This Thursday, June 20th, is Summer Solstice, the official beginning of Summer. The long days and warm temperatures bring on a celebration of life! We travel, we gather, we see old friends and meet new ones, and we do all the fun things we love to do outdoors. Take it all in, enjoy while it lasts, it flies by so fast.
The beginning of summer is also the end of the first half of the year, and lately I’ve been thinking about the cycles that come with the waxing and waning of our daylight hours, the cycles that we live by, and how they affect the real estate market.
The typical market cycle that we see most years starts at the beginning of the year. Inventory of homes for sale is low and declining until daylight savings time in early March. Once spring has sprung, the number of homes listed for sale starts to increase and so does the number of homes under contract. As buyer demand rises, so do home values, until May or June.
Then in the second half of the year, the number of homes for sale continues to increase and the number of homes under contract decreases until sometime in October. Then inventory of homes for sale decreases until early the following year, and the cycle repeats itself.
The housing market rally that started at the beginning of the COVID-19 pandemic, defied the traditional market cycle. The Median Price/Square Foot of a single family home in Salt Lake County increased for 26 out of 28 months, from $158.86/sq.ft. in February 2020 to $259.04/sq.ft. in May 2022, a 63% increase. As of May 2024, it’s at $252.20/sq.ft..
Since May 2022, we’ve gone back to a traditional market cycle, where prices rise in the first half of the year and settle back down in the second half.
The Median Price/Square Foot decreased for 7 out of 8 consecutive months from $259.04/sq.ft. in May 2022 to $226.71/sq.ft. in January 2023, a 12.4% decline.
Then the Median Price/Square Foot increased for 5 out of 5 consecutive months, from $226.71 in January 2023 to $246.72/sq.ft. in June 2023, a 8.8% increase.
Following that, the Median Price/Square Foot decreased for 6 out of 6 consecutive months, from $246.72/sq.ft in June 2023 to $228.16/sq.ft. in December 2023, a 7.5% decrease.
And once again in the first half of this year, the Median Price/Square Foot increased for 5 out of 5 consecutive months, from $228.16/sq.ft. in December 2023 to $252.20/sq.ft. in May 2024, a 10.5% increase.
If you’ve been sitting on the fence about making a move, we should talk. Interest rates are still pretty high right now, so buyer activity has been restrained, and the number of homes for sale has been rising since March 5th. On March 5, 2024 there were 884 single family homes for sale in Salt Lake County, as of June 17th there were 1,478.
If you need to sell a home to buy another, and you’ll be moving to a higher priced home, keep in mind that the demand for less expensive starter homes is typically higher than the home you’ll be moving up to. Right now there is 26 days of inventory of single homes for sale in Salt Lake County under $500,000, and 40 days of inventory in the $500,000 to $800,000 price range.
I’ve bought homes in all four seasons. When you find the one, and the plan is to hold onto it for five or more years, you pull the trigger and make it happen. Every property is unique, and if you love it, you go for it.
That said, if inflation falls enough for the Federal Reserve to start dropping the Federal Funds rate, and interest rates start coming down later this year or next, demand for housing will most likely increase and the market will become more competitive.
If you’ve been thinking about making a move, the second half of 2024 could be your opportunity.
If you enjoyed reading this newsletter, please share it with your friends, family and colleagues, and 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 that I help buy and sell homes, are repeat customers and referrals from the people I know. I love what I do, and I truly can’t do it without you!
Thank you!
Kev
