2023 SLC Real Estate Market Forecast
/The Salt Lake Board of Realtors and James Wood, Ivory-Boyer Senior Fellow, Kem C. Gardner Policy Institute, David Eccles School of Business at the University of Utah has just put out their 2023 Housing Forecast. It gives us a picture of what residential real estate looked like in 2022 and what to expect in 2023. I will hit the highlights here and link the full report below.
Inflation & Rising Interest Rates
Last year we saw inflation go up much higher than we are accustomed to. That caused the Federal Reserve to raise the federal funds rate to slow the rate of inflation. The federal funds rate doesn’t exactly match mortgage interest rates, but it absolutly affects it. We haven’t seen increases in the funds rate like this in ages and it caused mortgage rates to go up from 3.2% in January to 7% by the end of October. That’s a massive increase in a short period of time.
Higher interest rates make borrowing money more expensive. When the rates skyrocketed, home sales slowed significantly - there were 26% less sales in 2022 than 2021. Buyers needed to take a breath and reevaluate what they could afford with the new price of a mortgage. It was often significantly less.
The median price for a home in Salt Lake County at the peak of the year in May was $565,600. When the year ended, that median price had decreased 14% to $485,829.
What will 2023 Bring?
The economy is slowing down. There is talk of a recession. Most morgage experts believe interest rates will settle to around 6.5% to 7.5%. As far as housing prices go, the housing market is not in the same precarious position it was in 2008. The mortgage are much stronger and so is employment. And Salt Lake City is still recovering from the housing shortage that has pushed our home prices up so much.
All that to say that it is expected that the price of houses will remain the same or drop by around 5% in 2023. The declines are more likely in the first two quarters of the year with stabilization by the third quarter.
My Thoughts
I am glad that the skyrocketing prices of 2021 are a thing of the past. That was too rapid to be sustainable and made home ownership very difficult for buyers. I much perfer the balanced market we are currently experiencing. In my last few transactions I have seen seller's be flexible on prices, pay some closing costs, and agree to make repairs or credits. There is give and take in the market again and that is always a good thing.
Are you looking to buy or sell this year? Reach out and let’s get started!