Wasatch Front Homes Sales Surged-President's Message
The Wasatch Front-area IE: Salt Lake, Tooele, Davis, Weber & Utah Counties home sales surged in October as buyers rushed to take advantage of a tax credit for first-time home buyers formerly set to expire Nov. 30.
Now extended and expanded, the tax credit helped boost area home sales, which were up more than 25 percent in October compared to the same month last year.
The Wasatch Front hasn't seen this big an increase in sales since March 2005 during the real estate boom. During October,
Realtors in Salt Lake, Utah, Davis, Weber and Tooele counties sold 2,228 homes and condominiums, up from the 1,778 sold in October 2008. Sales were up 7 percent from September, even though sales typically taper off at the end of the year. In fact, the sales figures rivaled levels seen in June, typically the state's strongest month for home sales. The sales increases were broad-based with each county posting double-digit gains.
The biggest increase was in Tooele County with a 58 percent gain. Coming in second was Utah County with a 28 percent increase. In Salt Lake, Davis and Weber counties, sales were up 23 percent.
The approaching tax credit deadline had the same impact on U.S. home sales, which also surged in October. Compared to October 2008, sales were up 23.5 percent, and on a seasonally adjusted basis, sales increased 10 percent compared to September. Both locally and nationally, sales in lower price ranges were particularly strong.
For Wasatch Front homes listed below $250,000, sales were up a whopping 39 percent. Sales could continue to post gains in November as the markets continue to see lingering effects from the former deadline. The new cutoff date for the tax credit requires buyers to be under contract by April 30 and to close within 60 days. Experts say the new deadline could create a similar surge in sales in spring and early summer 2010 as another set of buyers rushes to meet the new deadline. "There is still a large pent-up demand that can be tapped before the tax credit expires," said Lawrence Yun, chief economist of the National Association of Realtors. "Our recent consumer survey further shows that 13 percent of successful first-time buyers had a previous contract that was canceled or fell through - there likely are many more buyers who were attempting to purchase but simply ran out of time."
Along with the tax credit deadline, highly affordable conditions also contributed to the sales boost in October. Locally, Salt Lake homes are the most affordable they've been since 2004, according to a new Wells Fargo/National Association of Home Builders report. Nearly 71 percent of Salt Lake homes sold in the third quarter were considered affordable to those earning the area's median income, up slightly from the second quarter and up from 55 percent last year at the same time. Driving that affordability is a combination of lower home prices and super-low interest rates.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage is at its lowest point since May and more than one percentage point lower than last year at this time. For a 15-year fixed-rate mortgage, rates are the lowest they've been on records dating back to 1991. Low prices are also contributing to the favorable affordability conditions.
In October, the median price of a Wasatch Front home was $195,000, 9 percent lower than the median price of $215,000 a year ago. On a national level, the price-to-income ratio has now fallen below its historic trend, which means buyers are receiving greater-than-normal value for their purchasing dollars.
The combination of these three factors, low interest rates, affordable home prices, and a tax credit worth up to $8,000 or $6,500, has created a truly unique purchase opportunity that will only last into early next year. To get the latest information on your market and all the incentives available you, contact your local Realtor.
Or you can give us a call @ 435-840-5029 to discuss the Wasatch Front Homes Sales Surge.