The national and local housing market surge is finally cooling. With interest rates rising to nearly 5.5%, the federal reserve’s goal of cooling demand is working. While interest rates continue to increase with an expectation of hitting 6% by year’s end, many buyers are still priced out of an already expensive housing market.
Along with interest rate hikes, inventory is also on the rise. Here is what is going on in Lehi:
Existing inventory is up. Over the past two years, Lehi has been averaging only 30 available homes for sale at any given time. That number has risen to 108 available homes listed for sale on Monday, May 23. Despite the higher number of homes for sale, the total is still far from normal market conditions, where inventory would hover around three months of supply, with Lehi’s listing number for typical market conditions at around 350 units. The state has also seen a rise in inventory. Utah had an average of 2,767 active listings in May 2021, compared to 5,009 active listings as of today.
Builders’ inventory is up too. As existing home inventoryhas risen, available new homes are rising too. Builders are starting to eliminate their weekly bidding programs and are moving back to a first come first serve system, allowing buyers to shop around and take their time in decision making.
Bidding wars are down. The days of multiple offers on every property are over for now. Lehi saw a median sales-to-listprice of 105% over the last three months and that number is down to 101% so far in May.
Prices are staying steady. Although the market shift is here, prices aren’t expected to take a big hit. While homeowners won’t be seeing 25% year-over-year appreciation like in 2021, prices will steady without sharp increases or decreases in value. Lehi started the year with a median sales price of $581,000. May is currently sitting at a median sales price of $600,000. This number is Lehi’s highest monthly median sales price in history, despite the seller-to-buyers’ marketshift.
The Lehi and Utah housing market as a whole is projected to weather the storm of inflation and increased interest rates better than most according to a study by Yahoo Finance. The study factored in the state’s income growth projections, unemployment forecast, consumer confidence, debt-to-income ratios, affordability, mortgage rates and inventory levels.
Utah ranks in the “very low” chance category for potential housing market corrections in the Yahoo Finance study. Along with Yahoo Finance, the Kem C Gardner Institute also projects Utah’s housing market to stay fairly normal citing continuing population growth and the housing shortage the state has faced for the last several years.
Industry experts say no 2008 housing bubble is in the forecast as Utah’s job market continues to prosper with the nation’slowest unemployment rate, just 1.6%. Housing market experts also say lending practices have improved since the recession of 2007-2008 when unqualified buyers were receiving mortgages all over the country.