A little poetry for the Winter Solstice. With all the snow we’ve had, it’s the most wintry ❄️ December I remember in a long time.
Hibernal Solstice, Winter’s first day AKA
Autumn’s final encore north of the Equator is today
Welcome back Winter, with your blustery ways
Earth is at full tilt, the Sun’s lowest-angled rays
The longest night and the shortest day
Then Earth tilts back the other way
Just as we’re gathering to celebrate the holiday
So Give Love, give thanks, and praise
Life is good, enjoy all your days!
In this last SLC Homes News of the year, I want to briefly talk about the usual suspects, inflation, interest rates and inventory in Salt Lake County.
- US Inflation for November is down to 7.1%, which is the lowest it’s been since December 2021 and the fifth month in a row it has declined. It peaked at 9.1% in June 2022. This cycle of high inflation started in the first quarter of 2021.
- The Federal Reserve increased their (benchmark) Federal Funds rate by 0.5% last Wednesday, to a range of 4.25% to 4.50%. This is the seventh time they have increased the rate since March 17, 2022 when the rate was at 0.00% to 0.25%, which it had been at for two years.
- The Federal Reserve allowed inflation to increase from 1.7% in February 2021 to 8.5% in March 2022, before they started increasing the (benchmark) Federal Funds rate. The Fed’s target rate of inflation is 2.0%. I don’t understand why they waited so long to react, but the Fed has 400 PhD economists and a grand plan, and I’m a Realtor in SLC who got an MBA back in ’94.
- Federal Reserve Chairman Jerome Powell, banks and big money expect that that the Federal Funds rate will increase further in 2023, to somewhere between 4.75% and 5.75%. Inflation, like a big ship, takes a while to get back on course when it’s allowed to drift so far off it, so we shouldn’t expect mortgage rates to come down in the first half of 2023, and I’m guessing we’ll be lucky to see them coming down in the second half of the year.
- The average 30-year mortgage rate hit 7.08% on October 27, 2022 and was at 6.31% last Thursday December 15, 2022. During the time in between those dates, the Federal Funds rate was raised twice for a total of 1.25%. Mortgage rates are not directly tied to the Federal Funds rate and are also influenced by other factors like the bond market, monetary policy, economic growth, inflation, the housing market, supply and demand.
- The number of single family homes for sale in Salt Lake County has declined from a peak of 1,904 homes for sale on October 18, 2022 to 1,466 homes for sale on December 20, 2022. This is the lowest inventory we’ve seen since June 28, 2022. A decline in the number of homes for sale almost always happens this time of year.
- The number of single family homes under contract/sale pending in Salt Lake County has declined from 1,423 homes on May 31, 2022, to 1,200 on August 30th, to 750 homes on December 20, 2022.
Stay tuned next month for my 4th quarter 2022 year end results. I’m expecting another quarter of declining values from what I’m seeing in the market.
If you’ve been thinking about buying a home, 2023 could be a great opportunity! If you’re considering selling your home, it’s just a matter of preparing your home for sale, pricing it right and being a little more patient than we had to be last year at this time.
We’re still at two to three months of inventory of homes for sale in Salt Lake County, which isn’t even close to what we’ve seen in previous down markets.
Enjoy the holidays!!!
