According to the Realtor’s Confidence Index, which gathers monthly information about real estate transactions to provide on-the-ground information, there are several indicators that point to a turnaround of the housing market.
First, the buyer traffic index has improved to 50 after having dipped to a low of 30 in April. Foot traffic has a strong correlation with future contracts and home sales, so it can be viewed as a peek ahead at sales trends two-three months in the future. Overall home showings in May were down 20% compared to May of 2019. So far for June, we are actually up 6.6% over the same time last year. And, overall, we are 39% above the pre-pandemic peak. This is a good sign for the future health of Utah’s real estate market.
Interestingly a higher fraction of sales closed just based on virtual tours or virtual showings with 9% of sales closed based on virtually showing homes, this is based on buyer agent feedback.
The COVID-19 has changed the way buyers purchase, it has also changed the way sellers sell. Having a high-end virtual tour and virtual showings have become very important to the selling and buying process and this may be a trend that doesn’t fade away anytime soon.
Also, based upon data released by the National Association of Realtors, home prices are expected to rise in Utah by 2-3% in 2020. That’s incredible given the ongoing Pandemic and most certainly is a testament to the health of Utah’s economy.
While we are still uncertain how COVID-19 will continue to change the landscape of housing and the economy beyond a 3-month threshold (previously this is determined by foot traffic), our housing market is currently healthier than the majority of our nation.
Also, Utah ranked #6 in mobility last year with 1 in 6 residents changing their location. About 400,000 Utahns changed homes within the state and another 100,000 immigrated from other states. As you can imagine, most of our in-migration comes from California. However, Idaho, Washington State, Texas and Oregon rank up there in terms of out of staters moving to Utah.
Employment is a huge driver for migration, so let’s hope that Utah continues to hold low levels of unemployment through the COVID-19 pandemic.
So in a nutshell, showings are up, the amount of properties a buyer looks at before purchasing a home is down, more buyers are buying their homes based upon virtual showings or virtual tours in general. Listing volume is down, as uncertainty has led many sellers to wait until “the dust settles”, accompanied by a strong local economy has caused price pressure on homes priced under $350,000 with more than 80% of properly priced homes in that price range receiving multiple offers. Finally, because of these factors, we’re actually likely to see an increase in average price by 2-3% even during a recession. We shall see, again, we can only predict out 2-3 months at a time. I’ll continue to keep you posted on this blog, but please don’t hesitate to call or email me directly with any questions you may have about the market or to discuss your personal real estate goals.