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Logan McKay Zylstra
  • Realtor
  • American Fork, UT
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My Take on The National Housing Market

Logan McKay Zylstra
  • Realtor
  • American Fork, UT
Posted May 12 2022, 10:28

There have been thousands of headlines about what rising interest rates will do to the housing market. Many of these articles are crying that we are in a "housing bubble" or that we are entering a recession. However, I have a boring, not-so-scary take on what this means for you as a buyer or seller in this market.

It is no secret that the housing market has been crazy the past two years (especially here in Utah, where we saw 28% appreciation in home values in a single year during 2021). As prices increase, buyers can afford less and less house. Now that interest rates are increasing, and will continue to increase, buyers again are able to afford less and less house.

As a result, some buyers are getting priced out of buying and others are opting to continue to rent or stay in their current homes to avoid paying a significantly higher mortgage.

With all of this being said, this issue boils down to a simple supply and demand issue. There is less demand now that people are being priced out or disincentivized to buy from higher interest rates. However, there is still an inadequate supply (Utah is short about 50,000 housing units according to Kem C Gardner Institute). This means that as the upward pressure of demand softens, we will see a cooling-off period supported by limited supply.

I am not claiming to have a crystal ball, but what this means to me is that we will see stabilization in the market. There will no longer be 10+ offers on homes, but rather 2-3 competitive offers. This is obviously not as good for sellers, but a better situation for buyers. Which in my opinion, is a healthier housing market for all.

Side note for all those who still scream a housing market crash:

In the last FIVE recessions, we have only seen housing prices decrease TWICE. During one of those two downturns, we saw only a 1.9% decrease in home values. While the most recent '08 recession saw a 19.7% decrease in home values as a result of bad lending.

https://www.keepingcurrentmatt...

Salt Lake City, Utah

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