Supercharged by historically low-interest rates during the pandemic, Salt Lake County’s housing market saw a boom in activity. It squarely landed amongst some of the strongest housing markets in the nation. In recent months, however, home prices have fallen nearly 8 percent since May, owing to the hike in interest rates.
A Returning Stability in Salt Lake County
After the initial turmoil caused by the pandemic, Salt Lake County’s housing market is finally seeing a return to normalcy as supply and demand are realigning with pre-pandemic numbers. Furthermore, the average house sat longer on the market in Q3 when compared to last quarter indicating a dip in demand.
While inventory is starting to rise in nearly every region, the market is still favoring sellers as there is still demand for homes. In the long term, supply and demand are expected to align better and home prices will stabilize. To prove this, let’s look at some statistics from Q3 that I have broken down for simplicity.
The Median Sold Price
The median sales price for homes in Salt Lake County dipped as the market saw some buyers backing out due to the hike in interest rates in Q3. The median sold price in Q3 was $600,000, which is down 5.8 percent when compared to Q2 of this year. However, if compared to the same time last year, we are looking at a growth of 9 percent.
The decline in demand is certainly causing some sellers to lean toward price reductions and the trend may continue if The Fed introduces another hike in interest rates in the coming months. While this may have some people convinced that the seller’s market in Salt Lake County is nearing its end, reasonably priced homes are still getting readily snatched up by buyers. While the demand for homes is gradually tapering, inventory is still not high enough to push the market to the advantage of buyers.
The Total Number of Homes Sold
The number of houses sold in the third quarter of 2022 was 2361, which is down 18.8 percent when compared to Q2 of this year and 30 percent when compared to the same time last year. Q2 typically sees more activity but the sales numbers in Q3 were also down when compared to the same time last year – indicating that demand is coming in line with supply. It is yet another tell-tale sign of a market that is seeing a return to normalcy as interest rates are rising to stifle inflation.
The Median Days on Market
The median days on market for Salt Lake County in Q3 of 2022 was 22 days. This is a sharp rise from both the last quarter and Q3 of last year. Homes in Salt Lake County stayed on the market for six days throughout the year until Q3, which saw a drastic shift in the housing market. Rising mortgage costs drove a cross-section of buyers out of the market who were eager to capitalize on the historically low-interest rates, so homes are taking longer to sell.
The Mortgage Rates
The mortgage rates in Salt Lake County are close to 6.5 percent for a fixed 30-year loan. This is a rise from last quarter which saw rates between 5 and 5.5 percent. To curb the ongoing surge of inflation, the Federal Reserve increased interest rates yet again by 75 basis points. While there were many signs this year indicating the effects of the pandemic were slowing down, the rapid rise of inflation may pose a challenge for buyers and sellers if it continues to rise unabated. In other words, the housing market is rebounding back to its pre-pandemic state.
For sellers, the market is still favoring them, however, they might want to re-strategize their approach soon to appeal to buyers wary of rising interest rates. Since there is a chance of interest rates rising further, buyers will likely factor that into their decision and make a move when they spot a good deal.
What To Expect In Q4 2022
While there are signs that the effects of the pandemic are ceasing and that the market is returning to normalcy – for the foreseeable future – curbing inflation will remain a key element in the federal government’s economic policy. The Fed has implied that the housing market is in severe need of correction to balance out supply and demand. Should inflation keep rising, the Federal Reserve will likely continue to hike interest rates in response—driving mortgage rates up and the demand for houses down.
First-time home buyers should remain diligent and watch the market for their perfect home as inventory is continuing to increase yet prices are likely to stabilize. Inventory is rising in almost every market across the nation as sales numbers are steadily declining in the wake of rising interest rates. On the other hand, sellers may want to try and sell soon, as the market may continue shifting towards a buyers’ market, resulting in an even further drop in list prices in Salt Lake County and across other markets in the nation.
Even with inventory going up in Salt Lake County’s housing market, it is still not high enough to shift the market in favor of buyers yet. So houses will continue to sell as long as they are reasonably priced. In either case, both buyers and sellers should continue to monitor the market and consult with their agent to see what options they have and determine the best time to buy or sell.
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