake (0.4 months of supply), Utah (0.5 months of supply), Weber (0.5 months of supply) and Tooele (0.6 months of supply).

To learn more about market conditions in your area, contact a local Realtor.