Last year was record-breaking for the housing market in the Beehive State: Utah Realtors sold the most homes they ever have in a single year, the median sales price rose 7% to a record high of $320,000, and the number of houses for sale hit a record low in December, according to the Utah Association of Realtors, which has data going back to 2003.
Locally, home sales increased 2% in Weber County, 5% in Davis County and 2% in Morgan County, while prices in those areas rose 11%, 8% and 1% respectively.
The quick sales and rapidly rising home prices are signs of a hot housing market. While that’s good news if you already own a home, it’s much harder for buyers who are trying to get in the market. The following Q&A provides information about several of the concerns today’s buyers have.
How do I avoid buying at the top of the market?
When buyers see that Utah home prices have increased 40% in the past five years, they want to know whether the trend is expected to continue. That’s because some buyers are nervous about purchasing a home at the top of the market, only to see their home’s value fall in subsequent years.
While there is no crystal ball that will tell exactly what is going to happen to future housing prices, there are many indicators that prices will continue to head up. Jim Wood, with the University of Utah’s Policy Institute, recently told Realtors to expect a 5%-7% price increase in Davis County and a 10% gain in Weber County in 2020.
Taking a multi-year view can also alleviate fears since housing historically increases in value over the long run. For example, in the past five years, home prices in the Ogden-Clearfield metro area have increased more than 50%. Since 1991, Utah price appreciation is up nearly 343%.
By selecting areas with strong, diverse economies and by planning to hold property over a long period, buyers can typically avoid any negative short-term market fluctuations.
How can I find an affordable home?
It’s a good idea to work with a real estate agent who knows the area. He or she can set up notifications so you’re aware of new properties in your price range as soon as they go on the market. Your agent may also be able to alert you to houses that are about to go up for sale so you’re ready to act quickly.
With existing inventory being limited, another way to secure a home is to buy it directly through a builder. If you choose this route, make sure you are working with a Realtor who can help you navigate the paperwork and process since there are a number of new construction pitfalls you’ll want to avoid.
Also, talk to your lender about any programs that are available to help first-time buyers, teachers, single parents and others.
How do I win a bidding war?
When multiple buyers are competing for the same house, making an offer becomes much more complicated. You must act quickly, and you may have to decide up front the maximum amount you’re willing to pay.
Your Realtor is a valuable resource who can help you avoid overpaying and help you understand the most effective strategies for getting a seller to accept your offer.
Because the market is competitive, you’ll want to make sure your offer is as favorable as possible. Offers with high earnest money, few contingencies and a fast closing date are typically more appealing. If you’re using financing, you’ll also want to show the seller that you’re pre-approved for a loan.
Buyers can learn more about navigating this hot housing market by talking to their local Realtor. A directory of local Realtors is available at NWAOR.com.