Compared to the rest of the country, our real estate market is growing faster. Barring significant changes, we’ll continue to grow.
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How has our Utah market done so far this year? What can we expect from it moving forward throughout the rest of 2017?
You may hear many different things about our market, but this update focuses on both its current state and how it compares to the rest of the nation on a year-to-date scale. To make this comparison, I used data from many different sources, including CoreLogic, the National Association of Realtors, Realtor.com, and our local MLS.
According to CoreLogic, our national market is anticipated to rise 6.7% by the end of the year. Year to date, it’s already risen 5.8%. This increase doesn’t mean what you might think it does for your home’s value, though, because CoreLogic takes into account average price points for the market. More specifically, the price range they used to calculate this increase was from $262,000 to $263,000.
When we talk about certain numbers regarding appreciation and growth, how they apply to your home’s value depends on its location, size, price range, and the four rules of real estate we’ve discussed before—curb appeal, kitchens, baths, and amenities.
From a national perspective, we have a very good market that’s seeing growth. If we scale it back to our local market, we find that Utah as a whole has gone up 10.7% over the last year. The Salt Lake metro area itself has gone up 8.8%. The only other state that’s experienced higher growth so far is Washington at 12.7%.
What makes our Utah economy so much different? People are moving here, staying here, and values are going up.
Nationwide, the average days on market for a home is lower than in Utah, but in our local market, inventory levels aren’t supporting the number of buyers. At this time last year, we had more home sales nationally than we do now. To quote Lawrence Yun, chief economist of the National Association of Realtors, “Lower-priced listings continue to be scooped up, but severe shortages are keeping many buyers on the sidelines.”
Basically, people get frustrated when they can’t find the home they want or they feel like it’s unattainable. As more buyers shy away, this means more opportunity for listings and builder inventory continues to be very strong.
Utah is the No. 1 destination for millennials. We were also ranked in the top 10 as far as the most employed states in the nation. On a national level, the unemployment rate is right around 4.9%. Locally, we’re at 2.9%. There are a few reasons for this gap, the foremost of which is we have one of the highest job-growth markets.
Our team has closed more than 130 transactions so far this year, and the average price point for all those homes is around $282,000. Inventory levels are low compared to where they have been because large portions of it have been bought up, which has caused values to go up.
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People are moving here, staying here, and values are going up.
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Interest rates, though, are still at a historic low, which brings up an important point—the terms of the market are just as valuable as the price of the property. Based on our current interest rates, properties are very affordable to the average income earner. In fact, it’s more affordable to buy a home than it is to rent—the percentage of income needed to afford median rent is at 29.2%, while the percentage of income needed to afford a median home is only 15. 8%.
If you’re in the market for a home, consider the following options.
First, use the link above that lets you search all homes for sale in your zip code so you can get a sense of appreciation rates in your area and what’s happening on a per-zip code basis.
Second, if you don’t own a home and are considering buying, think hard about taking advantage of these extremely low interest rates. Sometimes we hear about historic low interest rates but fail to see the value in them, but because they’re so low in relation to home values, they’re making those same homes more affordable.
The market could correct at any time, and you’re more likely to see that affect other parts of the country because they don’t have the economic growth we do and they don’t have the jobs we do. The stimulus we’re seeing and the amount of migration we’re experiencing make us different. Barring significant changes, we’ll continue to grow.
You can see the changes to accommodate housing right here in Salt Lake city. There are 350 square foot micro-units being built downtown because there isn’t enough inventory. There are also 65-acre developments being built in Spanish Fork. In short, we’re one of the best places in the country to live.
If you have any questions about our year-to-date market or you’re thinking of buying or selling a home, please don’t hesitate to reach out to me. I look forward to talking to you soon.
