These are the four forces driving our market right now.
Here are four main things to keep in mind about where our real estate market is and where it might be heading:
1. Price increases. We’ve seen dramatic price increases over the last 12 months, with Utah becoming a leading state for price appreciation. Our northern neighbor Idaho is another with quite a bit of appreciation. Since the beginning of the year, we’ve seen about a $60,000 median price rise. In this case, waiting will cost you.
2. A slowing of price increases. Lawrence Yun, the chief economist for The National Association of Realtors, predicts a slowing of price increases. However, keep in mind that Utah and Idaho have been the No. 1 and 2 real estate markets in the U.S., so don’t expect prices to slow too much here, if at all. We may see sellers getting too aggressive with their pricing, so their homes will sit on the market longer. We’re starting to see some price corrections, but overall, we’re still seeing price growth.
3. Interest rates. Keep an eye on interest rates; they control buyer’s purchasing power when buying homes. If rates climb, buyers can afford less house, and that puts pressure on housing prices. The rates could change in light of the current uncertainty throughout the world due to recent events. Also, inflation is moving upward. We’ll see whether or not the Federal Reserve decides to change short-term interest rates because of inflation.
4. Home building. Building has been a real challenge in this economy for the past year. Due to the difficulties they’re seeing, builders are putting a cap on their inventory, meaning they’re only committing to build so many houses because their costs are escalating, and they can’t build an infinite number of homes at fixed prices. The cost of materials and labor have spiked and are out of builders’ control.
If you have more questions about our market or any other real estate topic, please reach out to us via phone or email. We would love to help you.