An ActiveRain Friend asked the following:
"I was reading an article that said the Midwest is starting to get a little better,but that the States out by you are going to feel the brunt coming on a little more now. How is the market by you? I was thinking of moving in the future, and I like that area. Is the market getting softer for listings?"
2007's final statistics should be out soon and this is what I think they will say:
The total number of Sold listings is down (either slowing, or at a minimum, less percentage are selling than last year)
Homes that aren't selling are overpriced
The homes that are selling are still selling for more than they would have a year ago (Appreciation is still positive)
My guess for the 4th quarter appreciation rate would be between 7 and 10%
Predictions:
Sales will pick up in the Spring (Interest rates are still low, Sellers who really want to sell are being more realistic in their pricing)
Appreciation rates for 2008 will range from 3% - 7%
There will be fewer full-time Real Estate Agents in Utah in 2008 than there were in 2007
So, the answer is: The brunt has come.
In the 3rd quarter of 2007, 66% of all listings did not sell. That is pretty rough. I have seen builders sitting on spec homes for 6 months, unwilling to budge on their pricing. If they were 20% overpriced (Mind you, that's like $80,000 for a $400,000-$500,000 home) they were still able to sell them within 6 months when Salt Lake was getting 20% yearly appreciation a year ago. But when rates have slowed to the 7-10% range, anyone who knows what is going on in the market knows that if the Seller doesn't come down to market value, it will now take 2-3 years on the market for market value to catch up to the list price of the home.
New construction spec home prices are slowly coming down. It isn't that they are "on sale" or a great deal, it's just that they were overpriced and the demand dried up as other markets around the country started collapsing. There are still Buyers out there. Buying homes. Some are still waiting. But my guess is that come Spring, the market will pick back up.
What is necessary in order to keep things moving in the right direction, however is that those Sellers who know they are overpriced also need to be reasonable in their pricing. My guess is that some will, others won't. Those Sellers who can afford to wait 2-3 years to sell and who do not need to sell immediately may wait. But my guess is that a higher percentage of listings to sales will exist than 66% of homes going unsold like 3rd quarter 2007.
Once again, let me be clear: Salt Lake's slowdown has more to do with Sellers changing their expectations and being more reasonable with their asking prices than it has to do with appreciation. Appreciation IS slowing, but appreciation in Salt Lake is still positive meaning that if you are planning on Buying a home in Salt Lake, it still makes more sense to buy earlier rather than later, in most cases.
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Exclusive Buyers Agents work for the Buyer, to get the best price and terms for them, not the Sellers.
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