If you watch the news, you’ll be scared stiff. The media can’t stop talking about the worst financial crisis mankind has ever experienced. It’s supposed to be worse than the Great Depression. But have you been to southern Utah? Have you driven down St. George Blvd. at 5:00 pm or been to Sand Hollow on a Saturday? Every part of our slice of paradise seems to be full of people living life and spending money. Recession? I’m just not convinced.
I pulled the market statistics for Washington County for the month of April. There’s a lot of interesting data coming out of last month’s report. We have seen some impact from the global pandemic, but the data suggests our economy and real estate market are poised for increases this year. The numbers below are for April 2020 and are relative to April 2019.
- Pending home sales were down 20.2% – (Yikes!)
- 11% fewer new listings came on the market – (This makes the Yikes! above more palatable)
- The absorption rate indicates a 3.27-month supply of homes, down from 3.59 months – (less supply than last year? Hmmm…this isn’t so bad)
- Median days on market are down to 23 days, compared to 28 days 1 year ago. – (Homes are selling fast!)
- The median sales price of a home in Washington County is now at $340,193, up 11% from $305,500. – (Wow!)
- Year to date, prices are up 7.83% in Washington County, relative to the same period in 2019
Inventory and the absorption rate are the key metrics to watch. We came into this pandemic with just a little more than a 3-month supply of homes on the market; extremely low housing inventory in Southern Utah.
Home prices will increase when there is more demand than supply; which is what we are currently experiencing. The Federal Government has been working hard to keep the federal funds rate low, and the mortgage market has responded. Lenders are now quoting 3.25% for a 30-year fixed rate loan (). Extremely low mortgage rates continue to bring homebuyers into the marketplace despite fears of coronavirus and a global recession.
Many home sellers appear to have held their homes off the market in response to the covid pandemic, bolstering our low absorption rate, keeping the balance of supply and demand relatively unchanged.
Many buyers quit looking at homes when their state’s stay-at-home order was issued, delaying home purchases. With many parts of the country beginning to reopen, buyer activity in Washington County has dramatically increased from just a few weeks ago. Additionally, southern Utah has been relatively spared from coronavirus, prompting local officials to take a laissez-faire approach to social distancing, compared to many surrounding regions. Based on the continued demand for real estate and relaxation of social distancing, I expect to see an increase in homes sales in the months of May, June, and July.
With the Federal Government pumping trillions of dollars of stimulus into the economy, there are a few trillion reasons to believe that real estate is a solid investment. If, as a result of the virtually unlimited printing of money, we experience hyperinflation real estate values should skyrocket!
With housing inventory low, mortgage interest rates at record lows, and buyer demand high I predict home prices will continue to increase for the remainder of 2020.
If you are thinking of making a move, buying or selling, call me. Buying or selling a home is an adventure. I’m Joe Allen, and I’m ‘Southern Utah’s Home Adventure Guide.’ Let me be your guide.