Our Month-to-Month change in inventory turned sharply negative in July but at the end of August was again starting to rise. The gray (2019) chart line shows the traditional historic decline from Summer into the holiday period. 2020 (orange) was the exception as the pandemic had its initial effect at mid-year. 2021 (yellow) has followed a more “normal” path with but a few deviations. 2022 began with a drop of 53 listings in January but reversed direction gaining 39 listings in February and continued with gains of 117 in March, piled it on with 111 more in April, then exploded in May with 281 more listings, and finished the second quarter with 379 more. That 379 is the largest single month increase in the past eight years. Inventory numbers are looking very optimistic for the first time in two years.
Pricing
The median sales price of a single-family home continues to dominate the national headlines, but with mortgage interest rates climbing and sales activity dropping off it’s not unreasonable to expect a bit of a downturn in median sale price.
The median sale price of single-family homes in Park City and Snyderville was $2.78 million in June, an increase of 4.0% from May and significantly higher (19.6%) higher than June 2021.
Condominium sales prices were up significantly as well, 9.5% from May, and a whopping 65.4% higher than in June of last year.
The median sale price of condominium homes in Park City and Snyderville was $1.34 million in June.
No One Saw It Coming: How a Housing Market Curveball Has Completely Changed What Buyers Can Expect in 2022
Realtor.com economists went back to the drawing board and revisit their economic housing forecast for 2022 considering changes in the mortgage markets.
They now expect home prices and mortgage rates will continue to rise, home sales will drop as buyers are priced out of homeownership, and the housing market will continue to cool. However, in a bright spot for frustrated homebuyers, the number of homes on the market is expected to shoot up.
Mortgage rates are now anticipated to hit 5.5% by the end of the year—a rate expected to continue sidelining buyers already grappling with record-high home prices. Initially, the Realtor.com economists predicted they would hit only 3.6% for 30-year fixed-rate loans. However, rates hit a high of 5.3% last month before settling in at around 5.1%, according to Freddie Mac data.
In some welcome news for buyers, all these forces at play are expected to give the number of homes for sale a big boost. Inventory is expected to increase by 15% this year. That’s a game changer for the market and is a significant jump from an earlier estimate of just a 0.3% bump.
For more gory details, visit the source: https://www.realtor.com/news/trends/the-2022-housing-market-what-the-experts-predict-for-the-rest-of-the-year/
Rising Mortgage Rates Expected to Cool Buyer Demand
Nationwide, home prices posted another record-high year-over-year increase in April, marking the 123rd straight month of gains. Rising mortgage rates drove buyer urgency and the resulting price growth, with about 70% of U.S. homes selling for more than asking price this spring. However, higher mortgage rates will likely also put the brakes on buyer demand in the coming months, causing annual home price appreciation to cool to 5.6% by April 2023.
“The record growth in home prices is a result of a scarcity of for-sale inventory coupled with eager buyers who want to purchase before mortgage rates go higher. Buyers who closed on their home in April had locked in their mortgage rate in February or March, when rates were lower than today. With 30-year fixed mortgage rates much higher now, we expect to see waning buyer activity because of eroding affordability. As a consequence, our forecast projects slowing price growth over the coming year.” – Patrick Dodd – President and CEO for CoreLogic
Source: https://www.corelogic.com/intelligence/u-s-home-price-insights/
The cooling effect of rising mortgage rates was reflected in significant declines in asking prices of new and existing active listings, as reported by Redfin.
More and more, home sellers are ceding to the mounting pressure on affordability posed by this month’s rapid mortgage-rate hike. The median asking price of newly listed homes is down 1.5% from the all-time high it reached in the spring, and a record-high share of sellers dropped their asking price during the four-week period ending June 26. Pending sales continued to fall, posting their largest decline since May 2020, but there are signs that early-stage homebuyer demand is starting to level off.
Source: https://www.redfin.com/news/housing-market-update-asking-prices-decline/
We are seeing that asking price decline locally as well. We started tracking the number of price reductions back in January, and it’s clear from the numbers that the rate of price reductions is accelerating.
In January and February, price increases (green line) were outpacing reductions (red). But since March, the reductions have climbed at an ever-increasing rate while increases have dropped to nearly zero.
Stop the STRs?
If you’ve been following the news lately, you know there’s a new push by Summit County governance to regulate, limit, or otherwise restrict short-term rentals (STR) in the greater Park City area. By some estimates, STRs account for nearly 25% of the total housing stock in the county, and over 40% within Park City Limits.
Source: https://gardner.utah.edu/wp-content/uploads/ShortTermRent-PB-Jun2022.pdf
Your local Realtor board has been actively engaged in the debate on potential limits or regulations.
References:
https://townlift.com/2022/05/summit-county-exploring-short-term-rental-regulation/
https://www.parkrecord.com/news/summit-county/park-city-board-of-realtors-voices-opposition-to-moratorium-on-nightly-rentals/
https://www.kpcw.org/summit-county/2022-05-27/summit-county-delays-nightly-rental-moratorium-amid-realtor-pushback
https://www.cityweekly.net/UrbanLiving/archives/2022/06/01/stop-the-strs
Why is this important to your business? Even though more than 60% of the current listings on the market in Summit County allow for short-term rentals, buyers would be unable to get licenses should the moratorium pass. Realtors feel this temporary halt could drastically impact sales on properties that are currently under contract (sale pending). Almost 64% of pending sales in the MLS in Summit County right now allow for short-term rentals. So, imagine how those buyers with a pending purchase contract will react when they learn about a moratorium on STRs. Any plans they might have had for passive income from an STR on the property would be a no-go because they wouldn’t be able to get a permit.
Article Authored by Bob Bemis
Original Article Featured in PCMLS Monthly