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Housing Market: This Utah market has seen the largest price reduction in the US

As the US housing market continues to show signs of cooling – from mortgage lender layoffs to several consecutive months of sales – it is hitting home big in Utah.

The tables are starting to turn. Motivated sellers are starting to lower their expectations, with buyers paying for something to lock up at home.

Half of all home sellers in Provo, Utah County’s largest city, 45 miles south of Salt Lake City, dropped their asking prices in May as mortgage rates rose more than 5%. High borrowing rates, coupled with historically high home prices, have increased prices as more than 70% of Utah households manage the state’s middle-priced home.

According to data posted by Redfin this week, Provo’s regional market in Utah saw the largest share of the price drop in the 108 metros listed in its analysis in May.

It is important to note that monthly list price declines do not equate to a real price decline or a real decline in Utah’s home price trajectory, which has been on the rise since the 2006 US housing market emerged in 2009 and declined. Experts say. It will take economic sea change – widespread layoffs, foreclosures and a disappointing job market to severely disrupt Utah’s housing price trajectory and send prices down across the state.

And price list reductions are not uncommon – in fact, sellers, especially motivated sellers, are more likely to cut their listing price if they find that their initial listing price may be too high to be competitive with other listings.

However, if a regional market sees widespread price reductions, “things are generally starting to cool down,” as Fortune put it. “That’s what we’re looking at right now.”

What’s happening in Utah’s housing market

About According to Redfin, 47% of home sales in Provo were slashed in May. That was the largest share of cuts in regional markets nationwide in May. Compare that to a year ago, in May 2021, only 12% of Provo listings saw a price cut.

And two other Utah regional markets – Salt Lake City and Ogden – are among the top five metro areas, which have seen a large increase in inventory share with a price drop compared to a year ago.

  • In Salt Lake City, 45.8% of homes for sale saw price reductions in May. Ogden was not far behind with 42.6% of homes with a price drop. According to Redfin, the same figure was just 20% in May 2021 in Salt Lake City and Ogden.

According to Redfin, here’s how these Utah markets compare to other Top 10 regional markets that saw the biggest share of price cuts in May:

  1. PROVO, Utah – 47.8% of homes fell for sale in May when prices fell.
  2. Tacoma, Washington – 47.7%.
  3. Denver, Colorado – 46.9%.
  4. Salt Lake City – 45.8%.
  5. Sacramento, California – 44.3%.
  6. Boise, Idaho – 44.3%
  7. Ogden, Utah – 42.6%.
  8. Portland, Oregon – 42%.
  9. Indianapolis, Indiana – 41.9%.
  10. Philadelphia, Pennsylvania – 41.2%.

Why are sellers cutting prices?

The rise in the price drop is a big indicator that the housing market is taking a turn – and buyers have found their limit.

“The rise in prices is a sign of a slowdown in the housing market. Many buyers are falling behind amid skyrocketing home prices, rising mortgage rates, high inflation and a reeling stock market, ”Redfin reported.

In other words, sellers are reshaping their prices to better match the buyer’s appetite. Redfin’s chief economist, Daryl Fairweather, said most sellers “come to terms with a sluggish market.”

“There are two types of vendors in today’s market: those who know the market is cool and who are learning about the cooling market as they go through the sales process,” Fairweather said.

“The former wants to sell quickly before the market slows down and they are ready for a cheaper price than comparable homes in their neighborhood, and the latter may have to drop their prices if their home doesn’t attract buyers in a few weeks.”

Why are listing prices falling in Utah, Idaho?

The epidemic has had an impact on the Western housing market, especially in mid-sized states such as Utah, more affordable costs and outdoor recreation opportunities than places like California.

Fortune reports that “Provo’s housing markets are likely to see higher price reductions in places that are more at risk during the epidemic.” “The market, some distance from several ski slopes, saw a large influx of remote workers during the epidemic.”

The fast-growing Utah state is facing housing shortages before the COVID-19 epidemic struck, and places like it and other western states, such as Idaho, are attractive places for Americans who are free from remote work on the national map. Demand has skyrocketed, translating into an annual double-price increase, which can be as high as 50% or 60% in some areas.

In fact, according to Redfin, the top 10 places where home prices increased during the epidemic include Utah’s three regional housing markets and one in Idaho – Provo, Salt Lake City, Ogden and Boise.

Redfin reports that from May 2020 to May 2022, home prices rose an average of 65.7% in Provo to $ 550,000. They rose 56.2%, $ 556,000, in Salt Lake City, 57.2%, $ 500,000, in Ogden and 66.7%, $ 550,000, in Boise.

Redfin reports that “as home buyers move out of the city during the epidemic, competing with locals for a limited home supply is skyrocketing.”

But the price drops in May – and according to Redfin’s data, the rise of more people wanting to leave the Salt Lake area is an indication that epidemic-fuel stimulation in Utah and Idaho is drying up.

“Salt Lake City has begun to reverse the trend in both locations with net outflows for the first quarter (more Redfin.com users are looking to quit rather than moving),” Redfin reported.

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