Year-end real estate results are in for 2017, and even though Northern Utah failed to beat 2016 levels, demand in local real estate markets remains strong. In fact, sales should increase in 2018 as the number of listings picks up and buyers have more choices.
Real estate sales in Weber County fell 3 percent in 2017, and Davis County had a decline of 4 percent, according to the Utah Association of Realtors. Nevertheless, a January University of Utah Policy Institute forecast expects those results to reverse in 2018, with sales up 3 to 5 percent.
Morgan County bucked the trend with sales up nearly 9 percent in 2017.
As a whole, the Northern Utah market remains strong because last year’s sales decline was not due to a lack of interest from buyers. Instead, it was a result of limited housing inventory. In other words, there were fewer homes sold because there haven’t been enough houses for sale.
At the end of December, Realtors reported inventory levels down 28 percent in both Weber and Davis counties. Meanwhile, listings were down in both counties, although not by as much.
In fact, the number of households has been increasing faster than the rate at which builders are constructing units. For example, Davis County had a supply deficit of 585 homes while Weber County’s shortfall was 993 units, according to the University of Utah.
That shortage bumped up prices. Last year’s median sales price for Davis County homes increased 9 percent to $272,500. In Weber County, prices were up 12 percent to $207,500, according to Utah Realtors.
Following this trend, the University of Utah forecast calls for Davis County prices to be up 8 percent to a median of $308,000 in 2018. Similarly, the median price in Weber County is expected to increase 10 percent to $242,000.
With prices and interest rates on the rise, affordability remains a concern. National Association of Realtors Chief Economist Lawrence Yun recently commented on these conditions nationally.
“These consistent, multi-year price gains have certainly been great news for homeowners, and especially for those who were at one time in a negative equity situation,” Yun said. “However, the shortage of new homes being built over the past decade is really burdening local markets and making homebuying less affordable.”
Luckily, Northern Utah has one of the most affordable housing markets in the state and the region. The National Association of Home Builders recently reported that nearly 77 percent of units sold in the fourth quarter were affordable to a family making the median income of $76,600.
That’s better than the U.S. and Salt Lake City, where only 60 and 62 percent of homes sold were considered affordable. In fact, it’s the most affordable area tracked in Utah, the sixth-best regionally and in the top 100 markets nationally. The gauge takes into account current real estate sales prices, interest rates and incomes.
Many national experts are predicting mortgage rates will remain under 5 percent this year, which should help preserve affordability, as should an uptick in new construction.
With interest rates headed up, that’s likely to get buyers off the sidelines. Since the beginning of the year, Freddie Mac has reported rising rates in its weekly survey.
While the real estate market of 2018 may provide some relief for buyers looking for a greater selection of homes, it is likely to continue to be a competitive market on the purchasing side. Meanwhile, existing homeowners will be able to take advantage of years of built-up equity if they’re looking to sell.
Would-be buyers and sellers can learn more about the real estate conditions in their own areas by contacting a local Realtor. A directory of Northern Utah Realtors is available at NWAOR.com.
Brenda Nelson is president of the Northern Wasatch Association of Realtors.