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Going house hunting in northern Utah this year? Steel yourself. You’re entering a brave new world.
In this market, buyers have to act quickly and decisively to snag what they want. Demand is high — and prices keep rocketing ever higher. At the same time, supply is comparatively low — and could fall even lower.
In fact, demand for freshly built and existing single-family homes, condominiums and town houses has surpassed supply along the Wasatch Front for at least the past five years. But the current chasm has reached historic proportions, and the soaring sticker prices remind one of the uber-markets in urban California.
One real estate agent even used the term “biblical” to describe just how historically tight northern Utah’s housing market is these days.
Rather than dampen sales, it turns out, the coronavirus pandemic amounted to a mere two-month hiccup last spring, followed by a breathtaking real estate rebound that catapulted housing sales to new records.
On the buying end, COVID-19 brought not only rock-bottom interest rates but also new cravings for more space, suburban locales and home offices. Remote work allowed employees to consider home listings they once thought too far away. All the while, well-heeled buyers and relocating executives, newly untethered from the office, headed to Utah from out of state, bringing added spending power with them.
As for sellers, they’re out there but in far smaller numbers than usual. Some are delaying putting that for-sale sign in the yard. They’re waiting for the virus to ease and more masses to be vaccinated before opening up their properties to strangers. Others would love to move out, but they can’t find an affordable place to move into, further tightening the housing stock.
The health crisis also transformed how people shop for homes. There are more virtual showings and offers made without stepping foot inside a property. Most homes aren’t on the market for long and draw multiple offers.
So if you’re interested in buying or selling or both in 2021, here are some tips:
Low interest rates are driving home sales
The 30-year fixed mortgage rate is hovering below 3%, its lowest level since 1968 and set that way to promote an economic recovery from COVID-19.
Buyers, some of whom have built their savings toward a down payment during the pandemic, are eager to lock in those rates. Those shopper-friendly rates are a driving force in the five-county region along the Wasatch Front, where 43,281 homes of all types sold last year, 7% higher than an already robust 2019.
Consensus forecasts among many of the nation’s top lenders is that interest rates will tick up only modestly in 2021.
Should I even try to buy a home?
Yes, those prices are steep but don’t bank on them declining anytime soon. The median price on a single-family home in Salt Lake County is forecast to rise by at least 6% in 2021 and up to 10% for condos and town homes.
So now might be time to jump in, but beware: Backed-up demand is deep in this market and homes may be hard to find. By one ballpark measure last week, Salt Lake County had roughly 500 homes listed, for a population of 1.1 million people.
Listings anywhere below $500,000 are typically drawing multiple offers.
“I tell buyers the truth: It’s pretty brutal out there,” said Scott Robbins, a Draper-based agent with Summit Sotheby’s International Realty. “It’s a little scary. It’s definitely unhealthy.”
Robbins and others say buyers need to prequalify for a mortgage before they even start looking. They should also be prepared to write offers quickly and at top dollar; agents report initial listings leaping by $20,000 to $40,000 overnight.
Even then, you may be outbid or trumped by a cash buyer at least three or four times before landing a home.