Last year the real estate market continued its trend upwards despite a tumultuous economy, nation-wide shutdowns, and a global pandemic. Economists predicted that 2020 was a year to watch, but no one could have known what the next 12-months had in store.
Despite a brief period of retraction between Q1 and Q2, the real estate market quickly recovered and gained significant momentum through the balance of 2020. That momentum has only accelerated as we enter the new year and solid growth is expected throughout the U.S. and more particularly in Utah during 2021.
While the median home value in Utah over the past 12 months experienced a 16.36% increase, the mortgage payment for the average buyer has only increased $30/month thanks to a drop of 1.04% in the average interest rate over the last year.
These statistics support continued high demand for real estate and will lead to several positive trends. Here is what our full-service residential real estate brokers forecast for the upcoming 12-months in Utah’s real estate market.
Utah Real Estate Trends to Expect
One of those key principles to understanding the real estate market is the economy. Last year, the U.S. saw some of the best housing demographics ever recorded, including ending the year as the most out-performing sector of the economy.
As monumental as 2020 was, 2021 could be even more so—thanks to last year’s investment decisions coming to fruition over the next 12 months. If you include additional disaster relief and vaccine distribution, it’s not difficult to imagine that momentum within the real estate market will continue to spread.
A few trends already shaping up in the 2021 real estate market include:
Low-interest rates
If you are asking yourself, “Is now the right time to sell my home,” current interest rates are the place to start. This year, the Federal Reserve promises to keep interest rates low to ensure that the real estate market stays intact. Compare the current interest rate of 2.68% to 3.72% in 2019 and 4.64% in 2018. Even though the average home price is selling for a higher rate, buyers can offset the slight increase by taking advantage of the low interest rates. All in all, these promising numbers will likely increase buyers’ and investors’ interest, keeping demand high in the residential sector.
High home prices with low inventory
The latter half of 2020 saw a rise in average home prices. As interest rates stay low, home buyers will have a hard time finding a new home. For the past year, buyers have been chasing an ever-dwindling supply of homes in Salt Lake and Utah Counties. Consider this: Double the number of homes sold in 2020 with ~30,000 transactions last year as opposed to ~15,000 homes in 2008.. But 96% fewer homes are for sale today with 929 homes on the market, compared to 15,000 homes in 2008. To be clear, there were over 31,000 homes listed for sale from January 2020 to December. All but 929 of them sold, leaving an available inventory of only 929 homes. Compare this to 2008, when over 30,000 homes were listed for sale and only 15,000 or so sold.
Another prime example of high prices and low inventory is Saint George, Utah. People are moving to southern Utah at a rapid rate, and with interest rates reaching record lows, buyers can obtain the highest possible value for their homes. This combination is causing a housing shortage throughout the town.
Transition back to in-person work with an emphasis on digital capabilities
The pandemic might have taught businesses to work remotely, but many companies crave getting back to the office. Most companies recognize there is always a need for office space. But these spaces will be less dense and more flexible, allowing employees to work a couple of days a week from home. All in all, the office market should reach the bottom and begin stabilizing during 2021. Mid-year, 85.7% of companies plan to return to the office, according to CBRE.
Rise of diverse home offerings
Utah housing experts are predicting an increased demand from homebuyers who delayed purchasing because of the uncertainty of 2020. Now, these buyers are looking for homes that will accommodate their growing needs, such as large spaces that provide room for working from home and virtual school attendance. Along with traditional buyers, previous renters will also transition into single-family homes to mitigate exposure to the virus. These changes will create evolving shifts in the Utah real estate market, which will forever change what home builders and sellers bring to the table.
Demand for affordable housing solutions
Affordability is the question on the minds of buyers everywhere. In the fourth quarter of 2020, the United States market saw an increase of at least 10 percent of median home prices in most of the nation, according to a report by Attom Data Solutions. The report found that more than half of the counties analyzed were less affordable in the fourth quarter of 2020 than in the past. All in all, the report showed the average worker was unable to meet the 28 percent affordability guideline used by lenders. Sellers should work with an experienced Utah realtor to navigate the current market, finding an affordable price for buyers that won’t leave money on the table.
Invest in the Future with Woodley Real Estate
Whether you are looking to sell or buy a home, Woodley’s real estate brokers will draw upon our vast market experience to guide you through each step of the process. Our full-service real estate firm will ensure that you make the best moves at the right time to capitalize on the growing Utah real estate market. Our philosophy is that real estate is more than just financials. It’s about finding a place where you and your family can thrive.
Let’s make the right decision. Contact our Utah real estate brokers today.
