When the pandemic first began there was a sense of concern for the real estate market as fears of another market crash arose. Earlier in the year, we did see a dip in the market locally and nationwide. We are now seeing a surge. Why is this happening? Well, it is a combination of a few different factors, supply, mortgage rates, and location.
Utah’s Perfect Storm
The Utah market has seen a massive surge this year. The demand for homes was already high pre-pandemic. As the year goes on, we are only seeing an increase in that demand. We are only seeing houses stay on the market for a median of 12 days. It takes half the time to sell a house today than it did last year. In the month of August 2020, 5,201 total homes were sold with a median price of $362,000.
The only downside we are seeing to this massive surge is the lack of inventory. While we have seen in the past that Utah has had a problem with inventory, and that problem has been heightened during this current time. When we compare the data from this August compared to last year, we can clearly see this shift. The market now has more pending sales than it has houses on the market, while last year it was the reverse scenario.
Utah has seen an increase in the number of people wanting to move here for various reasons, this increase in population, and the fact people are staying in their homes longer has led to a market where there are more buyers out in the market then there are sellers.
It’s not only Utah. We see similar trends across the country. The demand for real estate in the Utah market is increasing, but the inventory is starting to dwindle. To put it simply, homes are selling too quickly for the market to keep up. Specifically for Utah, there are 5,184 active listings and 9,995 pending sales. There is a 3 month supply at the current sales pace, which is well below the 6-month pace needed to keep a balanced real estate market. The national housing inventory has seen a decline including decreases in the inventory of newly listed properties. Due to this shortage, homes are selling up to 18 days faster than the year prior. There has also been an increase in the average price of a sale; 8.5% more than last year.
Even though we see a limited supply in the housing market, there is still a strong demand for the buyer’s side.
The biggest reason that people are so willing to buy homes at this time is because of the interest rates. According to Windermere Chief Economist Matthew Gardner, In the August reports, for a 30yr fixed-rate mortgage, the interest rate is at a shockingly low rate of 2.9%, last year the rate was sitting at 3.73%. These are historically low numbers.
With the housing prices rising and the interest rates being so low, you have to look at the difference between the price and the actual cost of the houses you are buying. Even though the house price is higher, with lower interest rates, the monthly mortgage payments are still comparable. With lower rates, it costs less to borrow money from lenders to get the money for your house. This means that buyers may be able to afford more house than initially expected, and is pulling buyers onto the market.
Why Does This Matter?
This high demand for homes is predicted to continue on throughout the year, and possibly carry over into 2021. On the buyer’s side, we see historically low-interest rates, which can help counteract the rising price of houses. On the other side, sellers are getting more for their listings than before with the increasing price of houses, and heavy demand will decrease the time needed for your home to sell. The main issue on hand is the housing shortage, and only time will tell how that will affect the market in the long term.
For weekly updates on the housing market, keep an eye on the Windermere Utah Facebook page, as every Monday we post “Mondays with Matthew,” a video update from our Chief Economist about the market.
THE BIG PICTURE – IT JUST KEEPS GETTING BETTER!
By Jess Reid
Since the great recession, the Park City Real Estate market has continued to grow and improve every year. Overall, 2019 closed volume is up 13% over 2018 for a phenomenal $2.7B dollars. Notable influences on our market include: An ever expanding geographic area of real estate including, extensive remodeling of older properties and many new construction projects. Park City currently offers a variety of real estate options for all kinds of buyers. Generally speaking, prices have been rising dramatically and a leveling off of prices, might be very healthy in the long run.
Read on to learn more about the diverse segments of our market.
