Salt Lake County’s housing market has been on fire in recent years. It continues to be a topic of great interest for both sellers and buyers as the demand and home prices are starting to increase compared to the previous quarter.
Let’s explore the key highlights and most recent insights, including the median sales price, median Days on Market, mortgage rates, and number of homes sold that shaped the real estate landscape of Salt Lake during the second quarter of 2023.
Number of Homes Sold
In this year’s Q2, 2,207 homes were sold, and in comparison to the homes sold in Q1, it shows an increase of 24.55%. This increase is seasonal so it isn’t clear evidence of a crazy good market compared to the year-over-year decrease. However, ongoing issues–which we will describe below–contributed to a decline of 25.06% from the same quarter last year.
The ongoing issue of low inventory is one of the major contributors to the decrease in sales. This is a result of several reasons, among them a lack of new construction and the area’s strong demand for housing.
Another factor is the impact of higher interest rates. Potential sellers, who enjoyed low interest rates (around 2-3%) in recent years, may be hesitant to list their homes for sale. This reluctance stems from the prospect of purchasing their next home at a significantly higher interest rate of around 6-7%.
As a result, they are more likely to hold onto the current low-rate mortgages and not sell unless necessary. Consequently, the limited supply of homes that enters the market and the high demand result in reduced Days on Market and increased prices.
Median Sales Price
In Salt Lake, the median price of a home sold in Q2 2023 was $595,000, an increase of 6.11% from the Q1 of this year. There’s also a decrease of 6.56% compared to the same quarter last year which is the highest median sales price in the area over the past five years. According to ATTOM, the median estimated value over the last month for the cities within the county ranged from $300.22 to $378.12/sqft.
The area’s median sales price has increased overall during the past five years. The 2018’s median sales price was $354,999 and the 2022 median sales price was $600,385. This reflects an increase of 69.12%.
Though it’s been increasing, there are a few fluctuations in the quarterly trends. The fluctuations are probably caused by economic conditions, the market’s supply of homes, and other factors that impact the purchasing power and confidence of the buyer.
As the rates started rising last year, it did cool the market. But the market has already shown signs of rebounding as Days on Market have shrunk and prices have grown.
Median Days on Market
In comparison with the first quarter, the median Days on Market for Q2 was 15, reflecting a decrease of 64.41% and an increase of 150% from the same quarter last year. The median Days on Market of homes sold in Salt Lake have been steadily declining until the sudden surge of 250% in the third quarter of last year. The lowest median DOM was recorded in Q1 and Q2 2022.
The low inventory of homes and the rising interest rates are some of the factors that have contributed to this decline. This update is particularly interesting. Compared to the three previous quarters, this year’s second quarter has come way back down.
In addition to the low supply and high demand that makes homes sell very quickly, almost immediately after they are listed, here are some of our additional insights:
- There will be no improvement in inventory anytime soon. While we will likely never see the interest rates back in the 3-4%, it has come down slightly in recent months.
- Salt Lake’s housing market is becoming more competitive.
- This is wonderful news for sellers, but it may have the reverse impact on buyers, who may need to accept higher prices if they want to enter the market.
Mortgage rates have been rising in recent months, and this impacts the area’s housing market. As of the time of writing, the 30-year fixed mortgage average reached 6.96% and the 15-year fixed mortgage average hit 6.30%. For now, inflation is expected to keep on posing a challenge for housing markets, sellers, and buyers.
Higher mortgage rates in Salt Lake can affect the affordability and demand for homes in the area. It may also discourage potential buyers from entering the market, leading to a slowdown in demand and which also impacts home prices.
The Federal Reserve raised the Fed Funds rate last May 2023, bringing it to a range between 5% and 5.25%. However, it’s important to note that mortgage rates are influenced by numerous factors such as market forces, economic conditions, and inflations. While the action of the Federal Reserve plays a role in shaping the interest rates, other elements like lender policies and local market conditions also contribute to the area’s mortgage rate fluctuations.
Traditionally recognized as the busiest quarter of the year, understanding the dynamics of this period is crucial for navigating the market and staying ahead of the curve. Salt Lake’s housing market is anticipated to remain hot in Q3 2023. The competition will be fierce and home prices are expected to continue to rise.
Despite that, there’s always a chance that the market will start to cool off in the next quarter although this will likely be normal, seasonal changes. Sellers and buyers must stay vigilant, seek guidance from professionals, and closely monitor the trends. As we move forward, let’s remain proactive and optimistic, seizing the opportunities presented by the thriving yet ever-changing housing market.