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According to the most recent report from the Utah Association of Realtors, the Utah housing market is expected to experience moderate growth in the next two years. Sales of existing homes, in the state of Utah, were just above 60k in 2020, 55k in 2021, and are projected to be about 45k in 2022. The tight supply of available homes is expected to continue to be a major factor limiting sales growth, as we saw Utah home sales down 27% in 2020 and 52% in 2021. However, because of increasing interest rates and rising home prices, we're expecting to see a significant lessening of buyer competition, which is leading real estate professionals to predict an increase in home sales in 2022 of 57%.
The combination of rising prices and limited inventory is expected to result in more buyers being priced out of the market, particularly first-time buyers and move-up buyers looking for larger homes. Despite these challenges, however, the overall outlook for the Utah housing market remains positive, with sustained job and population growth providing support for future sales and price gains.
Home prices are projected to increase in 2022
Despite increasing interest rates and economic uncertainty, home prices across the United States are projected to increase in the next two years. In 2020, the US average home price was $297k, $347k in 2021, and is projected to increase to $378k in 2022. According to the National Association of Realtors, prices are expected to rise by about 4-6% in 2022.
In the state of Utah, the average home price in 2020 was $358k, $450k in 2021, and it is projected to increase to $500k in 2022. The rise in home prices is being driven by a combination of factors, including what are still considered historically low-moderate mortgage rates, limited supply of homes for sale, and a market that is still easing from an incredibly strong sellers market to a neutral market.
While some regions will see higher price increases than others, like Utah that is expected to see 9% growth, the overall trend is expected to be positive. For potential homebuyers, this may mean that it's a good time to start shopping for a new home, and those who are already homeowners may see their equity increase over the next few years. Either way, it's important to stay informed about the real estate market and consult with a professional before making any decisions.
The average days on market will continue to decrease as inventory levels rise
The average days on market (DOM) is a calculation of how long a property is listed for sale until it goes under contract. The DOM is a good indicator of market conditions, and it can be used to predict future trends. In general, when inventory levels are increasing, the DOM will be higher as well, because there are more properties to choose from. When buyers have more options, they tend to take their time and be pickier about which property they ultimately decide to purchase.
Conversely, when inventory levels are low, the DOM will decrease, because buyers are willing to make quick decisions in order to avoid being shut out of the market altogether. Currently, inventory levels are rising, which means that we can expect the DOM to trend upward in the coming months. Nationally in 2020, we saw DOM fall, as inventory tightened and competition increased, from 43 to just 21. Through 2021, DOM remained under 21...for a few months dropping as low as 17 days. Utah followed suit, in 2020 dropping from 59 to 36, and in 2021, remaining under 34 for the entire year and dropping as low as 17 days.
In 2022, we're going to see days on market begin to tick back up because of increasing interest rates, leading to fewer buyers on the market as home prices are still increasing. Nationally, we're seeing DOM stay under 20, but in Utah where prices increased much faster than the rest of the country the last two years, we're seeing days on market climb from sub-20 numbers up to 40 DOM.
It's important to remember that buyer demand will continue to play a major role in setting the pace of the market. So while the overall trend is toward a slower-moving market, there will still be variation from one state, one property to the next.
Interest rates are predicted to rise slightly, but they will still be favorable for buyers
According to the most recent predictions from economists, interest rates are expected to continue to rise in the coming months. However, even with this increase, rates will still remain at historically low levels, making it an ideal time for buyers to enter the market. Take a look at the chart below to see how rates have fluctuated over the last 50 years.
In 2020, average mortgage interest rates were 3.11%; in 2021, they continued to fall to 2.96%; and as we've seen them increase in 2022, we're expecting rates to rise to 8% by the end of the year. In 2023, forecasters are predicting that rates may stabilize and start to decrease slightly.
Although an increase in rates may cause monthly mortgage payments to rise, it is important to remember that home prices are also predicted to continue increasing. As a result, buyers who lock in a low rate now will likely see their home appreciate in value, offsetting any increase in their monthly payment. For these reasons, now is still a great time to buy a home.
There are several factors that could impact the housing market over the next few years - keep an eye out for them!
The housing market is constantly fluctuating, and it can be difficult to predict what will happen next. However, there are a few key factors that could have an impact on the housing market over the next few years.
First, interest rates are expected to rise in the coming years. This could make it more expensive for buyers to purchase a home, and could lead to a decrease in demand. Additionally, the supply of homes is expected to increase as more baby boomers downsize. This could cause prices to stagnate or even decline in some markets. Finally, economic conditions will also play a role in the housing market. If there is a recession or slowdown in job growth, it could lead to a decrease in demand for housing. However, if the economy strengthens, it could lead to an increase in prices. Ultimately, it's difficult to predict exactly how the housing market will evolve, but these are a few factors that could have an impact.
Hopefully, these figures can help to provide you a snapshot of what to expect from the Utah housing market in the next two years. Keep in mind that there are always variables at play which could impact these projections - so it’s important to stay up-to-date on local news and be prepared for any changes. If you have any questions about the data or would like more information, please don’t hesitate to reach out. I'm happy to help!
Find Your Utah Home with Angie Clarke and UT Makes Moves / Keller Williams Realty
If you are looking for the right Utah home, then give Angie Clarke with UT Makes Moves a call. I aim to offer an exceptional relocation experience and unparalleled customer service through prompt communication, ethics and integrity, and the utmost care / concern for my clients!
Angie Clarke with UT Makes Moves is your local Salt Lake City home expert, specializing in working with buyers who are relocating to Utah. Whether you are buying or selling, I'd love the opportunity to make your relocation journey smooth and successful...I strive to provide Relocation Elevated: easing minds, building community, and finding home.
To get started on finding the ideal Utah home for you, take a look at my buyer's or seller's guides, or schedule a time to meet with me today. You can also contact me at angelaclarke@kw.com or call (904) 226-3894. I'd love to be your Salt Lake City Realtor.
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