What’s the latest news from our Wasatch Front market as we move further along into 2019?
To answer that question, let’s first compare the statistics from the fourth quarter of 2018 with 2017’s fourth quarter. Home sales dropped 7% from just over 9,600 to 8,994. The average sale price, meanwhile, increased 8% to $350,000. For new construction homes, the average asking price rose a little over 8%. The average days on market for all housing types decreased 5% from 43 to 41 days.
With interest rates rising almost a full percentage point during that time and an exceptionally low number of starter homes available, first-time buyers are being squeezed pretty tightly right now.
Currently, we have a tale of two markets. Our supply of inventory for all home types is at 5.3 months, and because a six-month supply is considered a level market, we’re close enough to that mark to be considered a level market too. However, for homes priced under $350,000, there’s just a 3.9-month supply, which is a strong seller’s market. For homes priced over $500,000, we have a 10-month supply, which is a strong buyer’s market. In other words, the higher you go in price, the more we become a buyer’s market.
Our market can also be described as more of a trickle-up market, meaning first-time buyers dictate the rest of the market’s movement. When a first-time buyer buys a home, that seller is able to move up into the next price range. In that sense, we can see how a lack of supply impacts the higher price ranges.
What about the year-over-year numbers from 2018 as a whole?
The number of total home sales stayed relatively flat compared to 2017. The average home price increased 9% to nearly $340,000, while the median price rose 10% to $300,000. The average market price decreased 5%. Like our fourth quarter snapshot, home prices continued to rise while affordability decreased. That being said, the supply of inventory increased from 3.19 months to 4.06 months.
What’s in store for 2019? Slightly slower economic and demographic growth along with higher prices and interest rates will dampen demand, which will mean fewer single-family home sales but more condo and townhome sales as more buyers seek affordable housing.
Overall, prices are expected to rise between 5% and 7%. Single-family home sales are expected to decline 8%, while condo sales are expected to increase 7%. When you combine the two, we expect the total number of sales to drop 4%. With fewer expected sales but higher sale prices, it’s still a great time to sell your home.
As we finished the fourth quarter of 2018, the Federal Reserve was expected to increase interest rates four times this year, and there was some speculation that we could see rates rise as high as 6%. Those expectations have been tempered a bit, and we’re now expecting just one adjustment this year. If you’ve been holding off on buying a home due to high interest rates, it might be time to get off the fence and make a move.
If you’re thinking of buying or selling a home or you have any more questions about our Wasatch Front market, don’t hesitate to reach out to us. We’d love to help you.