The numbers for the housing market in Salt Lake showed growth in the fourth quarter, much as they have throughout the year. Homes are commanding higher sales prices and spending less time on the market—even as the number of sales dipped.
The best news is for sellers who are generating sales prices well over their asking price. With higher prices resulting from shrinking inventory, a housing shortage could be on the horizon. That said, low-interest rates are prompting many to buy now, and high prices are inspiring sellers to get their homes on the market fast. Here’s a deeper dive into the numbers and what they mean for both home buyers and sellers in Salt Lake.
2021: Another Great Year for Real Estate Sales
Interest rates remained low throughout 2021 and that made a huge difference in the growth of single-family home prices. In fact, it produced the highest number of SFH sales we’ve seen in the past decade and a half. These historically low interest rates kept the foreclosure rates low, which prevented another crash in the housing market.
It is perhaps because of the pandemic that home buyers were quick to act. With mortgage interest rates so low, folks were keen to act before the Fed raised them. The result is more homeowners and sellers who got well over their asking prices. Of course, sellers were happy to get that extra money as well, but more homeowners means more people paying property taxes, and communities across the country benefit from that.
Another way COVID-19 assisted the market was that many people were forced to reduce spending on other things. Going out to dinner and the movies, and taking vacations was put on hold for much of 2020. As a result, people were able to save more and put it towards a home purchase in 2021. A shortage of housing stock also created a seller’s market. Home sellers were able to entertain higher offers, with their homes spending less time on the market. All in all, the housing market was a bright spot in what had otherwise been a pretty dismal year—thanks to the pandemic and its many variants.
It was because of all of the pandemic anxieties that the Fed kept interests as low as they have. This prompted many people to take advantage of those rates. The result is what will turn out to be the highest number of sales since 2006. If housing stock remains in limited supply, prices will stay high and days on the market low.
Median Sold Price
Looking at the numbers for the real estate market in Salt Lake for 2021 shows a healthy increase in the median sold price. From $440,000 last year to $555,000 this year, we have an increase of just over 26 percent. That’s tremendous growth, especially considering the skepticism many had about whether we were about to see a decline in the real estate market heading into the new year. If we look at the median sold price for homes in 2019 of $384,565 compared to the 2021 numbers, we see an increase of about 44 percent. Obviously, these are great numbers and show a very strong market.
When we talk about the median sold price, this is different from the average sold price. The median price indicates the halfway point in pricing between the high and low numbers. It provides a better picture of the actual sales price than the average because it removes the outliers of the highest and lowest sale prices.
Number of Homes Sold
Let’s look at the total number of homes sold in Q4 2021 compared to the two previous years. For 2021 the number was 3,147. That is a slight decrease compared to the 3,653 homes sold in Q4 2020 and an even smaller decrease from the 3,192 sold in 2019. These are not big numbers, so it’s hard to glean much about the future of the market other than it’s strong now and should stay strong in the near term.
Median Days on the Market
With a high demand for homes comes increased competition. However, it also results in quick sales with home buyers making offers well over the asking price. When we look at the number of Days on the Market in 2021, we see a drastic reduction from 31 in Q4 2019 to just nine in Q4 2021. That’s a decrease of about 70 percent. Compared to the DOM from Q3, 2021, which was 7, it’s a slight increase. It’s another positive sign that the market in Salt Lake remains healthy. It’s important to remember that the Median Days on the Market are the total number of days the house is on the market from listing to the signing of the contract.
If you could say anything positive about the ongoing COVID-19 pandemic it’s that it has kept interest rates low. This has provided a huge incentive to buyers looking to lock in a good rate. That said, there have been changes early in 2022. For example, a few rates surged upwards to a rate not seen since the early part of 2020, with 15-year fixed and 30-year fixed mortgages among them.
The average for a 15-year, fixed-rate mortgage just last week was 2.76%. That’s an increase of nearly 20 points over the first week of the year. While the monthly payment will be higher, this rate is lower than that of the 30-year mortgage which was at a 3.49 percent average at the beginning of last week, another nearly 20 percent increase.
The Future of the Market
The current year will likely be another strong one for the real estate market and it will also remain a sellers’ housing market. We can expect home values to rise as well, perhaps by double digits. That is going to price some folks out of the market, but if the job market continues to grow, with a little patience, things will start opening up for everyone. That said, a continued housing shortage would take the shine of that bright future, for sure. In conclusion, the housing market in Salt Lake looks good for 2022.
The data in this article was obtained from several sources. It’s subject to change over time and is presented here only as a snapshot of the Salt Lake real estate market in December 2021.