When the market seems too good to be true, an intervention might be the best thing to do, and that is exactly what the Federal Reserve did by increasing the Federal Funds rate seven times in 2022, and halting their purchases of mortgaged backed securities. So let’s take a look at the fourth quarter results and see how higher interest rates are affecting our local residential real estate market.
4th Quarter 2022 Results for Salt Lake County Single Family Homes:
The median price of a single-family home in Salt Lake County increased from $555,000 in the 4th quarter of 2021, to $562,000 in the 4th quarter of 2022, a 1.3% increase. Almost all of the gains of the first half of 2022 were taken back in the second half of the year.
If you look at the appreciation from the 4th Quarter of 2019 to the 2nd of quarter 2022, we saw an increase in the median sale price go from $385,000 to $636,000, a 65.2% increase in two and a half years, which consisted of an amazing ten consecutive quarters of appreciation. That was quite a run, but it wasn’t sustainable due to high inflation.
Here are a few other stats that show the change we’ve experienced in market activity:
- During the first half of 2022, the 30-year mortgage rate went from 3.1% to 5.8%, and during the second half it was in a range of 5.0% to 7.1%, and is currently at 6.5%. Once the 30-year rate was sustained over 5%, home prices declined in Salt Lake County.
- From February to May 2022, single family homes were selling for an average of 103% to 105% of asking price and were on the market for 5 to 6 days.
- From September to December 2022, single family homes were selling for 92% to 95% of asking price and were on the market for 28 to 41 days.
- The number of homes sold in Salt Lake County during the 3rd and 4th quarters of 2022 were at their lowest levels in fourteen years, with a total of 4,159 homes sold during the second half of 2022, 47% lower than the number of homes sold in the second half of 2020 at 7,880 and 37% lower than 2021 at 6,577.
- The number of single family homes listed for sale during the second half of 2022 peaked on October 18th at 1,904 homes for sale, and has consistently decreased since then and is now down to 1,284 homes for sale. I think this is a result of people staying put in their existing homes and the holiday effect.
4th Quarter 2022 Results for Salt Lake County Condos & Townhomes
The median price of a condo/townhouse in Salt Lake County increased from $400,000 in the 4th quarter of 2021, to $403,000 in the 4th quarter of 2022, a 0.8% increase. Like single family homes, almost all of the gains of the first half of 2022 were taken back in the second half of the year.
If you look at the appreciation from the 4th Quarter of 2019 to the 2nd of quarter 2022, we saw an increase from $280,000 to $450,000, a 60.7% increase in two and a half years, which consisted of nine out of ten consecutive quarters of appreciation.
Condos and townhomes have reacted the same way to the increase in interest rates as single family homes have.
It will be interesting to see what happens with the inventory of homes and condos for sale in the first half of the year. During the fourth quarter of almost every year we see the fewest number of new listings for sale, with the second and third quarters typically having the most new listings. The months of January and February typically have the fewest homes sold in most years, due to cold weather, short days and the lack of inventory of homes for sale.
If you have any questions about buying or selling residential real estate in or around Salt Lake, wonder what your home is worth, or know someone that needs help buying or selling, please contact me. Over 90% of the people I help are repeat customers and referrals from the people I know. I love what I do, and I can’t do it without you!
Thank you!
Kev
