We’re four weeks into 2020, and now that 2019 is in the rear view mirror, we have a clear view of what happened last year in the Salt Lake residential real estate market. This month we’ll take a look at the current housing inventory situation, which is as tight as I’ve ever seen it, and the appreciation in the median price of property in Salt Lake for 2019.
4th Quarter 2019 Results:
The median price of a single family home in Salt Lake County increased from $355,000 in the 4th quarter of 2018, to $384,000 in the 4th quarter of 2019, an 8.2.% increase.
The graph below shows the median price for the 4th quarter all the way back to 2005. The 2017 to 2018 time frame saw an 7.6% increase, from $330,000 to $355,000 and the 2016 to 2017 time frame saw an 11.9% increase, from $295,000 to $330,000.
When you look at the last eight years of appreciation, from 2011 to 2019, the median value of a single family home in Salt Lake County increased 96.9%, from $195,000 to $384,000. If you adjust the 2011 price for inflation, the 2011 median price would be $227,049, which is a 69.1% increase.
If you go back twelve years to the previous peak of the market, from 2007 to 2019 the median price increased 60.0%, from $240,000 to $384,000. If you adjust the 2007 price for inflation, the 2007 median price would be $309,455, which is a 24.1% increase.
The median price of a single family home in Salt Lake City increased from $345,000 in the 4th quarter of 2018, to $380,000 in the 4th quarter of 2019, a 10.1% increase.
The graph below shows the median price for the 4th quarter all the way back to 2005. The 2017 to 2018 time frame saw a 4.5% increase, from $330,000 to $345,000, and the 2016 to 2017 time frame saw a 10.0% increase, from $300,000 to $330,000.
When you look at the last eight years of appreciation, from 2011 to 2019, the median value of a single family home in Salt Lake City increased 130.3%, from $165,000 to $380,000
If you go back twelve years to the previous peak of the market, from 2007 to 2019 the median price increased 70.4%, from $223,000 to $380,000.
The median price of a condo/townhouse in Salt Lake County increased from $260,000 in the 4th quarter of 2018, to $280,000 in the 4th quarter of 2019, a 7.7% increase.
The graph below shows the median price for the 4th quarter all the way back to 2005. The 2017 to 2018 time frame saw a 12.6% increase, from $231,000 to $260,000 and the 2016 to 2017 time frame saw an 10.0% increase, from $210,000 to $231,000.
When you look at the last eight years of appreciation, from 2011 to 2019, the median value of a condo/townhouse in Salt Lake County increased 90.5%, from $147,000 to $280,000
If you go back twelve years to the previous peak of the market, from 2007 to 2019 the median price increased 64.7%, from $170,000 to $280,000.
Current Housing Inventory Shortage:
In a strong real estate market, like the one we’re in, housing inventory levels decline during the 4th quarter of the year, as fewer homes are listed for sale and homes continue to sell. I have a simple ratio that I use to compare one year to the next that I call the List to Sold Ratio. The equation is:
(Total # of homes listed – Total # of homes sold) / Total # of homes listed = List to Sold Ratio
If the number of homes listed is greater than the number of homes sold, the List to Sold Ratio is a positive number. The theory is, the higher the positive number, the more inventory there is for sale, and therefore home values appreciate less moving forward because buyers have more homes to choose from.
If the number of homes sold is greater than the number of homes listed, the ratio is a negative number. A negative number indicates a shortage of inventory and potentially stronger home value appreciation.
The table below shows the List to Sold Ratio for the 4th quarter from 2011 to 2019, and the percentage increase for the median sales price of a single family home for the 4th quarter of the following year.
(Single Family homes in Salt Lake County)
Total Listed Total Sold List to Sold Ratio Median $ % Change
4th Qtr 2019: 2,626 3,126 -19.0% TBD
4th Qtr 2018: 3,225 3,059 + 4.8% + 8.2%
4th Qtr 2017: 3,219 3,347 – 4.0% + 7.6%
4th Qtr 2016: 3,034 3,237 – 6.7% +11.9%
4th Qtr 2015: 3,072 2,997 + 4.0% + 9.2%
4th Qtr 2014: 3,244 2,852 +12.1% + 6.6%
4th Qtr 2013: 3,217 2,607 +19.0% + 4.5%
4th Qtr 2012: 2,852 2,734 + 4.1% +11.4%
4th Qtr 2011: 2,934 2,372 + 19.2% +12.8%
The “List to Sold Ratio” in the 4th quarter of 2019 was -19.0%, which is the lowest I’ve ever seen it. The number of homes sold is in line with previous years, but the number of homes listed significantly declined, down to 2,626 in 2019 from 3,225 in 2018 and 3,219 in 2017. That’s a significant shortage in homes for sale!
The previous lowest List to Sold Ratio happened in the fourth quarter of 2016, and was -6.7%. In the year following that, the median price of a single family home went up 11.9% from fourth quarter 2016 to 2017. This is the biggest appreciation we have seen since early in the housing market recovery when there were a lot of bargains.
In addition to a shortage of homes listed for sale, mortgage interest rates are again at historic lows. Over the last fourteen months, the 30 year mortgage rate has fallen from 4.9% in November 2018, to 3.6% in January 2020. This 1.3% decline in the 30 year mortgage rate results in a 14% savings when comparing the monthly payment at each rate.
In addition to low interest rates and a shortage of housing for sale, the state of Utah had a 2.4% unemployment rate in November 2019 and has experienced 9 years in a row of 3+% employment growth (#1 job growth in the nation).
I believe that the shortage of homes for sale combined with low interest rates and a strong economy will likely cause prices to climb faster than normal in the first half of 2020. Last year we saw an 8.2% increase in the median price of a single family home in Salt Lake County, and I feel like we will see greater appreciation than that in 2020.
With the spring selling season approaching, if you’re looking to buy a home in the next six months, I’d get moving on that ASAP. If you’re looking to sell, March, April and May are almost always the best times to list your home for sale, but if you need to sell a home in order to buy another in Salt Lake County, it might make sense to get your home on the market sooner because your next home is going up too.
If you have any questions about buying or selling real estate in and around Salt Lake County, wonder what your home is worth, or have a friend or family member that needs help buying or selling, please contact me. I’ve been a Realtor in Salt Lake since 1999, and absolutely love what I do, and I can’t do it without you.
Thank you!
Kev
Kevin Coyle
Realtor Broker MBA CRS
SLC Homes
Kevin@SLCHomeBuyer.con
M: (801) 243-0699
