We’ve come a long way from the recessionary days when homes sat on the market for many months, or even a year or longer, waiting for a buyer. Today, properties are once again being snapped up quickly, often with multiple offers due to the shortage of inventory. While this imbalance is frustrating some would-be buyers, it is also creating a great opportunity for savvy homeowners who have gotten the message that now may be the best time in many years to sell their home.
In Utah, inventory levels are down significantly in many areas from the height of the market. The number of homes available for sale is declining, according to the Utah Association of Realtors. In January, inventory fell 24 percent compared to the prior year.
This comes as the economy gains momentum and the job and financial markets improve - all providing more ready cash and incentives for buyers to purchase. The result is that there are more offers for good homes for sale. Sellers are getting higher prices and properties are moving faster than they have in years.
As a result of this shortage of homes for sale in Utah, we are back to seeing offers with no contingencies in some cases, and buyers making offers on several properties before they actually get into contract on one. Multiple offers over asking price are not unusual in some prime neighborhoods.
Utah home sales increased for the eighth consecutive month in January, up more than 6 percent compared to the prior year, according to the Utah Association of Realtors. Utah Realtors sold 120 more homes this year than they did last January, closing 1,985 transactions. This was the best January in five years in terms of homes sold.
Among the more populated areas, sales were particularly strong in Salt Lake, Uintah and Davis Counties where sales were up 30, 29 and 6 percent, respectively.
“The Utah real estate market began the new year in much the same way as the prior year concluded: Home sales were up, housing inventory was down and market fundamentals continued to improve,” said Utah Association of Realtors President Lori Chapman. “The spring buying season is also looking like it will be stronger than last year.”
The number of contracts signed to buy homes in January increased 20 percent, signaling a likely rise in February closed sales. The number of January pending sales has not been higher since 2007.
Adding to the strong buyer demand are record-low interest rates. Interest rates fell to historic lows again in April. Thirty-year fixed-rate mortgages averaged 3.87 percent, down more than 1 percent from a year ago, according to Bankrate.com. Fifteen year fixed rates dropped to 3.11 percent and adjustable-mortgage interest rates were 2.73 percent in April.
To be sure, the housing market is once again coming alive. Real estate agents are seeing dozens of visitors at some open houses, multiple offers are no longer the exception, but the rule in many communities, and buyers are showing a sense of urgency perhaps out of concern that record low interest rates could be heading higher before long. Some recent comments from our local managers:
- “In Utah County, inventory is lower currently than I has been for a significant amount of time. Our records go back to 2001 and we are lower than anytime between then and now.”
- “Utah County’s absorption rate is 6.19 months of inventory, right on the tipping point between a buyer’s and seller’s market.”
- “25% of our listing inventory are short sales. Most are getting multiple offers. If we remove these listings from the inventory we are left with a very low absorption rate of 4.66 months of inventory.”
- “Our local builders are building as fast as they can, but the smaller custom home, or spec, contractors have not been able to find financing to return to the market. Without them, I believe our inventory will continue to decline, as it has for the last 12 months.”
- “We have enjoyed a high percentage of population growth within our own valley, and when added to the number of companies moving their organizations locally, we may see a dramatic spike in values due to inventory shortages.”
Sellers need to sense the same pent up demand, excitement and urgency in the market that buyers have sensed for the past year. They need to take the long postponed leap to list their homes for sale now.
Simply put, there just aren’t enough homes on the market to meet the tremendous demand from buyers. And this is true in all price segments, from small starter homes and condos right up to multi-million-dollar Previews International properties.
The days of buyers being only interested in distressed properties at bargain basement prices are over. Homebuyers are pounding the pavement looking for good, well-maintained properties at fair prices in every segment of the housing market.
The real estate market has always come down to two simple factors: the law of supply and demand, and consumer confidence. Right now, both of those are creating a sellers’ market here in Utah. Consumers are feeling more confident as the economy picks up steam and the stock market turns in strong gains in 2012. Clearly, the scales of supply and demand are tipping heavily in favor of sellers today.
Smart, strategic homeowners understand all this, and they’re making their moves right now – not six months or a year from now. They’re the ones getting multiple offers for their home because there just isn’t a lot of competition for buyers’ attention. They’re out there now, before everyone else joins the “house party” and tips the scales back in favor of buyers once again
