Utah’s red-hot housing market is calming down, so is now a good time to buy a house?
Apr 10, 2023, 10:49 PM | Updated: 11:07 pm
DRAPER, Utah — It may not be the buying frenzy we saw a couple of years ago, but licensed realtor Jennifer Gilchrist said the Wasatch Front’s housing market is still plenty robust, partly because we are now in the spring home-buying season.
“March, April, May are the months where we get the highest offers on homes,” she said. “It’s springtime and the weather is nice and the holidays are over. The kids are winding down at school and they would be able to make that move during the summertime.”
It is also robust because the supply of homes on the market remains low.
“We are still behind the number of homes we need to meet the demand,” Gilchrist explained.
What has changed, Gilchrist said, is what is behind the demand. Home sales prices have dropped 3.4% in Salt Lake County compared to what they were a year ago, according to numbers from the Utah Association of Realtors. That drop was 3.7% in Weber County, 5% in Davis, and 8.7% in Utah County.
That is enough to chase some cash-rich investors out of the market.
“What I’m seeing right now is a lot of first-time homebuyers who could not buy a house in the prior frenzy, because they were competing against cash offers and investors,” Gilchrist said. “Now, they can come in and compete.”
And with mortgage interest rates doubling what they were two years ago, existing homeowners are not eager to move at the cost of their lower interest rates.
“They would then have to trade in their 2.875% or 3.0% rate and now get a much higher rate, so they are tending to stay in place,” she said.
If the higher rates leave you feeling stuck where you are now, even in a less competitive market, certified financial planner Shane Stewart of Deseret Mutual Benefits Administrators says they will not always be high.
“One of the things that we all have in our brain is called permanency bias — meaning if the rates are high now, we think in our mind, they’ll always be high,” Stewart said. “But rates are cyclical, and they’ll likely come down at least once in the life of that loan.”
And so, you are not locked into a rate for life.
“If you think about the past 30 years and what has happened in mortgages — the rates have gone up, then they went very low, and they’re coming back up again,” he said. “That happened at least two or three times. It’s likely sometime in the life of that mortgage, you’re going to refinance when the rates go back down.”
Even with today’s higher mortgage rates, Gilchrist said buyers have an advantage they have not had for years: negotiating power.
“They’re actually even getting the sellers to pay some different types of concessions, which they would not have done before,” she said. “They’re able to use an FHA loan, where before, sellers would not even look at an FHA or VA loan because they wanted conventional or cash.”
Buyers also do not need as much cash to buy a house as they did a few years back.
“Before, if you didn’t have a down payment, you weren’t getting the house,” Gilchrist said. “I’ve helped several of my new first-time homebuyers get into houses with zero down payment, and zero out-of-pocket for closing costs because we had the seller pay for that.”