Wednesday April 30, 2014: The 1st quarter 2014 results are in for single family home sales in Salt Lake County. The median sold price for a single family home in Salt Lake County was $245,000, which is 7.9% higher than 1st quarter 2013 when it was $227,000, and 28.9% higher than 1st quarter 2012 when it was $190,000. 1st Quarter 2013 was 19.5% higher than 1st quarter 2012, so you can see the local housing market has slowed down from this same time last year.
The Home Sales Graph below goes all the way back to 1st quarter 2011. The lines on the chart are:
- Blue line is the Median Sold Price for a single family home in SL County
- Green line is the Total Number of Homes Listed
- Red line is the Total Number of Homes Sold
When you look at the Median Sold Price (blue line) on the Home Sale Graph, you will notice it increased for seven consecutive quarters, from 1st quarter 2012 when it was at $190,000, to the 3rd quarter 2013 when it peaked at $255,000. In the 4th quarter of 2013 the price dropped to $245,000, down 3.9% and stayed at that level in the 1st quarter of 2014.
This slight drop in the 4th quarter of 2013 is not unusual. Most years, values drop in the 4th quarter as the days get shorter and colder and the holidays are celebrated and we had had seven quarters in a row with increasing prices.
Home sales have slowed in 2014. When you compare the green line (homes listed) to the red line (homes sold) on the Home Sales Graph, 52.2% of the homes listed for sale, sold in the 1st quarter of 2014. This is pretty good overall compared to other 1st quarters in years passed, but during the 1st quarter of 2013, 64.3% of the homes listed sold. 2013 was the highest this percentage had been since 1st quarter 1997. 59.8% of homes listed sold in the 1st quarter of 2012.
The third highest the rate has been was in the 1st quarter of 2006 when 61.3% homes listed, sold. The lowest 1st quarter was the year the bottom fell out of the local housing market in 2008 when only 27.7% of homes listed sold.
My opinion is that overall we still have a healthy local housing market in Salt Lake County. Unemployment is was at 4.1% in March 2014 and interest rates are still low with the average 30-year mortgage rate at 4.25%.
I recently read an article on MarketWatch.com that said this: “According to the Federal Reserve’s senior loan officer survey, 16.7% of the large banks recently eased credit standards for prime purchase mortgages, while 5.6% tightened, and the rest left standards unchanged.”
It’s been a long time since banks have eased credit standards for mortgages. When this happens, it tends to increase the volume of mortgages made. I can think of three big reasons why this is happening now.
- The 30-year mortgage rate was at about 3.5% this same time last year, and then increased to 4.5% by July 2013. This caused a major decline in the number of existing loans being refinanced and a decline in the overall number of loans being made. Banks are in the business of lending money.
- Property values have been increasing or bottoming out in many housing markets across the country for the last couple years, which has removed some of the risk of making mortgages.
- The overall economy has been improving with unemployment declining in the U.S. to 6.7% in March 2014. This also reduces risk.
Looser lending standard will likely result in more buyers qualifying for mortgages which will increase the volume of home sales.
The 2nd quarter of 2014 will tell the story of the spring selling season. The market almost always goes up in the 2nd quarter from the 1st quarter. I’ll let you know what the results of the 2nd quarter are once they are available in July.
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