The Utah Housing Market has an annual pattern. If you look at the housing market too narrowly you miss these trends. The negative impact of misinterpreting the housing market can cost you thousands of dollars on your home sale or purchase. However, if you maintain the appropriate perspective, you can anticipate good deals and make top dollar on your home.
Those who don’t watch the housing market year after year sometimes act like a weatherman with memory loss. As things cool off in the fall you might hear them say things like, “I’ve never seen it this cold! We’re headed into the next ice age!” Or when things start to warm up in Spring you might hear “Global warming is going crazy, we’re all going to die!” A weatherman making such claims would not last very long, but real estate hobbyists make similar claims about the housing market.
Because you remember last fall you know that the weather will cool down, so you don’t panic when the thermometer drops. We also remember that summer warm-ups are expected each year and enjoyed. This isn’t news, it is normal. What makes the news is when we deviate from the established pattern. Snow in July, or 80 degree weather in December, now that is something to talk about.
The Utah housing market is no different. However, you still see news stories about the housing market booming in the spring like it has never happened before. You’ll also hear that we’re going into another recession when the market starts to drop in the winter. Inexperienced agents and news reporters have been jumping on the sensational bandwagon and reporting these very things in the housing market. Before making any rash claims about the state of the market, make sure you look at the YEARLY pattern. Real estate experts know this pattern, and know how to buy and sell homes based on the state of the seasonal market.
As a free service to the public, I provide two graphs and a free tool to help you make an informed analysis of the housing market. This is important for two reasons. First of all you won’t go crazy and try to sell your home just because the news is saying you should. Also, when you decide it is time to sell your home, you’ll know where to find the best housing market information.
This graph shows you the number of homes sold each month for the past 3 years compared to the current year. At the top of the graph are labels you can click on to see other nearby counties. The default is Salt Lake County because it has the highest number of homes sold each month.
This graph gives you a quick glance at the yearly pattern which starts low in January and increases through the spring months. The number of homes sold reaches a high point during the summer months between June and August, then starts to decline going into winter.
The current year is the green line so you can easily see how the number of homes sold this year compares with previous years (2013 is yellow, 2012 is red, and 2011 is blue). The first thing you see about the 2014 housing market is that it has been lower than 2013. How much lower? Below the graph you can see the actual number of homes sold and how that compares to the previous 3 years. For this year, the number of homes sold each month has been between 10% lower (April) to 2% higher (February) than last year.
What this graph does not show is how home prices have changed over the years. In 2013 between May and July home prices were rising. There was a frenzy of buyers looking for a home and the competition drove them to offer above the list price. As a result home prices increased. However, when the number of homes selling dropped, as it does every fall, home sellers kept their prices high. This has caused the number of homes sold this year, to stay lower than last year.
To see how this works we need to look at another resource.
Like the previous graph you can switch between the nearby counties to see their individual markets. There is also an “Overall” tab which gives you a general look at statistics across the area.
This graph displays 4 lines that provide a snapshot view of the housing market. The green line is the same as the green line on the previous graph. Is shows the number of homes sold during that month. Above this line is the number of homes listed for sale that month. This line is yellow. When the yellow line is above the green line the market is growing. It is growing because there are more homes being listed for sale then there are homes sold. If the yellow line dips below the green line it means there were more homes sold than there were listed for sale. From the graph you can see that this has happened each December for the past two years.
The next line up on the graph is red and represents the number of homes under contract. It may come as a surprise, but not every home that goes under contract will ultimately sell. In fact the percentage of homes that actually sell after going under contract is only around 60%. What we’ve seen this year, which we haven’t seen in a long time, is there have been more homes listed for sale than the number of homes under contract. That means the number of homes for sale would continue to increase even if every home that went under contract sold.
The top line is the blue line. This shows you how many homes are for sale on the market. You hear about supply and demand all the time, and the blue line represents the supply. The demand is shown by the red line. When supply (blue) goes down and supply (red) goes up, home prices increase. Can you see the point on the graph when the red and blue lines were the closest together? It was April, May, and June 2013 during the buyer frenzy! The number of homes on the market (blue) had been dropping since fall so there weren’t enough homes to support the spring demand (red). As a result those sellers who did have their home on the market (yellow) could demand higher prices on their home. That is why home prices increased.
Many home owners anticipated the summer demand this year and listed their homes for sale in the spring expecting to get the same frenzy of offers that existed last year. But they were not the only ones watching the market and you can see that for three months there were more homes coming on the market than buyers. As a result there were so many options on the market, that buyers were not willing to offer above price on the homes. Do you see how the yellow line has been above the red line for most of 2014? That has prevented the blue and red line from getting close together like they did last year. As a result the sellers who over-priced their homes were forced to drop their prices if they wanted to sell. Those who did not drop their price, did not sell. That’s why we have seen less homes sell this year than we did in 2013.
While this may sound like a bad thing, it is a good sign that the market is normalizing.
These two graphs are great for showing you the yearly, cyclical housing statistics. This gives you a birds-eye view of the Utah housing market. But when you get close to making a purchase or sale in real estate you need more specific details. That’s why I also provide the Neighborhood Report.
This report is useful for home buyers as well as home sellers. If you are interested in selling your home, this neighborhood report will show you how the market is in your neighborhood. It does this by showing you how many homes similar to yours are listed on the market (supply), how many have sold (demand), and if they are selling above or below list price. This can be an incredibly useful tool in making decisions about when to list your home. However, as you saw last year, if you only react to the market you may miss the wave. That’s why it is important, even with all of this useful information, to enlist a real estate specialist to evaluate your unique situation.
Buyers can get a Neighborhood report for an area they’re interested in buying a home in. This will help you know the stability of the market in that area and help you determine if you can write a low offer, or if you need to be competitive to get the home you really want. There is nothing worse than falling in love with a home and having someone else buy it out from under you. Make sure you hire an agent who knows the area and can help you write a competitive offer.
In addition to all of this, the report also provides information about the area such as schools and community demographics. These demographics include median home price, population, marital status, household size, turnover, and average income. These statistics can help you determine if the area is right for you. Picking the right neighborhood has a great impact on your happiness with the home long-term.
Beat the Curve
How do these statistics help you? They keep you informed about the housing market as it is, and as it was. But how can you make projections about how it will be? The answer is relying on a full-time real estate professional with years of experience. An agent who is new to the field won’t understand the local cycles, or how to anticipate deviations from the norm. Those agents who are part-time are unable to invest the necessary resources to fully comprehend the intricacies of the market. That is one of the reasons why the New York Times says an experienced agent sells homes for 12.4% higher than one with less than 10 years experience.
You can find a list of local area experts who specialize in your neighborhood here. Our experts sell over 400% more than the average agent. This keeps them informed about the way the market is, where its going, and what you need to do to goBE successful.