Wednesday, August 2, 2023
A slowing housing market makes tough business for Salt Lake realtors
Urban Living
Posted By Babs De Lay on August 2, 2023, 4:00 AM
The Salt Lake Board of Realtors just released June 2023's sales data for Salt Lake County and, basically, all the stats trended downward from the same time last year. To wit: 1. The number of sales of all types of property were down 26.1%; 2. The median single-family home price dropped to $600,000, down 4.1%; 3. the number of sales of just single family homes is down 26.1% (748 sales in June); 4. The median price per square foot is $254.41, down 1.2%; and 5. the median home price of all types of residences is down 4% to $519,000.
Last week, the Fed met and raised the key interest rates it charges to banks by 0.25%, the 11th rate increase since last March, and the highest level in 22 years. But mind you, when I got my real estate license in 1984, interest rates were 18%!
Houses were not selling then, and builders were in a panic. The market responded by creating something called a "negative amortization loan," which almost immediately boosted home sales here.
How did that work? Imagine walking into a builder's sales office knowing that mortgage rates were 18% for a 30-year loan, but the builder's rep asked you if you'd buy one of their homes if the interest rate was 6.5%? Well, of course you'd be interested, right?
The deal was that, indeed, the rate would be that low, but the interest difference between 18% and 6.5% would be added back into what you owed on your mortgage—11.5% each month. That difference would increase what you owed the bank each and every month and, well, if you wanted to sell a few years after your purchase you'd find out you owed more than the property was worth!
Just like in 2008 and 2009, many people lost their homes and simply gave them back to the bank. The 1980-'82 recession in the U.S. was the worst economic downturn in the country since the Great Depression, and property values dropped. It was exacerbated by the 1979 energy crisis, which was mostly caused by the Iranian Revolution that created a major disruption to the global oil supply. There were long and ugly lines at gas stations around the country as vendors ran out of fuel due to the poor supply chain.
Much like today, Americans in the Reagan era were concerned with high budget deficits in the U.S. Treasury and bemoaned a lack of trust in the government. Sound familiar?
The June 2023 sales stats also describe a local real estate industry that can't possibly support a living wage for real estate agents—not when total sales in a month, of all types of residences in the county, were a mere 1,072, and when there are over 10,000 members of the Salt Lake Board of Realtors. That stat points to just over 10% of the membership selling homes past month. And like any sales profession, "10% sell 90% of the inventory."
Thinking of being a real estate agent? It's a tough business!
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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