Back to Normal, Again

It is old news that the days of rapid price acceleration are over – that shouldn’t make headlines anymore. What we all want to know right now is, are prices really declining? How high will interest rates climb? How much effect will rates have on the real estate market this fall? And what is all this talk about home prices being “sticky” – is that a real thing?

We’re a few weeks late getting last month’s housing data to you, so let’s dive right in. 

Salt Lake County – August 2022
Detached Homes, Year/Year
-$604,900 median sold price, up 10% from last year
-$240 median sold price per square foot, up 7% from last year
-853 units sold, down 22% from last year
-25 median days on market, up from 7 days last year

Park City Area – August 2022
Detached Homes, Year/Year
-$1,850,000 median sold price, down 31.5% from last year
-$651 median sold price per square foot, up .4% from last year
-29 units sold, down 47% from last year
-38 median days on market, up 14 days last year

THE NEWS: The median sold home price for detached homes in Salt Lake County was $604,900 in August, which is up 10% from last year, and right in line with last month’s median sold price of $600,000. This is also up 39% in just two years – the median sold price for a detached home in Salt Lake County was $433,550 in August 2020. We may be down from peak pricing earlier this year, but homeowners are still benefiting from a staggering increase in value. 

BEHIND THE NEWS: Among the many unprecedented events of the last two years, the soaring home values and insane bidding wars of that time will remain a historical point of reference for us all. As we transition this fall into a real estate market that feels entirely different from that time, it is hard not to wonder if this is actually back to normal, or if we’re all frogs in boiling water again. 

To answer this, last month we looked at similarities between 2019 and today. Perhaps surprisingly, the total number of properties available for sale and properties currently under contract with an offer was almost identical to what it was in 2019, a year widely considered to be more normal in the real estate world. 

Last week Dejan Eskic, M.R.E.D., a senior research fellow at the Kem C. Gardner Policy Institute tweeted this illuminating graphic depicting just how unusual the market of the last two years has been. It shows that in the spring of 2021, 21.9% of all homes sold the same day they were listed. As of August this year, it had receded to 2%, a normal level. 

Last October, we noticed a turning point in the frenzied market as “supply levels in Utah seem to have reached the floor.” Prices at that point in time had somewhat stabilized, hovering in Salt Lake County between $550,000 – $575,000 for several months until January came along and when there was another sudden bump in prices with values peaking at $650,000 in May. Sales, though, are a lagging indicator, and even with the record-breaking values being reported in May, it was also clear the market had already changed direction again. It just wasn’t being reflected in the numbers just yet. 

The Park City market trends similarly. It appears to have hit its all-time high median sales price at about the same time as Salt Lake, and has since come down slightly. Days on market for homes in Park City have steadily increased to a more normal number, like Salt Lake. And after inventory on the Park City MLS hit an all time low in February 2022, it had been rising steadily until July 2022. Although inventory on the Park City MLS is still below normal levels, it has drastically improved from where we were a few years ago. 

So in summary, it took a full year to get here, but today inventory levels are widely back to normal, which is good news! Inventory on the state-wide utahrealestate.com finally topped 10,000 homes, a 150% increase over the slim 4,000 active listings this time last year, and a benchmark not seen since 2018. It is an environment that has helped replenished our chronically under-housed inventory of available homes for sale here in Utah.

But the sticker shock of current interest rates has undoubtedly slowed buyer demand this summer. Total sales for detached homes in Salt Lake County in August 2022 was 853, below 2018 and 2019 levels of approximately 1,200 sales. So will the “stickiness” of home prices have any effect right now? The idea that home prices are sticky and slow to decline, because sellers dislike giving up any gains and will hold off selling until absolutely necessary? There may be some truth to that. Most buyers and sellers in our local market are motivated primarily by things like family, life events, new job, retirement, etc. And with home values appreciating roughly 40-50% the last two years, there is still a lot of equity out there. 

Our advice to buyers and sellers who are uncertain about the market is to remember it is a lateral move. If you sell your home this fall, you’ll most likely realize a higher price on your home than you would if you list it a few months from now. And you’ll also have more money at your disposal for the purchase of your new home as well. You’ll still end up in a good place. 

Reach out to us if you have questions on how the market affects your home, your neighborhood and your unique situation. We’re here to make sure you make a wise decision in your sale or purchase of a new home. Give us a call, and let’s put this information to work for you.