Buyers take note! The real estate market is changing drastically, especially seen in new data from the Salt Lake Board of REALTORS. Homes sales (condos, single family) fell to just 1,344 in June in Salt Lake County. That’s the lowest they’ve been in June for a decade and 27% less sales than last year during June.
What does that mean for buyers? For the last 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 is 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 battle. In order to sell to the interested buyers the 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 have not seen seller’s pay closing costs in at least two years because our market heated up so fast with so much competition from buyers that it wasn’t a really a possibility. Now with the slow down buyers might be able to pay asking price and not $100,000 over ask! Buyers might be able to negotiate seller concessions, like seller paying for a home warranty on behalf of the buyers for a year (@$600) on mechanical items in the home, mortgage costs (can be up to 2% of the loan amount), repairs and personal items such as washers/dryers, pool tables, snow blowers.
One of the biggest reasons the market has slowed is due to the Federal Reserve raising its rates which trickles down 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 be meeting in another week and economists suspect it will raise interest rates by one percent which makes it more expensive for banks to borrow and thus interest rates on all kinds of consumer and commercial borrowing, including mortgage rates tend to go up. This is all necessary to try and cool inflation.
Inflation rose to 9.1% last week, the most since February of 1991. You certainly can feel that as airline fares rose 34.1%, new car prices by 11.4%, and food prices are rising 1% per month. Housing prices are falling around the country by an average of 5% and over 50% of the listings on the MLS in Salt Lake City have had price reductions in the past few weeks. If you gave up trying to find a home, you may want to get back into shopping…deals are out there again!