ST. GEORGE — What will Southern Utah’s housing market look like in 2023? How will that impact local resident’s ability to purchase a home?
Recent Iron County quarter-over-quarter numbers show an estimated decrease in home prices from $385,000 to $378,000. Housing values are down, but “not enough to be really excited about,” Jim Rushton told St. George News.
Rushton works with the Stratum Real Estate Group and is the president of the Iron County Board of Realtors.
“We’re not really there — home prices are still up this year,” he said.
From November 2021 to November 2o22, the median sales price in Iron County increased by 9.1%, from $355,251 to $387,500, according to a recent report by the Utah Association of Realtors. The median sales price for homes in Washington County increased by 8.4%, from $500,000 to $542,000.
Zillow reports via its home value index that the typical home value in Cedar City is 403,240, up 9.6% from January to December 2022. St. George’s typical home value is $537,730, up 3.5% from $529,674 in that same time period.
Still, Utahns have reduced sale prices by 32.3%, the third highest percentage after Nevada and Arizona, according to Realtor.com. Price reductions have been found in states that have had the “hottest” markets over the last two years and became “magnets for those fleeing the coastal population hubs.”
Factors driving price cuts are increased mortgage rates and inflation, among others.
A good indicator for whether real estate is in a buyer’s or seller’s market is the inventory of available homes, Rushton said. For instance, in October 2021, there were 179 homes in Iron County’s inventory – a supply that would run out in 1.5 months if no other homes were listed for sale. In October 2022, the supply increased to 399, which would last 3.8 months.
A “normal” market is when there are about 3-6 months of inventory available. While Iron County is still “leaning toward a seller’s market,” Rushton said it is currently more “balanced” and “stable” and trending toward a buyer’s market.
In October 2021, there were 91 new home listings versus 98 in 2022 — a 7.7% increase, Rushton said, referencing a report from the Utah Association of Realtors. But, the number of pending sales is down by 24.8% in that time frame, from 113 to 85, and closed sales are down 31.5%, from 127 to 87.
“Right now, everybody’s a little bit on edge,” he said. ” … They’re a little leery about what interest rates are doing and what the forward forecasts are for interest rates.”
Rushton said that others he’s spoken with in the mortgage industry are optimistic that rates will go down — possibly in the spring or summer.
However, he added that Jerome Powell, the Chair of the Federal Reserve of the United States, doesn’t sound like he’s “planning on easing back,” which could cause “a little bit of pain to real estate.”
Federal interest rates don’t directly correlate to mortgage rates, but it does influence them, Rushton said.
Because of rising interest rates, Rushton said buyers are likely less willing or able to purchase a home, as they would not qualify for as much funding as they would if rates were lower.
“There are some buyers that are waiting and hoping that rates go down,” he said.
Kevin Lowry, with Coal Creek Mortgage, estimated that a person who qualified for a loan of $400,000 with a rate of 3.5% would pay approximately $1,796. But would pay about $1,798 for a home priced at $300,000 with an interest rate of 6% — losing $100,000 in buying power.
While many feel it’s important to have low-interest rates, Rushton said that, in his opinion, low rates don’t “coincide with a normal, healthy, comfortable economy,” as a rate of 5-6% would. Additionally, savings account rates typically rise with mortgage rates.
One of the impacts low-interest rates had on the market was the substantial increase in home prices, Rushton said.
Cache Valley Daily reported about a study by TNRealEstate.com that listed Utah as one of the top ten states where home values have increased the most in the past year. Read their report below:
Study finds Utah among states coping with property value escalation
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