Wednesday, July 20, 2022
Buying Time
Posted By Babs De Lay on July 20, 2022, 4:00 AM
Buyers, take note! The real-estate market is changing drastically, according to new data from the Salt Lake Board of Realtors. In Salt Lake County, total home sales (condos, single family, etc.) for June fell to just 1,344. That's the lowest June sales in a decade—and 27% fewer sales than June 2021.
What does that mean for buyers? For the past three quarters, homes were selling in just six days, but now the average "days on market" is 21 days, with an average list price of $613,397 and an average sales price of $611,740. There are now three times the normal inventory of properties for sale than pre-pandemic numbers, and that simply means that buyers finally have a chance to shop and maybe even return the next day to a property that hasn't sold with 20 offers on it.
I just helped some sellers go under contract on their home after a three-day negotiation. In order to seal the deal, sellers paid $12,000 in the buyers' closing/mortgage costs and agreed to pay the buyers' rent for 30 days after close of escrow, as they await their new home to be finished so they can move. I haven't seen sellers pay closing costs in at least two years. Because our market heated up so quickly and with so much competition from buyers, the idea of buyers paying those costs wasn't a possibility. Now with the slowdown, buyers might be able to pay the asking price—not $100,000 over ask!
Buyers might be able to negotiate other concessions such as sellers paying for: a home warranty on mechanical items in the home on behalf of buyers for a year (roughly $600), mortgage costs (can be up to 2% of the loan amount) and repairs. Sellers might offer to include personal items, such as washers/dryers, pool tables or snowblowers.
The main reason the market has slowed is due to the Federal Reserve raising its rates, which equates to higher mortgage rates for buyers. Thirty-year-loan interest rates were just above 6% a few weeks ago but have now dropped below 6%.
The Fed will meet in another week, and economists expect it will raise interest rates by another 1%, which will make it more expensive for banks to borrow and, thus, interest rates on all kinds of consumer and commercial borrowing—including mortgage rates—will tend to go up. This is all necessary to try and cool inflation.
Inflation rose to 9.1% last week, the highest since February of 1991. You certainly can feel that as airline fares rose 34.1%, new car prices are up by 11.4% and food prices are rising 1% per month.
Housing prices are falling nationwide by an average of 5%, and more than half of the Salt Lake City MLS listings show price reductions in the past few weeks.
If you gave up trying to find a home, you may want to start shopping again ... the deals are out there!
About The Author
Babs De Lay
A full-time broker/owner of Urban Utah Homes and Estates, Babs De Lay serves on the Salt Lake City Historic Landmark Commission. A writer and golfer, you'll find them working as a staff guardian at the Temple at Burning Man each year.
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