Utah Association of Realtors
Last year’s rapid rise in mortgage rates has continued to add balance to the housing market. Buyers are seeing lower prices, more concessions, greater negotiating power, increased selection and more time to make decisions. However, competition remains for homes that are priced right, especially for starter homes where there is a severe shortage of homes.
That’s the message from the data in the January housing statistics report from the Utah Association of Realtors. Key housing market indicators showed a market that is displaying signs of strength for homebuyers after ultra-competitive conditions during the pandemic.
“Inventory remains low, but buyers are beginning to have better negotiating power,” said Lawrence Yun, chief economist of the National Association of Realtors, in a press release about U.S. existing homes sales. “Homes sitting on the market for more than 60 days can be purchased for around 10% less than the original list price.”
Price discounts are good news for buyers who have long been waiting for some relief in the housing market. Here are a few highlights from the Utah report about the positive changes buyers are experiencing:
- Buyers have greater housing selection. The number of homes for sale in Utah increased 122% from January 2022. There were 9,024 properties available at the end of January 2023 versus only 4,059 a year earlier.
- Buyers have more time to make decisions. The average days on market increased to 63 days compared to 31 last January. As the time to sell increases, buyers can take longer to shop and make decisions — versus when decisions were oftentimes made within hours.
- Sellers are now offering concessions. During the days when buyers were paying tens of thousands over list price, asking a seller to pay closing costs was unheard of. Now, sellers are more likely to be open to negotiating price, closing costs and repairs. The average percent of list price received is January was 94% compared to 100% last year.
- Home prices are less expensive. While home prices are still very sticky because of Utah’s ongoing housing shortage, they are beginning to come down in response to buyers’ affordability challenges. The statewide median home price was $455,000 in January, down 6.3% compared to January 2022. This is the first year-over-year decline after 129 months of increases.
- Buyers face less competition. Utah home sales fell about 37% in January as high interest rates priced out would-be homebuyers. The decline in demand has left current buyers with more negotiating power.
Even though buyers are benefiting from the changing market, they continue to face affordability challenges. Here are a few key highlights from the report:
- Affordability remains a challenge. The Utah Realtors Housing Affordability Index —which measures the impact of prices, mortgage rates and incomes — fell 16% from last year. A Utah family making the median income only had 83% of what it needed to qualify for the median-priced home.
- The housing shortage remains. At the end of January, there were 2.6 months of inventory. While that’s a significant improvement from the 0.9 months in 2022, there are still not enough homes for those who want them. Traditionally, below six months is a seller’s market, and above six months is a buyer’s market. The shortage is even more pronounced for starter homes. For homes between $300,001 and $500,000, the market has only two months of inventory.
- New listings remain low. New listings fell 11.5% in January. This is the fewest number of new listings on record for this time of year, according to historical data that goes back to 2006. While buyers would benefit from the continued addition of more housing choices, many potential sellers remain on the sidelines, especially homeowners who have ultra-low interest rates on their mortgages that they don’t want to give up.
As Utah’s housing market navigates the current economic environment, it’s important to work with a Realtor who can help you evaluate the opportunities and challenges in the changing landscape. To find a local Realtor in your area, visit UtahRealtors.com for a directory of Realtors in Utah.