Hey Eric - Covid Real Estate Hangover. When Will Utah Real Estate Crash? Episode 27

Sales have continued to dip and slow. Median sales price has finally gone negative in Utah YOY. Is this the end?

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Transcript

hey this is Eric Gardiner with heyeric.com

and today I'm doing a market update for

February of 2023. a lot has happened in

the last weekend Silicon Valley Bank

just collapsed and so it's gonna really

change probably what the fed's going to

be doing with interest rates and stuff

obviously they raise interest rates

really fast and that caused some of the

the debt or the the bonds that that

Silicon Valley Bank was holding to to

not work out in their favor I'm not an

expert on that so I'm not going to go

deep into it but about the market update

here in Utah there's been a lot of

stories also about how

we finally have a decline in sales from

last year that the Market's decreasing

in value in units which is which is true

I've seen some videos from some people

who make it sound worse than it is

because it's something we expected with

price compression happening because

interest rate is rising it's just

natural for that to happen

so I'm going to go through just February

numbers and then I'm going to go through

covid numbers from the beginning of

covid to the high of the market which

was last year and to present day also so

let's Dive In so looking at February

numbers our total sales for the Wasatch

Front February 22 compared to 2023 are

down 18 which is a huge number right you

know we had 23.80 last year we have 1944

this year the market has come to a huge

slowdown because interest rates are so

high you know usually floating around

six and a half probably right now maybe

a little below that but you remember

last February was really high because

rates were really low I bet you like a

normal year pre-code was probably around

2200

um Twenty One Hundred something like

that

uh prices they that same February year

over year down eight percent

um so that's significant also the median

sales price this February was 461

thousand dollars days on markets

obviously skyrocketed last year's at six

Now we're at 50. median days on Market

one thing to note is months of Supply

were at 2.24 months of Supply so you

know total available units for sale is

four 4 351 along the Wasatch Front so

you know technically that is still a

seller's market even though with rates

it's created more of a buyer's market

because buyers can be more picky

um but the market is is still moving

along for those people who need to move

and they're just having to get more

creative with their financing and and

where their where their rate plan is

going to go over the next few years to

make sure their house is Affordable

um but diving into those those coveted

numbers I talked about so the next uh

data we're going to talk about is

starting in March of 2020 so that first

month to covid when everything kind of

halted here in the United States up

until the peak of the market which

according to the data in our MLS is May

of 2022. so the total sales were up 10

percent between beginning of covet and

peak of real estate market

sold price up 57 percent median sold

price so in March of 2020 it was 345 000

dollars

in that peak of 2022 540

000 for the median sales price along the

Wasatch run a 57 increase

so is that normal absolutely not

is that going to compress yes yes of

course that Peak Market happened last

May and we're already coming down off of

that we've been coming off of it all

summer all winter and we're still doing

that this February

um next I wanted to compare you know the

beginning of covid March 2020 to present

day so February 2023 with those month

numbers

total sales are down quite a bit from

that March so when we looked at this

data in 2020 March was still pretty high

for closings because stuff was already

in escrow things were closing

April was where there was a pretty

significant decrease in closings because

people just kind of froze they stopped

shopping

um and units were down

sold price median sold price

from covidstart March 2020 through

February of this year 2023 even after

this price compression over the last 10

months still 34 appreciation or increase

in median home price along the Wasatch

Front

so

what does that tell us even though

you're hearing these gloom and doom

things about how prices have come down

year over year absolutely true

having two years two and a little bit

years of 16 plus percent appreciation

you know we're still a 34 appreciation

since the beginning of covid for the

median home price in Utah

so well well things are compressing

prices are coming down because interest

rates are going up the market you know

if you bought during those times or if

if you've been tracking it during the

this you know last couple years the

market as a whole is still healthy you

know you still have you know probably uh

value in your home I guess you might

have paid over appraisal last year or

two years ago

but overall as these prices compress as

interest rates rise as they stabilize

now is what I believe is going to happen

we're going to have a continued you know

the compression is going to shrink

because the interest rates are going to

stabilize this year

and then as rates you know settle in to

probably what ends up being five percent

five and a half percent price will

stabilize and we'll get back to normal

appreciation that's what I'm thinking is

going to happen

um there was just a new report I posted

actually on on social media about how

the Utah Market is still predicted to do

very well over the next five to ten

years according to Zillow and granted I

always say take Zillow with a grain of

salt because a lot of their data like

their flipping business with prices were

way off those estimates are pretty off

in Utah because it's a non-disclosure

state

um but Utah is still a great Market

that's going to appreciate over the next

five to ten years so if if you have

questions about any of this data let me

know let's chat happen to answer these

over the phone or however you want to

chat about it but thanks for joining me

and have a great day