2019 SLC Housing Forecast
While no one can predict with 100% certainty the future of the housing market, as real estate professionals we make it a priority to look at historical data, talk with trusted experts, and keep up-to-date on current local trends. We check out the stats, we interpret the stats, and then we share our information with you. You're welcome. 😉
Last week, at the Salt Lake Board of Realtors 2019 Housing Forecast we had the privilege of listening to Jim Wood, Ivory-Boyer Senior Fellow at The Kem C. Garder Policy Institute at the University of Utah. Basically his role is to research, analyze, and comment on the housing, construction, and real estate industries, as well as the Utah economy.
Here are our top takeaways from SLC Board of Realtors 2019 Housing Forecast
1. Affordability Continues To Be A Major Issue
Bottom line, the price increase of a home in Salt Lake County in the past decade or so has impacted the ability to afford a home. If we take a look at the numbers, the median sales price of a home in Salt Lake County was $245,000 in 2013 and the median mortgage payment of a home was $1,299. By 2018, the median sales price increased to $355,000, and average mortgage payments have increased to of $2,014.
Combine rising prices with a weak income wage growth, the 3.8 percent increase in average pay in 2018—the largest increase since 2006— is projected to decline to 2.5 percent in 2019, and you’ll see why affordability continues to plague the market.
2. Expect More Townhome and Condominium Sales
With affordability being such a huge factor, many buyers are seeking more affordable housing options, which may explain why in 2018 we saw an increase in sales for multifamily housing like townhomes, condominiums, and twin homes. In 2019 the trend is expected to continue with condominium sales increasing up to 7% while single family sales may decline up to 8%.
3. Mortgage Rates Are Projected To Rise Above 5%
Most experts agree that mortgage rates will move above 5 percent in 2019. And, generally speaking, for every 1% the interest rate rises, your buying power is affected 10%. But let’s put this in real numbers. Say a person is looking to buy a 500K home and overnight interest rates increase by a full 1%. That same person who was looking to buy a 500K home, can now only qualify for a 450K home. His buying power was reduced 50K because the cost of borrowing money, due to that 1% raise in the interest rate, is higher. Higher interest rates in 2019 mean that borrowing money, just got a little more expensive.
4. Overall Market Slowdown Likely
The Salt Lake Valley has seen incredible growth in the past eight years, but this year marks the beginnings of a slower market. In Salt Lake, home sales declined from September 2018 through the end of the year. Overall, growth in residential construction is likely to stall as higher interest rates, high new home prices, and fewer new households cut into demand.
Knowledge is power, so we make it a priority to stay up to date on influencing factors to the real estate market. And we’re dedicated to helping our clients, and future clients, to making smart decisions. If you have further questions, call or text a member of the BHURDinUtah team today. We’re happy to answer your questions and advise you on next steps to secure your dreams of home ownership.