House price increases continue to be unbelievable, while high mortgage rates According to the latest spring data on the Utah and national housing markets, the market is just beginning to cool.
But that doesn’t mean prices will drop anytime soon – so Don’t think there is a bubble like 2006 soon to be popular.
Here are some key takeaways from the local and national housing landscape today:
what happened in utah
- The median price of a single-family home in Salt Lake County rose to $630,000 last month, up 22% from April 2021, according to the Salt Lake City Board of Realtors.
- It’s not just single-family home prices that continue to rise. The median price for all housing types in Salt Lake County in April was $550,000, up 26% year over year.
- The typical Salt Lake County home is still on sale just five days after it went on the market — as it was this time last year.
- In the Salt Lake City metropolitan area, Mortgage rates rise The cost of financing a home has increased by nearly $1,000 compared to a year ago. The typical home now has a monthly payment of $2,583 with a 30-year mortgage with a 20% down payment, which is $992 higher than a year ago, according to Zillow estimates.
- Buyers continue to pay more than the asking price. In the Salt Lake market, 66% of homes sold above list price in March, the latest data available from Zillow.
US market
- Nationally, U.S. home values continue to grow at a record pace, up 20.9% over the past year, according to the data Zillow Housing Report for April Released on Thursday.
- The combination Rising prices and soaring mortgage rates That means monthly mortgage payments for the typical home are 52.5% higher than they were a year ago, Zillow reports.
- Still, rising costs have not eased competition. “Homes are selling as fast as ever — the typical home is on the market in just seven days — and nearly half of the homes sold for above list price,” wrote Zillow’s market analyst Nichole Bachaud.
- However, there are signs that the U.S. market is starting to “rebalance,” including rising inventories and markdown listings. Zillow economists expect the market to start cooling this spring as rising costs give potential buyers long enough to allow inventory to start catching up with demand, “but it hasn’t gotten to that point yet,” Baggio wrote.
- Also shows what RE/MAX calls in its latest version housing report Home sales last month rose less than 1% from March and fell 12.8% year over year in all 53 metro areas reported, as “seasonal spring growth flattened.”
- This, combined with an 11.5% increase in new listings from March to April, led to a 24% month-over-month increase in U.S. inventories, according to RE/MAX data.
- Nationally, the median sale price for a U.S. home was $420,000, up 3.4% from March and up 15.1% from April last year, according to RE/MAX.
What does it mean to “cool” the market?
As housing market watchers see national headlines High interest rates cause U.S. home sales to coolMany people may ask, does this mean the bubble is about to burst or prices are about to fall?
Not so fast.
Remember, today’s housing market is not like it was in 2006, 2007, and 2008, when risky borrowing combined with overbuilt housing led to the subprime mortgage crisis and what we all know as the Great Global Recession.
Today’s experts say they did see Signs of a new type of bubble forming As U.S. home prices detach from market fundamentals — but experts say demand is real, especially for high-growth regions like the U.S. West and Utah grapple with housing shortages.
So when economists say the market is “cooling,” it just means that scarce inventory and high mortgage rates are causing potential buyers to turn away and are no longer part of the housing frenzy sparked by COVID-19.
“Overall, it remains a strong real estate market with rapid sales and demand easily outpacing supply,” said RE/MAX President and CEO Nick Bailey.
“We are starting to see sales cooling, which is not surprising given the record 2021 results and the recent rise in interest rates. Over time, this should create more balance against our long-standing frenzied seller’s market, ” Bailey said. “2022 is still likely to be one of the best years of the past decade, driven by generational demand, rising rental costs and still relatively low interest rates.”
When will the price drop?
Utah is not immune to what appears to be the start of a cooling. Sales slowed again in April — the 11th straight month of year-over-year growth, Dave Anderton, a spokesman for the Salt Lake City Board of Realtors, told Deseret News on Friday.
“Sales were down 16%, which I think was due to 5% interest rates and higher prices, so We’ve heard that people can’t qualify now,Anderton said. A jump from 3% to more than 5% now means a monthly increase in mortgage costs by “hundreds or thousands.”
“So I think high house prices and high mortgage rates are catching up and holding a lot of people back. They just can’t afford it,” Anderton said.
Housing inventory in Salt Lake County “climbed” about 3% in April as sales fell. “It’s not a huge increase,” Anderton said. “But it’s not going down. We’re used to seeing it.”
Anderton hasn’t seen 11 straight months of declining sales since the Great Recession.
Anderton said some sellers — not all — are starting to cut prices slightly, but that hasn’t yet been reflected in the housing data.
So will this start to have an impact on the price?
“Oh yes, it will,” Anderton said. “If we had 18 months of declining sales, and we’ve now hit the year, you’d see prices start to come down a little bit.”
Maybe then Utah won’t continue to see prices up as much as 25% year over year. In the past two years alone, home prices in the Salt Lake area have risen by a staggering 50%, according to the Salt Lake Board of Realtors.
“It’s not slowing down yet, which is scary. We could see another year of higher prices,” Anderton said. “But the rate hikes and declining sales tell me we’re on the verge of a turnaround.”
But that doesn’t mean prices will “collapse,” Anderton said, especially as Utah continues to see housing shortage in its booming economy and population.
“I don’t think (prices) are going to drop significantly unless we start seeing mass layoffs like we did during the Great Depression,” Anderton said. “When people start losing their jobs and then they lose their jobs, we’re going to see house prices fall. But right now the job market is not bad. The best it’s been in a long time.”
