Where did all the houses go? As of today (February 3, 2021) there are only 235 active listings for homes for sale on the MLS in Washington County, UT. Just one year ago, there were over 1,300 homes for sale. The rate of new listings coming on the market has remained about the same as ever, but buyer demand has exploded! The Covid-19 pandemic has done two things to dramatically affect our real estate market: 1) to stave off a deepening nationwide recession, the Federal Reserve has kept the Federal Funds Rate near zero, leading to record low mortgage rates, and 2) in response to the virus, many people are now working from home.
With record low interest rates and the freedom to move about the country and live anywhere they desire; many families are choosing to escape major cities and relocate to the country. With phenomenal weather 9 months out of the year, a relatively low cost of living, convenient access to natural wonders and recreation, the St. George area has become a prime destination for relocation.
As a result of extremely limited housing inventory (it’s currently a 3-week supply) home values have skyrocketed. In the last 12 months, the median sales price has jumped from $309,000 to $401,000, an increase of 29%! As inventory continues to dwindle, home buyers have fewer and fewer choices. Multiple offers and bidding wars are now commonplace on nearly every property across all price points.
For all the latest market data for home sales in Washington County, click the following link: https://www.flexmls.com/link.html?1lhqthuzro9k,6,1
Is buyer and seller behavior rational or irrational?
There is definitely exuberance in the market. Sellers often have zero competing listings for their home. Recognizing the lack of competition, sellers and are pushing the limits of fair market value and fair asking prices for their homes. Buyers, often competing against several others, are taking the approach of giving their highest and best offer moments after a listing hits the market. As a result of the limited supply of homes, we are seeing upward price pressure from both sides of a transaction. Both buyers and sellers seem to be making rational choices given the available information, but the rate at which prices are increasing seems unsustainable.
How long will it last?
The pandemic has fundamentally changed the way people live and work, and people are not likely to return to working in an office environment. Right now, there is a dramatic imbalance between southern California real estate values (relatively high) and southern Utah values (relatively low) that makes a move to the St. George area very attractive. I predict that prices will continue to rise in southern Utah until an equilibrium is reached between the two markets. Demand won’t wane until it gets too expensive for people to relocate to St. George. Interest rates are the other factor to watch closely. Demand could shift when mortgage rates increase. However, we are over a decade into the FED keeping interest rates at or near zero. How can they raise rates? They can’t until the US economy becomes stronger than ever.
If it’s time to sell your house, congratulations, you will be selling at the highest values we have yet to see in Southern Utah!
If it’s time to buy, be grateful for these extremely low mortgage rates, and the fantastic buying power of your down payment dollars.
Call me with your real estate questions. My cell phone number is (435) 773-3870. I’m here to help. As a professional real estate broker, I study homes and their values every single day. Call me, and let’s talk about when you plan on moving or investing in real estate.
Thank you for your friendship and business. I’m excited about being your real estate broker.