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SLC Homes Real Estate Year-End Report 2023!

The Federal Reserve raised their benchmark interest rate eleven times, from 0.025%-0.05% on March 17, 2022 to 5.25%-5.5% on July 26, 2023, and the rate has remained unchanged since then.  Freddie Mac shows that the average 30-year mortgage rate peaked at 7.79% on 10/26/23 and has consistently decrease since, down to 6.62% as of 01/04/24.  Let’s hope this trend continues.

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 2023 Results for Salt Lake County Single Family Homes:

The median price of a single-family home in Salt Lake County increased from $562,000 in the 4th quarter of 2022, to $580,000 in the 4th quarter of 2023, a 3.2% increase.  If you look at the previous year, from the 4th quarter of 2021 to the 4th quarter of 2022 we saw a 1.3% increase.

This is quite a change from the two years of COVID where appreciation was 55.4% from the 2nd Quarter of 2020 to the 2nd of quarter 2022.  During that historical two year period, the average 30-year mortgage rate was between 2.7% and 3.5%.  We’ve never seen a two year period with mortgage rates that low for that long, and chances are, we probably won’t see that again.

As a result of high interest rates, the five year appreciation for a single family home in Salt Lake County has come down to an annual appreciation rate of 10.8% from the 4th quarter 2018 at $355,000 to 4th quarter 2023 at $580,000.  This is far above the average annual appreciation rate of 4.8% for a single family home in the US per the Case-Shiller Index from 1987 to July 2023.

end-of-the-year-results-slc-homes-real-estate

The level of inventory for single family homes listed for sale and sold in Salt Lake County has significantly declined again in 2023.  Listed below is the total number of homes listed, sold, the percent of homes listed that sold and the average 30-year mortgage rate range for the last six year.

  • 2023:  10,003 homes listed for sale, 7,894 homes sold, 79% of homes listed sold, 30-year 6.1%-7.8%
  • 2022: 12,620 homes listed for sale, 9,357 homes sold, 74% of homes listed sold, 30-year 3.2%-7.1%
  • 2021: 13,476 homes listed for sale, 12,379 homes sold, 92% of homes listed sold, 30-year 2.7%-3.2%
  • 2020: 14,911 homes listed for sale, 13,733 homes sold, 92% of homes listed sold, 30-year 2.7%-3.7%
  • 2019: 16,126 homes listed for sale, 13,174 homes sold, 82% of homes listed sold, 30-year 3.5% to 4.5%
  • 2018: 17,076 homes listed for sale, 13,182 homes sold, 77% of homes listed sold, 30-year 4.0% to 4.9%

Utah has had a housing shortage for years.  Per the Kem Gardner Institute at the U of U, there was a 56,800 overall unit shortage in 2017, and that decreased to 22,800 units in 2022 toward at the end of the construction boom.  During 2022, the number of building permits for single family homes in Salt Lake County dropped 25% and from the 2nd quarter 2022 to the 2nd quarter 2023, it also dropped 25%.  It’s expected that the Utah housing shortage will increase to more than 37,000 units in 2024.

4th Quarter 2023 Results for Salt Lake County Condos & Townhomes

The median price of a condo/townhouse in Salt Lake County increased from $405,000 in the 4th quarter of 2022, to $411,000 in the 4th quarter of 2023, a 1.5% increase.  If you look at the previous year, from the 4th quarter of 2021 to the 4th quarter of 2022 we saw a 1.3% increase.

4th-Quarter-2023-Results-for-Salt-Lake-County-Condos-and-Townhomes-SLC-Homes

The level of inventory for condos and townhomes listed for sale and sold in Salt Lake County has also declined again in 2023.  Listed below is the total number of condos and townhomes listed, sold, the percent listed that sold and the average 30-year mortgage rate range for the last six year.

  • 2023: 4,123 condos listed for sale, 3,133 sold, 76% of condos listed sold, 30-year 6.1%-7.8%
  • 2022: 4,652 condos listed for sale, 3,749 sold, 81% of condos listed sold, 30-year 3.2%-7.1%
  • 2021: 5,334 condos listed for sale, 5,206 sold, 98% of condos listed sold, 30-year 2.7%-3.2%
  • 2020: 6,038 condos listed for sale, 5,144 sold, 85% of condos listed sold, 30-year 2.7%-3.7%
  • 2019: 5,291 condos listed for sale, 4,690 sold, 89% of condos listed sold, 30-year 3.5% to 4.5%
  • 2018: 5,566 condos listed for sale, 4,722 sold, 85% of condos listed sold, 30-year 4.0% to 4.9%

The condo market may be more affordable than the single family housing market, but both have been effected by high interest rates.

Looking Ahead

If you look at the current inventory situation, there is about 7 weeks of inventory of single family homes and condos & townhomes when you compare the number for sale to the number that are under contract.  Last year at this time it was about the same, 7 weeks of inventory for single family homes and 8 weeks of inventory for condos and townhomes.

Interest rates are also very close to where they were a year ago with the average 30-year mortgage rate at 6.6% compared to 6.5% a year ago.  However there is a significant difference from where we were a year ago and where we are today.  The Consumer Price Index (CPI) for Inflation is much lower now than it was a year ago, and that’s been the reason for high interest rates.

If you look at 2022, CPI peaked in June 2022 at 9.1% and had only decreased to 6.5% by December 2022.  If you look at 2023, CPI hit 3.0% by June 2023 and has been in a range of 3.0% to 3.7% since, with the most recent CPI report at 3.1% for November 2023.

December CPI will be reported this Thursday January 11th.  The Mortgage Bankers Association and Fannie Mae are forecasting that CPI will drop below 3% in the first quarter of 2024.    With falling inflation typically comes lower interest rates.

The Federal Reserve hasn’t increased their benchmark rate in more than five months, and policy makers are forecasting three downward rate adjustments to the Federal Funds benchmark rate in 2024.

So it appears that we are in a better place now than we were a year ago, and hopefully we’ll see rates drop below 6% sometime in 2024.  If this happens, it could result in more people listing their homes for sale and it would definitely lead to more home buyers.  Something to keep in mind if you’re considering buying or selling a home in 2024.

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 who 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!

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