Utah Housing Prices 2022
From May of 2020 to May of 2022, home prices went up by a staggering 65.7% in Provo, 57.2% in Salt Lake City, and 66.7% in Ogden.** Limited inventory and historically-low interest rates drove up Utah housing prices in text-book, supply and demand fashion.
And like a pendulum reaching its peak and turning back the other way, interest rates shot up in May and home buyer demand began to fall. The result is a 30.7% increase in active listings in July due to slowing buyer demand, according to Realtor.com.*
Buyers would celebrate the increased inventory and weakened competition if interest rates came back down or housing prices dropped. It seems as though many buyers are waiting for one or both of these to happen, creating a bit of a market stale mate. Which is exactly why we have more inventory.
As far as home prices dropping anytime soon, Dave Ramsey, a well-known financial guru and author responded, “It’s unlikely that home prices will go down in 2022 and beyond. Freddie Mac predicts home prices will grow at a slower rate of 5% in 2023, but they’re not going to drop in the coming years.”+
CoreLogic, one of the premier US housing data firms, predicts housing appreciation will drop from the current rate of 18.3% to 4.3% year-over-year, but that’s still a positive gain.*** An actual price drop in Utah homes below their current values may not be in the cards.
When asked about selling, Dave Ramsey commented, “Sellers out there can feel pretty good about selling their homes in 2022. If that’s you, you might want to put your house on the market sooner rather than later—while inventory is still low.”
Smart buyers and creative sellers are taking advantage of this new market buy re-introducing seller concessions. With the average homeowner equity reaching $185,000, sellers have some wiggle room to offer a concession that helps reduce the rate increase.~ “If you think about it, buying down the interest rate a couple points puts the buyer in the same situation they were a few months ago when demand was sizzling hot. Now the buyer has less competition and more choices, making this an excellent time to be a buyer and a seller,” says Mike Anderson, Chief Marketing Officer for Intercap Lending.
If sellers can help reduce the sting of the higher interest rate, buyers can take advantage of more inventory and less urgency to drop a full or over-asking-offer before proper due-diligence is done. “[Listing] agents are [now] answering their phone and working with me to negotiate a win-win offer,” says Julia, an Utah Realtor. “Negotiating a seller’s concession that buys down the rate is definitely helping.”
According to Brock Worthen, Intercap Lending’s President, sellers can offer a paid concession to help buy down the rate or pay some of the closing costs. Whether this is a permanent or temporary rate buy-down, it’s taking the edge off the higher rates for some buyers. “An interest rate around 5 or 6 percent for an owner-occupied property is historically a pretty good interest rate, but with higher housing prices, it’s nice to get a buy-down concession right now from the seller.”
Seller concession are coming back, and can make a big impact on getting the deal done. Talk to an Intercap Lending loan officer to learn more about seller’s concessions and how they can help reduce rates and closing costs.
*Weekly Housing Trends View: Data Week Ending July 30, 2022 (July 2022) https://www.realtor.com/research/tag/housing-inventory/
**As rent spikes by 35% in some cities, here’s how Utah compares to the rest of the US (Jan 31, 2022). https://www.deseret.com/utah/2022/1/31/22910742/how-much-is-rent-in-utah-texas-new-york-nyc-florida-average-home-price-redfin-apartment-association
***U.S. Home Price Insights (Aug 2, 2022) https://www.corelogic.com/intelligence/u-s-home-price-insights/
****Housing Market Predictions 2022: When Will Prices Drop (July, 2022) https://www.forbes.com/advisor/mortgages/real-estate/housing-market-predictions/
~What is the Average Equity in US Homes (May, 2022) https://www.investopedia.com/average-equity-in-u-s-homes-5270147
+Housing Market Predictions 2022: Will it Drop? (July, 2022) https://www.ramseysolutions.com/real-estate/housing-market-forecast