We’ve been through a lot in the past year and a half, but things are beginning to look a whole lot better. COVID-19 infection numbers around the country as a whole are dropping. Pandemic restrictions have been lifted for the most part as businesses begin to reopen. As well, the economy seems to be gaining ground with a steady march towards full employment.
Interest rates also remain low and this has inspired buyers to take advantage and purchase new homes in Salt Lake. If you’re looking to be one of these new homebuyers looking to lock in a mortgage on a home in Salt Lake, you should know which factors are affecting the market right now.
First, we’ll start with a comparison between the first and second quarters of 2021, then we’ll compare Q2 2021 to the second quarter of last year and see what that tells us about the future of the real estate market in Salt Lake.
Median Sold Price
Based on available statistics, the median sold price in the second quarter of 2021 reached $455,000. It’s important to note that the median price is not the same as the average price which can be skewed by outliers such as very low and very high sale prices. The median price is a much better indicator of what homes are selling for in a particular region.
Comparing the second quarter 2021 median sales price of $455,000 to the first quarter sales price of $415,000 shows an increase of almost 10 percent. When we look at the second quarter price compared to the second quarter of last year, we see an increase from $369,900 to $455,000 for an increase of 23 percent. So the clear takeaway here is that the market is on the upswing in Salt Lake. That certainly sounds like good news, and it is, but housing also needs to be affordable enough for everyone to have a stake.
Number of Homes Sold
Another key indicator of housing market health is the number of homes sold in Salt Lake. Let’s take a look at those numbers by quarter. In the second quarter of 2021, a total of 4,791 units were sold in Salt Lake. If we compare that number to the first quarter of 2021 which was 3,583 that’s an increase of 33 percent which is another indicator of strong growth.
Homes are selling, that’s for sure, but again, if demand exceeds supply, this can create a housing shortage which puts a drag on the health of an economy by keeping people locked in as renters when they could be homeowners.
Median Days on Market
Now let’s take a look at Cumulative Days on the Market or CDOM for short. When we’re talking about CDOM, we are looking at the total number of days the house was on the market. That means the first day it was listed until the day it sold. In the Q2 of 2021, that number was a median number of five days. That’s a pretty quick turnaround and that’s actually down from the previous year’s second quarter CDOM of 13. It’s also a day less than the median Q1 CDOM. Any way you look at it, those are healthy and encouraging numbers. So, what does this mean for homebuyers and sellers in Salt Lake? Let’s look at that next.
What Do These Housing Factors Mean for Salt Lake
The pandemic did untold damage to the country. Not just from a health perspective, but on the economy as well. Many businesses were forced to shut down due to COVID restrictions and some never reopened. The housing market, on the other hand, is in a boom and Salt Lake is benefiting.
Utah already enjoys low unemployment. According to the Bureau of Labor Statistics, that rate sat at just 2.7 percent a few months ago in May of 2021. Combine that with historically low interest rates and our state’s low tax rates, and you have the makings of a hot real estate market.
Speaking of low mortgage rates, let’s look at how low they are. Right now, the average rate on a 30-year fixed-rate mortgage is 2.822 percent, the average on a 20-year fixed-rate is 2.618 percent, and a 10-year average is just over two percent. It’s no wonder people want to take advantage before the rates go up. While that may not happen for many months or even a year, there’s no guarantee they won’t rise with little warning.
Another effect of the pandemic was that it forced many Americans, including many Uhtans, to look at their current housing and work situations. More time spent at home gave many of us the time to think about what better options might be out there. More space might be a factor for some, closer proximity to friends and relatives may be another. For some people, it’s just a good time to upgrade. For others, downsizing might be a better option and first-time homebuyers are eager to see what’s out there in a hot market.
Population growth is another big driver in the demand for housing. The state’s population grew by 18.4 percent from 2010 to 2020 which outpaced the national rate of 7.4 and made it the fastest growing state in the United States. The supply of single-family homes is not keeping up with demand, however. This presents opportunities for sellers to get well over their asking price but also creates competition among buyers and that can be a big turn-off.
While sellers aren’t complaining, a housing shortage is not good no matter how you look at it. It could certainly stall out-of-state migration to the Salt Lake area. A lack of new home construction has contributed to the shortage. There’s also a shortage of affordable homes for wage earners. There have been calls to streamline the permit process and eliminate certain building requirements to encourage building and investment. That could certainly open up opportunities for developers and investors. Unfortunately, skilled workers such as plumbers, electricians, framers, and roofers, also remain in short supply.
That said, it’s a good time to sell a home in Salt Lake and that looks to be a continuing trend. Sellers are enjoying quick sales, cash offers, bigger down payments, and offers for well over their asking price.
The data presented in this article was gathered from multiple sources. It is subject to change over time and is intended to present a snapshot of the real estate market in Salt Lake as of July 2021. All statistics are for Salt Lake County only.