SINGLE FAMILY HOME SALES
For 2019 vs. 2018, transactions are up 4% to 1,102 and sales volume is up 14% to $1.6B. Average prices vary greatly by area, but are generally up across the board over the previous year. We continue the trend, of higher priced homes ($4M and up) taking longer to sell. Here are some average single family sale prices in a few popular areas:
❱ Old Town – $2.144M
❱ Deer Valley – $4.7M
❱ Park Meadows – $2.26M
❱ Silver Springs – $1.3M
OVERALL CONDOMINIUM SALES
Volume is up 24% to $865M and like SF homes average prices vary dramatically. Some areas have very few condos (Silver Springs and Jeremy Ranch), while others are primarily condos (Canyons Village and Deer Valley). Empire Pass in Deer Valley, resale condominium volume and average price is slightly down. We believe this is primarily due to the new, much higher priced, projects being presold in the area.
Deer Valley continues to satisfy luxury home buyers in our market and Deer Valley Resort has many exciting new things going on! Even though sales volume is slightly down throughout Deer Valley, this is most likely a result of the exciting new projects that are sold but still under construction. There is much buzz and excitement about the remodel and update of the Snow Park Lodge this summer and other lodges after that. After many years of speculation, it appears that Deer Valley may be seriously considering building the long planned village on the Snow Park parking lots. There is also talk of a new condominium project next to a major lift in Deer Crest and the continuing negotiation to include Mayflower Resort as part of Deer Valley.
VACANT LAND SALES
Vacant Land Sales have decreased in the greater Park City area, however, this should change with the huge new subdivisions coming on in the Jordanelle area (Sky Ridge). The primary reason for this decrease, is the lack of new lots, as Park City is very close to build out and the Snyderville Basin is also running low on building lots. The general Heber Valley area also has very few lot sales because most of the lots are controlled by developers and are being sold with homes on them.
HEBER VALLEY AND WEST COUNTY
Heber City is a much smaller market than the rest of the Park City area, but a very important one. It serves as a more affordable place to live for people to have a primary residence or a vacation home. Midway is especially popular for vacation homes. The East County, which includes communities such as Woodland, Kamas and Oakley, is another area with lower prices than Park City and is becoming a haven for more primary residences and larger horse properties. This area has more of a rural feel than any other part of our market.
NEW CONSTRUCTION PROJECTS
New Construction projects are having a big impact on our market and will continue to in our future. Here are some prime examples:
❱ Park City Mountain Resort Village in the Park City limits. (See article on page one)
❱ Mayflower Mountain – A Billion Dollar ski area in Wasatch County overlooking the Jordanelle Reservoir. A 20 year project comprised of commercial retail, condominium hotels, ski runs and lifts and a special condo/hotel for the Military.
❱ Canyons Village is only about 40% built out with very high density approved for the master plan. Over 7 large projects are under construction with presales already.
❱ Jordanelle projects are underway with numerous condominium projects and a 450 lot subdivision (Sky Ridge).
GOLF / RESORT COMMUNITIES
Golf & Resort Communities are also another positive influence on our real estate market. They are a unique blend of golf courses and activities for the whole family from bowling to fly fishing to hiking and camping areas to gun clubs. All of these communities have multiple club houses that cater to all age groups and some of them have numerous Golf Courses as well. Here are some of the prominent Golf Resort communities:
❱ Red Ledges
❱ Victory Ranch
LIVING IN PARK CITY
We live here because it is hard to beat 300 days of sunshine & 350+ inches of snow fall each year. There are over 500 miles of maintained trails and thousands of acres of open space to preserve beautiful vistas and prevent over development. Our High School ranks in the top 2% nationally. Our Ski Resorts are rated some of the best in the World, year after year. We are only 45 minutes to an international airport and an easy commute to
a major metropolitan area, including “the Silicon Slopes,” a tech power house. The laid back vibes of our mountain town combined with pristine living and endless adventures right at our door step, make us happy to call Park City home.
All data was collected from Park City Multiple Listing Service, Inc. / Park City Board of Realtors 2019 Report.
At Windermere Utah, we are proud to keep you up-to-date on the latest news, events, and listings. Be sure to keep checking back in here at the blog, and don’t forget to follow us on social media.