Year-End and New Year Market Report
Let's take a look at the St. George real estate market report, focusing on current events and comparisons with prior years. And a little reflection on history and science.
At this point, our St George, Utah housing market seems to be right on track. The market was so predictable that I decided to pull one extra year for comparing and found another year….with the same predictability. January's "sold" homes were almost identical for the past three years. The only total transformation was the number of homes available. That number plummeted.
If we continue to mirror years past, we should see a gentle rise into February through April, then a predicted soft dip around May/June. Now, a few variables in play were always making noise in the background, one being interest rates. Rates will likely (finally) begin to make their long-anticipated upward trending appearance, and that impact could create a fracture in the mirror of years past. Meaning increased rates may begin a shift in the market.
It's steady through the peaks and valleys of the "sold" homes when you pull back the lens and look toward the horizon. The demand for housing hasn't changed much since 2019 (and before, but let's focus on this current data). Inventory has dramatically reduced, causing pricing increases in a short period. The law of supply and demand, folks, that's what is creating the price increase: consistent demand, limited inventory.
Now…will Newton's law come into play? Objects in motion will stay in motion unless acted upon... by an unbalanced force. We are unbalanced as a housing market; I suspect the balance will come. Likely in the form of interest rates, political unrest, and buyer fatigue. Buyers are getting tired. They've been beaten down for two years—and now, for most, the increased prices delivered a final blow. Most sellers are not basking in full glory either, though it may seem that way from the other side of the less green yard. Most sellers ultimately become buyers too, which is adding to inventory stagnation. Sellers don't want to list and sell their homes until they've got somewhere to go. And as motivating as their selling proceeds number may be, they've still got to afford the next home (and win the bid to get it, which is the pinch for all buyers currently).
If Newton was correct, there is an equal and opposite reaction for every action in nature. This was true for our market of 2006(ish). Some variables are different from current conditions, but will the variables change the outcome? If I knew for sure… I'd be writing a very different blog (remember, these are only my opinions). I do feel that we will see similarities of a slowing market. I think prices will begin a descent (not a plummet), and I suspect we will see inventory increase (probably more than most others have speculated). It's hard not to compare this to our not-so-distant real estate history, as this too occurred.
I've heard many agents echo, "it will never be the same as the last crash….lending was loose back then, and everyone was getting a loan with no qualifications and virtually no down payment". And my favorite comparison…" the difference is that back then, we had a surplus of inventory, and right now it's lower than it's ever been." Yes, that's true, and I'm certainly not arguing that point.
But….what will it look like in a year (or two…or three) when prices come down, and super qualified buyers that had perfect credit and solid qualifications put 20% down on their home that is now worth 40% less? (I'm also talking to you refinance cashback and HELOC-equity tapping, friends). What does it look like when they desire or need to sell? What does it look like when inventory increases? What will it look like if this happens across the country? Does it look different than the last housing crisis, or does it look identical for slightly different reasons? People trying to sell homes owe more than they are worth.
40% you say…. don't be ridiculous! Well, we've seen the average sale price from Jan 2019 to Jan 2022 increase by almost 80%. Back to that "equal and opposite reaction theory"…
I am Paula Smith, Associate Broker with RealtyPath of St George. I have been a licensed, full-time real estate agent in Southern Utah since 2006. Selling residential real estate during all of the changes in the market and witnessing our St George area grow to become one of the fastest-growing cities in America. I keep my finger on the pulse and not only pay attention to what is going on, but I've also accurately predicted future market conditions.
Allow me to be of assistance and earn your business. If you've got a home in Southern Utah that you're thinking of selling and you'd like a property market report, I can send that to you.
If you're ready to buy or sell, I'm prepared to make it happen. 435-773-3751
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