It’s been just over a year since our whip smart and silver tongued colleague, Mark Seely, weighed in on the state of our local real estate market (Market Forecast | 2022), and here we are again, tiptoeing into another new year, trying to make sense of it all and maybe offering a few predictions.
Like my esteemed compadre, I’ve been practicing real estate for a very long time (Great Recession, anyone?), and I’ve witnessed the peaks and troughs of it all. I’ve been there when you couldn’t give a house away to, more recently, when full asking price was the new lowball offer. It’s been a ride. And although the times are different, the jargon remains the same: interest rates are too high, there’s not enough inventory, homes are just too expensive, when will prices fall? What about the economy? Why does my back always hurt? All valid; none unique to our current environment. All this to say, I’ve been to this rodeo and we're gonna be just fine.
Before I take a peek at those tea leaves (and I’m no divinator), allow me to offer a brief summary of this year in real estate. Currently, the median price for a home in Utah is $550,000 which is down .9% from last September, and the median days on market sits at 31, up from 29 last month. The interest rate on the most popular U.S. home loan sits at an eyelash below 8% (7.9%), a rate we haven’t seen Queen Elizabeth hit the century mark (that was in 2000, for those playing along). The inflation rate Mark mentioned last year, that ungodly 9%? Well, it’s been unrelentingly hammered down to a more manageable 3.7%-- an impressive movement of the needle but still nearly twice the Fed’s goal rate of 2%.
So, what can we expect in the next year, an election year of all things?
Most likely more of the same. Interest rates remaining sticky (think Fed’s laser focus on that inflation rate), stingy inventory (think homeowners reluctant to give up their once-in-a-lifetime mortgage rate) leading to home prices not easing anytime soon (think supply & demand). But herein lies opportunity. Considered another way, that immoral interest rate has sidelined a good portion of the competition. Gone for now are the days of bidding wars with multiple offers and waived contingencies, and, although it may not feel this way, we are in a ‘buyer’s market’. But more importantly, this current lack of competition means when borrowing costs do ease, we should expect a flood of pent up demand to flood the market, i.e. competition.
If you are looking to buy or to sell in the near future but interest rates are proving problematic, keep in mind there are other financing options such as seller financing and qualified assumptions where terms may be more favorable than traditional bank offerings. If you have questions about these strategies, give us a call. We love to chat all things real estate.
As to the million dollar question of, ‘Is now a good time to buy a house?’ Perhaps a better one to ask yourself might be, ‘Is now a good time in your life to buy a house?’ Interest rates and low inventory and all that withstanding, maybe the right move is to not. For now. An old friend once told me summer is for exploration and winter for introspection. With all the pain in the world right now, maybe now is the time to take stock of and appreciate those things we cherish in our lives: our good health, our family and friends, our community. Those are the things that truly matter.