Commentary: What’s in store for Ogden/Salt Lake homebuyers in 2023
Conventional wisdom would suggest that warm weather states, more often than not, make the most preferred retirement destinations. However, retirees and residents alike consider Utah a pretty great place to call home notwithstanding the Beehive State’s snowy winters.
According to RetireGuide, Utah currently ranks as the second-best state to retire, trailing behind Hawaii, but placing ahead of retirement havens Florida and Arizona.
Additionally, Knock.com released its own Buyer-Seller Market Index in February, which noted that, in another slim year for home availability overall, Salt Lake ranks No. 1 for markets expected to see the biggest inventory gains in 2023.
Let’s take a closer look at what the housing market might look like as we continue into 2023.
Current conditions of the Ogden and Salt Lake markets
While hopeful homebuyers nationwide may be feeling the whiplash from the wild ride of the past three years — from historically low mortgage rates to rapidly rising rates and bidding wars to sellers pulling home listings — shades of optimism remain on the horizon for 2023 even while the market has currently cooled.
According to the 2023 Housing Forecast Report by Salt Lake Realtors, reluctant sellers and priced-out buyers point to reduced overall sales. The report found that after averaging 18,000 home sales per year for the past seven years, sales will likely fall between 11,000 and 12,000 homes in 2023.
Homes in Salt Lake City are receiving an average of three offers each, according to Redfin, and taking an average of 56 days to sell. Last year, homes sold in an average of 25 days. The average home sale price in January was $506,000, an increase of 1.7% from last year. A total of 86 homes sold in January, which was down from 188 last year.
Redfin reports that the Ogden housing market remains somewhat competitive, with homes currently garnering an average of two offers and remaining on the market for an average of 64 days. The average home sale price was $368,000 in January, which was 3.2% higher than last year.
National trends to consider
Experts may not hold a crystal ball when it comes to forecasting all the ins and outs of the homebuying market, but there are three broader trends that bear watching in the year ahead:
1. Limited housing supply
Low inventory and homes selling at a faster rate have created a challenging market for the past several years. The reality is this might not change anytime soon, given current market dynamics. Additionally, Bank of America’s latest Homebuyer Insights Report found that 55% of those polled think the housing market is more competitive than this time last year with 39% saying it favors sellers. With fewer people holding back on buying, national active home listings saw a 52.8% decrease between July 2016 and December 2022 (since Realtor.com began tracking this data).
2. A steady start to the year
After reaching a peak of 7.08% in November 2022, national rates consistently dropped during the last several weeks of the year. However, the biggest mistake that potential homebuyers along the Wasatch Front can make is waiting and trying to time the market. Instead, consider your personal timeline and when you’re financially ready to buy.
3. Buyers holding more decision-making power
At the height of the homebuying frenzy, there were stories of homebuyers overbidding by enormous sums or making numerous concessions. As we shift to a more balanced environment between buyers and sellers, buyers will have additional time to think and negotiate, making the shopping experience more manageable.
Homebuying strategies for 2023
The homebuying experience always presents challenges and opportunities requiring careful planning for those in the market to buy. Whether 2023 is the year you become a homeowner or purchase your second home, here are a few strategies to get you started:
Take advantage of digital tools
Looking for more convenience and control over home financing? Online resources can guide you through the mortgage process from start to finish and prevent any delays in the process, whether it’s checking the status of your loan or submitting required documentation electronically. They’ll even provide you with a to-do list of outstanding tasks and the status and details of a loan application.
Show sellers you can meet financial obligations
Whether you’re getting additional down payment assistance or earning a larger income, investing in a larger down payment could lower your mortgage rate. Make your offer stronger by showcasing to the seller that you’re in a good financial position.
Pay discount points on your mortgage
Mortgage points, also known as discount points, are fees you pay your lender at closing for a reduced interest rate on your loan. While this might not be the right strategy for everyone, paying discount points on your mortgage could offer potential savings over the course of the loan. In general, the longer you plan to own the home, the more you’ll save using points. Also, determine whether you have the cash available to buy points up front.
Research assistance in upfront costs
Even if a monthly mortgage payment fits into your larger financial picture, many homebuyers might still be struggling with saving for the down payment and closing costs.
Recognizing cash reserves are often the biggest barrier to homeownership, Bank of America, for example, offers up to $17,500 in down-payment and closing-cost assistance when used together — no repayment necessary. Additionally, the Bank of America Down Payment Center helps homebuyers find state and local down-payment and closing-cost assistance programs in their area, and the Bank of America Real Estate Center identifies down-payment and closing-cost grant-eligible properties for sale across the country.
Take your time
Finally, don’t rush into it. Take time to improve your credit score, research lender options and understand what you can comfortably afford before jumping in.
While buying a home today along the Wasatch Front may require a bit more patience and persistence, taking the time to prepare for what’s ahead, going in with the right mindset and taking advantage of the resources available to you can put you well on the path to your next home.
Nathan Thurber is a credit solutions advisor for Bank of America.