After a crazy 2 years of bidding wars and outrageous prices in the real estate market, rising interest rates have choked the speed and tenacity of the market. The Fed anticipate at least two more interest hikes before the end of the year so will we see the housing market crash?
We will see a cooling of prices, some discounts and an increasingly attractive buyer market, but prices won’t crash especially in Utah:
- According to UtahRealEstate.com, there are 6900 active listings today across the state and 3500 home sales in the last 30 days, meaning we are still sitting at around 2 months of inventory. Demand continues to be strong, especially when prices retract slightly, appearing to hit a certain point that buyers find attractive.
- We are building up inventory in the State of Utah, but very slowly. Last Thursday June 16th, (Thursdays are often the busiest days in real estate) there were 429 new listings, but 297 sales and 37 canceled or withdrawn listings. Other days the market sees the buyer/seller influx finish about even. There were 400 price reduction last Thursday so we should see a softening of market, and an increasingly attractive buyers market allowing buyers to leave behind the crazy days of 2020-21 when all contingencies, due diligences and safeguards were waived to secure a winning bid.
- 2008’s crash was due to highly risky loans written for people with questionable credit that could not afford the houses they were buying. Today loan writing is much more strict and foreclosures and delinquent mortgages continue to be near non-existent right now. CNBC reported on June 20, 2022 that mortgage delinquency across the country is at record low, under 3% currently.
- Homeowners with record low interest rates will be hesitant to sell for a price considered low by the standard of a few months ago during the crazy bidding wars and even more hesitant to give up their incredible interest rates and open new mortgages at nearly twice the rate. This will constrict incoming supply so that Utah will not likely gain a large inventory anytime soon. This should preserve Utahn’s property values and cause stability in market prices.
Prices will soften and the housing market will tip more in favor of buyers allowing them to be more selective and hold more power in the purchasing game but we will also see many Utahn’s happy to stay put at their current property, enjoying the low low rates they got in at causing the market to stabalize at a certain resistance point.
AJ is a licensed real estate agent in the state Utah. He is BYU graduate and works in public schools as a school psychologist when he isn’t working on a real estate deal. AJ has personally built nearly 40k in passive income in the past 4 years from his real estate investments and would love to help you do the same. Call or text AJ at 435-619-3465 to talk real estate.