This summer we had a bubble in the housing market. Prices were rising, buyers were coming out of the woodwork, and interest rates started to rise. We were in housing Nirvana! Where are we now? How has the bubble impacted today's market? Lets look at the home prices of a builder to see how this summer played out.
Here are the numbers for new construction homes in Bluffdale for the $300K - $400K price range. In May home prices jumped almost 10% from what they were at the beginning of the year. That's an increase of $30K - $40K. Today those home prices have dipped back down 12.5% lower than it was in May. That means the pricing is now $7500 - $10,000 lower than the original pricing from the beginning of the year. Was this bubble localized to Bluffdale?
In West Jordan we have seen homes that were selling for $280K in May, come down $30K in pricing as well.
In Daybreak, a home that was selling for $458K is now selling for $415K! That's a $43,000 price change in just 3 months.
What is happening?
1st - In June
interest rates went up. This lowered a buyer's buying power by 12%. (The monthly payment on a $264K home today, is the same as the monthly payment for a $300K home before the rate hike.)
2nd -
Supply in Salt Lake County was at an all time low of 3200 units on the market. Even with this low amount we saw a high number (1500+) of
homes sold! The last time we saw that was in 2007. This high demand and low supply created an extremely hot market. Just about anything on the market sold. We were selling homes
BEFORE they went on the market.
3rd - In the past 5 months we have had a
37.5% increase in homes on the market. So the supply was catching up with the demand. BUT with the increasing prices and increasing interest rates, demand went down. In fact the number of homes under contracts have decreased by 27% in just 3 months.
What does it all mean? In the short run, it means we had a
small bubble. Low inventory and high demand causes prices to rise. We are now
normalizing and sellers have more competition and buyers have more options. Buyers also have less buying power so pricing has settled down and stopped rising in the past 3 months.
Should you buy a home right now? Should you sell your home right now? Each situation is different, but this can be good news if you're looking to buy or sell a home. Give me a call for a free confidential analysis of your real estate options.
Utah Dave - Daybreak Neighboorhood Expert and Local Resident