How Affordable Are Homes in the Wasatch Front Market?
Now that we’re about three quarters of the way through the year, it’s time to take a look at the real estate market in the Wasatch Front.
In order to best understand what’s really going on in our market, let’s look at a couple of the key market indicators.
From January to August of 2017, we sold 15,891 single-family homes along the Wasatch Front. 4,800 condominiums and townhomes also sold during that time. This means nearly 20,000 homes and condos sold.
The average sales price right now is hovering around $320,000. This is about a 9% increase from what we saw last year.
Also, it’s important for us to look at supply and demand. These two factors are what drive the economy. When supply is down, demand goes up.
In real estate, a steady supply is considered to be between four and six months’ worth of homes on the market at any given time.
Anything below that means we are in a seller’s market. This puts upward pressure on pricing. Anything above six months constitutes a buyer’s market. 2008 through 2011 was very much a buyer’s market, for example.
Right now, we have about three months’ worth of supply in price points below $350,000 for single-family homes. Also, condominiums and townhomes below $350,000 are seeing approximately a 3.5 months’ supply. This is approximately a month above where we were at the end of this year’s first quarter.
As we see supply beginning to increase slightly, this may provide some relief for first-time homebuyers.
During the first quarter, our team saw multiple offers on about 80% of homes we had listed beneath $350,000. Now, only about 30% of homes in that same price point are seeing multiple offers.
For homes priced above $350,000 on the Wasatch Front, there’s just shy of six months of inventory.
To put all of this into perspective, let’s take a moment by talking about mortgage rates and affordability. Mortgage rates haven’t changed as much as was predicted. All in all, we’re hovering around the 4% mark. As prices have increased, this has helped things to remain affordable.
If you look at the average price of a $320,000 home at 4% on a 30-year mortgage, your principal and interest payment would be about $1,527. Ten years ago, the average price of a home was just $271,000 but the average interest rate was 6.5%. This meant the mortgage payment was actually $1,707. With these conditions, it costs about 12% less to buy a home today than it did 10 years ago.
If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.