All four of the seasons last three months, but I’ve always felt like summer passes faster than the other three. It’s like the old saying goes, “Time Flies when you’re having fun”, and there’s a lot of it to be had during the Summer. I hope you’re enjoying it!
We’ve completed the first half of 2023, and it’s time for an update on the residential real estate market in Salt Lake County.
2nd Quarter Median Price Change in Salt Lake County:
The median price of a single family home in Salt Lake County decreased for the first time since 2011, from $637,000 in the 2nd quarter of 2022 to $595,000 in the 2nd quarter of 2023, a 7.1% decrease. However, the median value has been trending upward since the 1st quarter of 2023, and there are still some homes that have had multiple offers on them during the 2023 spring selling season.
The total homes listed for sale and sold during the previous twelve months leading up to June 30, 2023, compared to the previous twelve months leading up to June 30, 2022, also declined, with a 22.8% decrease in the number of homes listed for sale and a 30.1% decrease in the number of homes sold.
High interest rates are causing some existing home owners, that might want to make a move, to stay in their homes longer due to the low interest rate mortgages they have on their current home.
We’re also seeing that decrease in the current the number of homes for sale and under contract. On July 12, 2023 there were 1,280 homes for sale and 963 under contract, compared to 1,655 homes for sale and 1,165 homes under contract on July 12, 2022.
The median price of a condo/townhouse in Salt Lake County decreased for the first time since 2012, from $450,000 in the 2nd quarter of 2022 to $415,000 in the 2nd quarter of 2023, also a 7.1% decrease.
The total number of condo/townhomes listed for sale and sold during the previous twelve months leading up to June 30, 2023, compared to the previous twelve months leading up to June 30, 2022, also declined, with a 25.2% decrease in the number of condos listed for sale and a 36.0% decrease in the number of condos sold.
More Points of Interest:
So home values in Salt Lake County have declined in the last year, which is not surprising with the increasing cost of home ownership due to high interest rates.
Interest rates are high due to many reason, a big part of that being that the U.S. Federal Reserve has increased their Federal Funds Benchmark rate to fight inflation, from 0.25% in March 2022 to a current rate of 5.25%. As a result, the average 30-year mortgage rate has increase from about 3% in January 2022, to 5.5% in July 2022, to 6.8% today.
The Federal Reserve has been increasing the Benchmark interest rate to fight inflation. Inflation started increasing in early 2021. The annual U.S. Inflation rate was at 2.6% in January 2021, and consistently increased until it peaked in June 2022 at 9.1%. Since then, inflation has been decreasing, down to 4.0% in May 2023 and 3.0% in June 2023. The Federal Reserve has stated that they will increase the benchmark rate until inflation is under control, with a target rate of inflation of 2.0%, and we are almost there.
I’m not sure what will happen next, it’s global and it’s complicated, but it seems like the worst is behind us and that it’s possible we could see declining interest rates sometime later this year. Fannie Mae is predicting that 30-year mortgage rates will be down to 6% by the end of 2023 and 5.4% by the end of 2024. The National Association of Realtors is predicting 6.0% by the end of 2023 and 5.6% by the end of 2024. The Mortgage Banker Association is predicting 5.8% by the end of 2023 and 4.9% by the end of 2024.
That said, the head economist for the National Association of Realtors, Lawrence Yun, has said it’s not likely that we’ll see 3% interest rates again for decades to come. The historic average for a 30 -year mortgage rate is about 7%, right where we are now.
When I think about our local market, I see a lot of apartment buildings being built, and very few new single family homes, and there isn’t much open space left to build on due to our natural boundaries, the Great Salt Lake, the Wasatch and the Oquirrh Mountains.
U.S. News and World Report recently ranked Utah the #1 state overall in the U.S. on their 2023 annual survey, and that included a #1 ranking for its economy. And, we’ve been getting high rankings like this for years.
It’s hard to know for sure what will happen, but my gut feeling is that the residential real estate market in Salt Lake County will remain strong for years to come.
If you or someone you know has any questions about buying or selling real estate in the Salt Lake metro area, if you’re wondering what your home is worth, or if you need a contractor referral, I’d love to hear from you!
Thank you for your repeat business and your referrals, and have a great summer!!!
Kev
