Economic shifts are difficult to pin point because we often don’t recognize a shift is happening until it’s already happened. This is why we pay close attention to leading indicators like active inventory and pending transactions.
Is a shift in the Wasatch Front real estate market underway?......... I think so. The numbers don't lie. However, this is not the end of the world for home owners. When we hear the word "shift" it conjures feelings of the great recession from a decade ago. That was the biggest economic disaster since the great depression and it started because mortgages were not trading on the secondary market. The shift that we are talking about is a return to reality. A slowing of rapid price growth to be a slow positive price growth.
The massive upward price mobility of the last half decade was primarily driven by limited inventory and low interest rates. There has been a massive influx of buyers into the market and few sellers willing to sell. Buyers want to buy for less than the house will cost in the future and at an interest rate that boosts their spending power. Some sellers see a limited inventory and stress about whether it is possible to find another house. This led many would be sellers to decide not to move.
Early this year there were less than 1700 active residential listings in Salt Lake County. It was a vacuum for inventory. Normal is 3100+. Today we have roughly 3000 active residential listings in Salt Lake County and roughly 2700 that are under contract (escrows typically last 30 to 45 days). The inventory increase is healthy but it is amazing how fast it increased. Usually we see an influx of homes going on the market in the summer. Throughout the summer we had less than 2700 residential listings on the market.
Luckily interest rates are still at historic lows. Low interest rates make it so that you can buy more house for the same payment. This increases demand and causes prices to increase.
So what does all of this mean. Well, we will likely see a slowing from the double digit annual price growth that we have seen for quite some time now. Historically, housing price appreciation keeps up with inflation. A shift should bring things in line with what is historically normal. A few quarter point rate hikes by the Fed would push rates up slightly, An increase in interest rates would slow things further but I think that we will be getting mortgages under 5% for the foreseeable future.
Luckily the real estate market on the Wasatch Front will likely outpace the national average. We have high net immigration. People are moving here and jobs are moving here. I'd say that is a good thing.
Is the market shifting? Yes. However, that shift is from a white hot market to a healthy market.
It is a great time to sell. We are still in a limited inventory market where it is easier to push buyers around. Looking to sell your home for top dollar? GET STARTED
- A very small percentage of real estate agents sell most of the properties
- If sellers aren't careful, they may have sat in more closings than the agent they hired to sell their home
- Sellers should spend time finding out precisely what the agent will do to market their home and see stats from the agent's past marketing
- If someone is friendly, that doesn't necessarily make them good at their job