Many, if not most, markets were struggling to keep up with the rising demand of buyers in the past few quarters, and Salt Lake County’s housing market was no different. However, after analyzing the sales data from Q2, we saw an inception of new trends that are introducing a rapid market shift while housing inventory continues to run low.
A New Turn For Salt Lake County
The second quarter is a time when the momentum starts building up again after the holiday season and we see more buyers step into the market. Much like last year, we saw growth in Salt Lake County’s housing market during the second quarter but what’s more interesting is that we are finally beginning to encounter new trends. The market is no longer driven by high demand as rising interest rates and home prices have driven a cross section of buyers out of the market.
We also saw home prices rise during the second quarter – mostly due to low housing inventory – so sellers were still landing offers higher than the asking price for the most part. The key thing to note here is that the market is shifting rapidly and more changes are expected to come in Q3. In short, the takeaway from the second quarter I’d like to share with you is that Salt Lake County’s housing market is moving towards a more stable point. To prove it, let’s take a look at some data from Q2 of 2022.
The Median Sold Price
Salt Lake County experienced another hike in home prices during the second quarter even though demand was starting to decline. The median sold price in Q2 of 2022 for single-family homes was $637,000, which is up 5.2 percent from the last quarter. If we compare that with the second quarter of last year, we are still looking at a growth of 19.07 percent.
Home prices are expected to rise further in Q3 but might hit the ceiling soon as demand will take another hit from the rise in mortgage rates. If you were thinking of selling your home in Salt Lake County, right now might be the best time to step into the market as the competition is projected to get fierce in coming months.
The Total Number of Homes Sold
2821 single-family homes were sold in Salt Lake County in the second quarter of 2022. This is up by 29.6 percent from the last quarter and 19.07 percent from the same time last year. The growth when compared to Q1 was more or less expected but when we compare the numbers with last year’s results – a period that saw exceptional activity due to low interest rates – we are still looking at significant growth.
What this means is that even though demand is starting to fall in the Salt Lake County’s housing market, homes are still getting snatched quickly due to low inventory. Looks like there is a silver lining for sellers afterall, so I highly recommend these clients to get in on the market as soon as possible.
The Median Days on Market
The median days on market for Salt Lake County was six days in the second quarter of 2022. Compared to the same time last year, we are only looking at a single day increment. This is another indication that the current buyer base is not taking too much time getting into contracts. This trend is driven by two factors; low housing inventory and the fear of interest rates rising again in Q3.
When compared to last quarter, the days on market for Salt Lake County did not change. Last year’s market was driven by historically low mortgage rates but this year, the underlying current for the uptick in sales activity is low inventory. Going into Q3, sellers can expect their homes to stay on the market longer as the demand thins out further.
The Mortgage Rates
The average for a 30 year fixed mortgage in the state of Utah currently sits at 5.34 percent, up by 0.07 percent from the last week. Experts predict that home prices will continue to rise further as the federal reserve will likely boost the funds rate as an inflationary control measure. U.S. inflation reached 9.1% in June and there is credible chance of feds raising the interest rates further post their July 27 announcement.
High interest rates will inevitably lead to stiffer competition in the future, finally bringing an end to last year’s trends. Many buyers who were exclusively leaning on home loans to take advantage of the historically low mortgage rates seen last year, will start tapping out of the market this year. Many experts see this as a sign of returning stability to the housing market in Salt Lake County.
The Overall Future of the Market
The projections for Q3 are looking promising as new trends are starting to normalize the market. We are seeing a dip in demand which will raise the number of days on market for Salt Lake County, so sellers might have to re-strategize and get familiar with the new market. We will see more fluctuations down the road due to changes in mortgage rates while new construction tries to catch up with the existing demand.
The second quarter saw an increase in the number of houses sold in Salt Lake County, indicating that buyers are still driven to invest, so if you are looking to sell your home, there is no time like the present. If the mortgage rates go up in the coming months, it might ward off potential buyers so it’d be wise to capitalize on the opportunity while the market is still somewhat favoring sellers.
Overall, the future of the housing market in Salt Lake County is looking strong. Even though some people are suggesting that we are nearing a crash, for what it’s worth, I think we are in fact inching towards a more stable market. First-time buyers might feel some pressure from the housing-crunch, but if they were to remain patient and strategize their approach, they can still land a good offer. There’s down payment assistance programs and other tools out there and I am a resource to help you plan.