Summer Softening | Urban Living

Wednesday, June 15, 2022

Summer Softening

Posted By on June 15, 2022, 4:00 AM

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What's going on? I recently held an open house and only two groups came through! I listed a property and only had three showings! Is the real-estate bubble bursting?

Don't wait for a popping sound, but the market is softening somewhat. Prices in many areas around the country have adjusted downward by an average of 5%, and bidding wars are starting to slow as mortgage interest rates have increased to 5% or more.

Last month, reported that home prices are moving south in cities such as Detroit, Pittsburgh, Los Angeles, Chicago, as well as Toledo, Ohio; Rochester, New York; Springfield, Massachusetts; Tulsa, Oklahoma; Memphis, Tennessee; and Richmond, Virginia.

This isn't a repeat of the evil Great Recession, when housing prices were out of control, and within a year, the bubble burst and prices plummeted across the country—with many foreclosures a direct result.

This small decrease doesn't mean we're headed for another crash, and Utah sellers won't feel that much pain during this inflation. Why not?

We have the best unemployment stats in the country, with only 2% unemployment vs. 3.5% nationally.

More people are moving into Utah than leaving it.

We still have very low real estate inventory for buyers or renters.

The advantage of the market softening is that buyers may have a chance at winning a bid rather than competing with more than 20 offers.

During the crash in 2008, we saw housing values decline almost 20%. And yet, in 2021, housing prices rose an average of 19% in one year. During the coronavirus, renters wanted the security of owning their own nest, and millennials decided to buy rather than rent. We saw not just unholy homeowner offering-price increases but also low inventory.

As inflation keeps rising, experts believe a recession could follow. Should that happen, we might see a collapsing housing market.

However, a collapse isn't logical in Utah when there continues to be such a demand on housing inventory. Thus, don't worry yourself thinking that the home you just bought is going to go down in value by 20% anytime soon.

Back in 2008, just about anyone could get a home loan, and too many bought who really couldn't afford to own. So, when the economy crashed, buyers lost their jobs and couldn't afford their mortgage payments, which led to massive foreclosures around the country.

Nowadays, lenders are much tougher on buyers—who now have to meet more rigid credit and income requirements to qualify for a mortgage. There are very few foreclosures out there right now, as seen by the HUD website's list of available homes.

Don't panic if you're selling right now. Your property may be on the market for a slightly longer time, or you may need a price adjustment, but you will sell if you're patient and have a good sales strategy.

About The Author

Babs Delay

Babs Delay

De Lay is realtor/broker/owner of Urban Utah Homes and Estates. She is a former member of the Utah Transit Authority's Board of Trustees.

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