Before May of 2022, home sales were going nuts. Values were going through the roof because of the tremendous demand for housing. With such low-interest rates, buyers could afford a much higher price.
In May of 2022, interest rates started to rise, and as interest rates rose, a buyer’s purchasing power started to diminish. That $800,000 home a buyer could afford was now out of reach. Buyers did not want to settle for a smaller house and sellers did not want to come down in price, so the market came to a halt in June.
Sellers putting their homes on the market for sale in June and July were finding that their homes weren’t selling. Most listings just sat on the market with very few showings. Sellers finally started realizing that if they wanted to sell their homes, they would have to come down in price. I had one home in American Fork that we listed for $975,000 because that’s what the comps said it was worth. However, comps are historical, so we were looking at comps that sold in the first part of 2022 when the market was still hot. My client now had two house payments and had to sell. Over a period of about 60 days, we dropped the price every week. We ended up dropping the price $80,000 before we were able to find a buyer.
What sellers have to realize is home values were already overinflated and it was inevitable that they would eventually come down. Even though my client came down $80,000, he still sold his home for more than he would have received had he sold his home in 2019. Home values seem to be stabilizing now. We’re starting to see showings pick up and homes appear to be selling for those homeowners who are willing to price their home according to today’s current market.
Will values continue to decline or rise? Nobody has a crystal ball and there are many factors that cause values to rise and fall, but assuming rates don’t continue to go up much, values should hold steady. In Utah, there is still a lot of demand, so assuming we don’t go into a major recession and the employment rate remains steady, values in Utah will most likely start to rise again, but at a much slower rate.
Check out this video from CBS news talking about home values nationwide
