As we make our way through the 2nd month of 2024, we imagine that countless residents of Salt Lake City (and its lovely surrounding areas) are wondering about the housing forecast. What, exactly, can we all expect to see in our ever-shifting, fickle, and drifting real estate market? It’s a good question, that, so we thought it worth going over a couple of the projections that are out there...
1) Interest Rates
The good news here is that they’re no longer on the rise, which is the break we all needed. Mortgage rates soared to nearly 8% as of late October, 2023, which in turn impacted borrowing costs, home pricing, refinancing, and market activity as a whole. Where home buyers were less inclined to lock into such a high rate, sellers were likewise hesitant to move away from their previously secured low rates (it has been estimated that more than 90% of homeowners with a mortgage have an interest rate below 6%). But the sun always rises, and since then, rates have been cut twice, landing 30-year rates at about 6.5% for the time being. While economists expect that rates will continue to decrease slightly as we move through 2024, most agree that a significant drop is unlikely, and we’ll probably end the year somewhere between 6% and 7%. Still higher than prior years? Yes. But lower than they were. *sigh*
2) Home Prices
Utah’s median home price for January of 2024 is at $485,000, an increase of close to 7% year over year. The trends and outlook for this vary a bit, depending on the source, but according to most experts, we can expect these prices to remain relatively flat throughout 2024. An increase in inventory—due in part to high interest rates that result in a smaller buyer pool—is a bright spot for the time being, and with things being less competitive than at this time last year, those in the market can benefit from lower pressure and a bit more negotiating power. That’s good news, indeed, for some buyers, but not the shift that many were hoping for.
The short of it? Speculative as it all is, it seems we have both good and bad news on the real estate horizon. Two helpful things to keep in mind for 2024…
First: Even if home buyers do catch a break, it’s unlikely to be a huge one. Many Utahans—namely those currently renting and/or first-time buyers—are still facing a tough market with elevated prices and interest rates. In fact, a Moneywise report released last year placed Utah in the “top 10 most difficult states for first-time buyers,” based on each of the 50 states’ median home prices and average required down payment (for those wondering, we landed at #6, with a median home price of $544,868 and average down payment of $70,832). For any with a median household income or who don’t have equity from a previous home, 2024 will continue to prove challenging.
Second: The market is correcting, even if it’s looking to be a slow burn. As of February 7th (with another week remaining before all January sales must be reported), Utah has a total of 2160 sold properties…150 more than January of last year. With interest rates dropping—even in small increments—we may see higher home inventory, and we can assume that builders will be incentivized to borrow (and thus, build). Add to all that an announcement by Governor Cox last year that he plans to build 35,000 starter homes by 2028 (an attempt, in part, to help address Utah’s housing shortage).
We at Homeworks Property Lab have been in this business a long time, and we can assure you that your home is out there. Whether you’re looking to buy or sell, it may require a bit of patience—but our team is well equipped to get you where you want to be. Contact us anytime with questions, concerns, or for a friendly discussion about your needs. We’re happy to help!