The real estate market has been experiencing some anomalies over the last several months that continue right up to the present. For example, Home prices have continued to rise while mortgage rates are going up and the supply of for-sale homes is increasing – factors that typically exert downward pressure on home prices. Simply put, market conditions are shifting and often inexplicably, so you need to keep up with what’s going on in the market. Read on, then, to find out what Salt Lake buyers and sellers need to know about market conditions.
The Market Is Slowing
[market-city] buyers and sellers should first be aware that, with respect to market conditions, the market appears to be slowing some.
According to industry watchers, “[w]ith the cumulative impact of higher mortgage rates, increased home prices and fears of recession, housing-market activity has already taken a significant dip . . . Slower demand is likely to continue throughout the third quarter, which will be characterized by year-over-year declines in home sales as well as slowing of home price growth on a year-over-year basis. We will likely see more price reductions, too, partly due to seasonality, but also as sellers contend with the reality of slower buyer demand.”
Inventory Remains Low
Inventory has been and remains woefully low while buyer demand remains strong. And that trend in market conditions, although it is lessening in intensity, doesn’t look to change soon.
To illustrate, housing inventory (that is, the total number of unsold houses on the market) was down over 16% in November of 2021 compared to the same time the previous year. Owing to various contributing factors (one of which was that there were fewer people selling), a lot of people were looking to buy, but there just weren’t enough houses on the market to meet that demand. And that trend in market conditions of low inventory still obtains in the market.
Buyers, then, have to be prepared to act fast because houses will be snatched up quickly. They may also have to sacrifice some wants and concentrate more on must-haves because their housing choices will be limited. Experts also recommend that buyers expand their search area and make sure to get pre-approved for a mortgage before beginning the search.
Low inventory for sellers is good news because there will be many more buyers competing for their for-sale homes, and they’ll likely get many competing offers. And those sellers whose homes may be less-than-appealing in a buyer’s market now have a much better chance of selling.
Prices Are Still Rising
Home prices have been surging, and though the price increases have slowed, prices are still going up. Prices will continue to increase, but industry watchers expect the increase to continue slowing its pace, at least more than in 2021.
For buyers, this trend in market conditions means that they absolutely must determine exactly how much house they can afford – especially when they factor in the currently increasing mortgage interest rates. If you’re a buyer, you need to calculate your home-buying budget and then stick to it without being pressured by competitors buying homes out from under you. It’s also recommended that you limit your house payment to no more than 25% of your monthly take-home pay and that you save at least 10% to 20% for a down payment before making a move. You can also offset the higher price by getting a 15-year fixed-rate mortgage because it will save you thousands in interest over a 30-year or adjustable-rate mortgage.
For Salt Lake sellers, these increasing home prices will likely mean a tidy profit when they sell. They will, then, be able to recoup the costs of the improvements they need to make to help their home sell. But if you’re a seller, you’ll still need to wait for the right offer. Buyers may be desperate, but you still need to strategize and negotiate.
Be sure to contact a Salt Lake agent at (801) 755-3865 to find out how to get the best price and best offer in your market.
Some Conclusions for Buyers and Sellers
So let’s draw out some conclusions about the current market conditions and how they affect Salt Lake buyers and sellers . . .
“More inventory is coming into the market,” industry experts say, “but this remains a seller’s market . . . The U.S. would need even more inventory for equilibrium to take place. However, hopeful buyers shouldn’t necessarily sit on the sidelines . . . Buyers who have lost out on countless contracts over the last two years may want to approach the market again . . . They will see less competition and are unlikely to see the bidding wars of the last two years.”
The experts also say that while sellers may still be pretty much in the driver’s seat, they may have to begin lowering their expectations a bit. “It’s important for sellers to be realistic about price expectations . . . Being patient is key – there are still many interested buyers out there.”
Dealing with Market Conditions
Things still aren’t quite normal in the real estate market, and conditions are such that predictions are difficult. What this primarily means is the services of an experienced Salt Lake agent are critical for both buyers and sellers. If you’re ready to succeed under these current market conditions, contact us today at (801) 755-3865.