Fired up for 2015 | Utah Real Estate Outlook
What is the deal with 2015? If your life is anything like mine thus far in 2015 time has been flying by. It is nearly the end of January already and I am just getting the first newsletter of the year out. I hope your year has gotten off to a terrific start so far and that you are keeping up with life so far in 2015!
Typically January is a slow month in the real estate world, but that has not been the case here at High Road Properties in 2015. Based on the number new clients contacts, property showings, listing appointments, and closings 2015 is off the charts in terms of activity. I have spoken to several other brokers and agents and they seems to be busier than normal as well. What does that mean for the market?
I believe Utahs robust economy has continued to fuel home buying demand and that people are continuing to take advantage of the low interest rates that currently exist. Those two factors have kickstarted the buying season early this year. However, those historically low interest rates will likely be moving upward sometime this year based on yesterdays info from the Fed. (More on that later. ) One way to measure where demand stands is to look at the current number of homes that are Under Contract and compare it to this time last year. Take a look below: As you can see there are 250-400 more homes under contract during the past few weeks as compared to the same period in 2014.
That is roughly 25% more homes under contract this January compared to last January. The differential actually increases in the most recent few days to over 30%. This data clearly shows that their are more folks buying homes in January this year as compared to January of 2014, and the trend seems to be accelerating. There are also less homes on the market this year so far for buyers to pick from.
P As of 1/29/2015 there are 3500 homes for sale in Salt Lake County. On 1/29/2014 there were 3,791 homes for sale in Salt Lake County. The decreasing supply of home on the market for sale coupled with an increasing demand by home buyers should lead to price increases in the first half of 2015. If we do not see an increase in active listings in the next 30-60 days we will likely have a shortage of homes for sale similar to that of two years ago.
The previous shortage of homes for sale caused multiple offer situations on properties at all price levels throughout the Salt Lake County area and caused prices to increase by double digit percentages in 2013. I think that is a possibility again in 2015 if interest rates do not spike too much later this year. The X Factor As always interest rates have a tremendous effect on purchasing power for home buyers. When rates increase buyers can afford a lower loan amount to have the same monthly mortgage payment.
This can quickly drive down demand from buyers across the board as you can see in the example below. As you can see even small increases in interest rates have a large effect on purchasing power. If you are looking for a home and can afford a payment of 00 per month an increase of 1% in interest rates lowers the value of the home you can afford from 0,000 to 0,000 or 10%. The Federal Reserve indicated after its meeting yesterday that rates will remain unchanged again for now, but they did indicate that based on economic conditions they may increase rates later this year.
I feel that this is very likely to happen in the Late Summer or Early Fall barring any major economic downturn. What does it me to you? If you are looking to buy or sell a property in 2015 the current market factors will have a major influence on how much you will pay, or how much you will sell for. Each neighborhood is different and I am able to run the numbers for you in the specific area you are interested in so we can make an educated move together.
As a home buyer in 2015 I believe making a move prior to a rate increase is key to getting you the best home at any given price level. As rates increase your buying power will decrease and you will be shopping a different category of homes. Locking down a stellar rate on a home you love is something you will benefit from for the next 10-30 years! Together we can find that home and make sure you get it under contract before someone else does!
As a home seller in 2015 I think supply will be the #1 factor that will impact your time on market and selling price. If there is a limited supply of homes in your area for sale you will be in a power position, and we will be able to negotiate top dollar for your home. Of course you will still need to make your home stand out from the rest by cleaning, staging and pricing appropriately. I can help you make these things happen anytime!
If you, a friend, a co-worker, or a family member would like more information about how to get started on your home purchase or sale please contact me anytime. Thanks and have a good one!