No one could have predicted what would happen in 2020 as the pandemic changed all aspects of life for people around the world. The housing market did not escape these changes. At the beginning of the pandemic, the housing market took a hit largely because many did not want to buy a home when the economy and job market were so uncertain, and most states quarantined and homes could not be shown.
What can be seen now, is that most housing markets heavily favor those looking to sell their home.
For the Salt Lake City housing market, due to its low cost of living, strong job growth with low unemployment and cheaper taxes, it has become one of the top housing markets to watch in 2021.
Continuing to be a Seller’s Market
In 2020, the trends seen in housing markets all across the country were leaning in favor of a seller’s market. With such little inventory on the market in terms of active listings and ever-increasing demand of people looking to buy a home, it created the perfect storm for booms in housing markets.
Homes listed for sale are being swept off the market in less than a month which has created an extremely competitive buyer’s market. These trends have continued into 2021 and look to be the case for the remainder of the year.
With the onset of the pandemic, many were unsure of what the future would look like in terms of the economy and job stability, so many were hesitant when it came to home buying. This resulted in a dip in the market at the beginning of the pandemic around March 2020, which basically halted the real estate market and prevented homes to be shown during the quarantine. This dip caused mortgage rates to reach an all-time low.
A survey done by Freddie Mac reported that mortgage rates have been hitting record lows since early summer of 2020. In January of 2021, this hit another record-low at 2.65% which is the lowest reported rate since they began their survey in 1971.
So far, this has only gone up to 2.9% as of July 2021 and is expected to increase a small amount for the remainder of the year. With such low rates, people have been taking advantage of the opportunity to buy.
Though inventory for homes on the market is continuing to dwindle, it has not made homebuyers shy away. Since mortgage rates have dropped, the demand for buying homes has only gone up and the limited supply has created a highly competitive playing field.
Homes are flying off the market at record speeds meaning those looking to buy need to put in an offer fast. In a lot of places, a home listed will have half a dozen offers by the end of the week with many of those offers being more than the listing price.
Houses for sale in July 2021 were moving off the market 32 days quicker than this time last year. There are no signs of the inventory for homes on the market increasing, causing those that are on the market to be sold quickly.
Inventory of homes for sale in the past year had declined by 50.9% since last year, and there seems to be a low number of homes. Since low mortgage rates caused a spike in demand, supply has not been able to keep up.
All over Utah, the state has seen an influx in people looking to move into the state, many being from California. With a lower cost of living and strong job growth, there is a lot of appeal for coming to live in Utah and in Salt Lake City.
Jay Elliot, a seasoned real estate agent in Salt Lake City, said of the current inventory, “The inventory of available homes is 2828 today and it was 7730 for last year which is down 70% from last year. And the demand has been crazy insane. Our sellers are receiving at least 4-8 offers for their homes.”
With limited supply, it is giving the seller the upper hand when it comes to negotiation to get exactly what they want out of selling their home.
As the distribution of the vaccine for COVID-19 becomes more efficient and readily available, the economy finally has signs of beginning towards normalcy.
Jobs are beginning to come back on the market, with around 850,000 of them being added in July of 2021. Unemployment rates have also dropped to about 6%, which is less than half of what it was in April of 2020. Utah had the second-strongest job growth in the United States from December 2019 to December 2020.
With more people employed, this gives them money to purchase a home they may not have had been able to afford otherwise.
More Working from Home
Working from home was something that was not common in most industries before the pandemic. Even after some have returned to work in the office, more and more businesses are looking to get rid of their office spaces permanently and have their workers be remote full-time.
This has given more people the option not to worry about their commute to work when trying to find a new home. In some cases, they may not even need to live in the same city as where their work is based.
“The pandemic increased our demand with homeowners looking to buy a home in a recreational county. For us, every country is near outdoor amenities and recreation.” said Elliot, “Utah is seeing a large influx of new workers with work anywhere and new businesses are moving into our state. Utah is the fastest-growing state.”
As of December 2020, Redfin reported that 67% of home buyers and sellers surveyed have already moved to a different city or would like to because of the option for remote working.
A Rise in Median Home Prices
Taking all of these reasons into considerations, this has resulted in median home prices across the country to rise. According to Norada Real Estate Investments, the median home price as of May 2021 was $380,000 which is up 15.6% compared to this time last year and it is expected only to rise as the year goes on.
The median home price in Salt Lake City was $440,649 in April 2021. This is a 20.7% increase from the same time last year.
The National Association of Realtors predicts that housing prices are likely to go up 8% in 2021. This means that the trend of the median price rising for homes is only expected to continue as supply continues to decrease and demand continues to increase.
Looking to sell your home in 2021? Now is the best time to do so. Trends are pointing towards being similar to 2020, only at a slightly lesser scale. The outcome from 2020 of continually decreasing home inventory, will see median home prices increasing even more also since supply is still not even coming close to keeping up with demand.
If you want to buy a home in 2021, just be prepared to not be the only one looking at homes on the market. Homebuyers should expect to put their offer in quickly and consider going over the listing price for their offer to stand a chance against the competition.