July 20, 2022 – Some significant trends are emerging in the Wasatch Back market area as the market adjusts from the enormous swings we have seen during and since the coronavirus pandemic. Listing inventory is rising, prices are starting to level off as mortgage interest rates climb. Buyers are becoming more hesitant to make instant offers above asking price and sellers are reacting by lowering those asking prices, in much greater numbers.
The remarkable rise in the sale prices of single-family homes that we experienced since shortly after the global pandemic struck in the latter half of 2020 continued through all of 2021 and into the first half of 2022. Sale prices for single-family homes in the primary market area of Summit and Wasatch Counties as reported by the Park City Board of REALTORS® Multiple Listing Service for the year ending June 30 showed strong appreciation with increases in both average (Up 15%) and median (Up 11%). For the year earlier, those increases were 54% and 58% respectively.
Despite appreciation slowing the rate of sales (units were down in many areas), the overall dollar volume dropped 22% for single-family homes but actually rose 3% for condominiums from the year prior, supported by the higher sale prices. Fears that the market might be overheated, reinforced by a continuing rise in interest rates, supply chain difficulties, and other inflation indicators (gas prices), slowed sales across the region.
Price appreciation continues to be driven by a dearth of available inventory, but that trend is reversing. At the end of 2021 there were only 187 residential properties for sale across the region, and many of those were still under construction. But sellers who fear they may be missing out on a healthy profit brought more homes to market ,and at the end of Q2-2022 there were 545 homes for sale, nearly triple the count from just six months earlier.
Some neighborhoods always fare better than others and the Q2-year over year results were no exception. For Single Family homes, all the major areas that make up the greater Park City market showed drops in units sold through second quarter of 2022 versus 2021. Within the Park City limits, unit sales dropped 55%. However, because of the historic rises in median prices, particularly in the outlying areas, only two other major areas (Snyderville Basin and Jordanelle) showed declines in total sales volume.
Condo sales prices were strong across the entire market range. Within the Park City Limits and in the Heber and Kamas Valleys total sales volume declined, primarily due to a lack of inventory to sell. Within Park City limits, condo sales volume was down 23% but median sale prices rose 15%. In the Snyderville Basin, total sales climbed 42% because average and median prices both rose 50% or more.
Comparing the 12-months ending June 30, 2022, to the same period in 2021:
· New residential listings (single-family and condo) are showing signs of recovery after a lengthy period of declines. For the 12 months ending June 2022, total new listings were 5,125 down 11% from the same period ending June 2021. But the 420 new listings (this is all residences, not just single family) in June were the highest monthly tally since September 2020 and the second highest monthly tally in almost four years.
· The market is cooling off after an overheated two years of sales. PCMLS members signed 2,970 purchase contracts in the 12 months ending 6-30-22, 36% fewer than the previous year (4,671)
· With New Listings running slightly higher than Pending contracts, available inventory started to increase. Only 265 residential properties were active at the end of 2021. That number was up to 317 at the end of Q1-22, and boomed to 858 as of June 30, an increase of 223% so far this year.
Overall, how did the local market fare? Here is our take on the total year-long results reported on a rolling yearover-year basis for the period ending June 30, 2022.
Single Family Homes
Overall sales units across the primary market area dropped 33%, but an 11% rise in median prices kept the total sales volume just 22% below the year prior. Through Q2-22, the $2.83 Billion in total sales was down from the Q2-21 Y-o-Y total of $3.65 Billion.
Highlights of the single-family home market:
• Within Park City Limits, total unit sales were down 55% over Q2-21 to 162 units but sales volume declined just 40% to $706 million this year.
• The median price of a single-family home across the city rose 35% to $3.7 million.
• In the popular Old Town area units were down 68% (130 to 42) as the median price set a new record above $3.1 million.
• The Prospector and Thaynes Canyon neighborhoods led all others for greatest increase in median price, with Thaynes up 50% to $4.4 million and Prospector more than doubling from $1.18 to $2.61 million.
• Snyderville residents saw a decrease in sales volume (down 23%) on a strong increase in the overall median price up 22% to $2.13 million. Almost all the Snyderville neighborhoods saw declines in units sold with Sun Peak/Bear Hollow area dropping the most (72%) to 10 units. Summit Park had the biggest gain with 42 homes sold, up 20%.
• Nearly one-third of overall sales volume was in Promontory ($373 million) while Silver Creek Estates and Silver Springs areas saw the biggest price increases with the median prices rising 74% and 64% respectively. The median sale price in Old Ranch Road rose to $6.5 million, second highest in the region behind Canyons Village ($9.8 million).
• The Heber and Kamas valleys showed substantial median price increases of 40% and 48%, respectively. Despite fluctuations in the regional markets, Single Family sales activity in the primary market area was markedly down compared to the year prior with sales volume off 22% while median prices were up 11% year over year.
• The Condo market in the Old Town neighborhood continued to be solid with unit sales level down slightly (11%) but sales volume up 36% on a gain in median price of 42%. The median price of a condominium sold in Old Town is now $1.0 million.
• Park Meadows and Prospector were the standout neighborhood performers with sales volume up 11% and 9% respectively. The median price of a condo in Prospector was up 84% to $411,000.
• Lower Deer Valley and Aerie both showed strong appreciation with median price gains of 42% or more.
• In the Snyderville area, outside of perennial volume leader Canyons Village, Kimball and Silver Creek South led in sales volume increases (19% and 27% respectively) while other Snyderville neighborhoods saw sales decline due to lack of inventory.
• In Wasatch County, (areas with 10 or more sales are reported) Jordanelle Park doubled its sales volume over the prior year on a substantial gain in median price, up 58% to $970,000.
• After explosive growth in the year ending 12/31, Land sales declined across the region with every major area showing drops in units sold. Total sales volume remained steady or dropped in all areas except Jordanelle where sales volume was up 70% on prices that more than doubled from the year prior.
• Jordanelle showed the most activity selling 390 lots this past year. Those lots sold for nearly twice the price of lots in the year ending 6/30/21. The median sale price was $800,000, up from $397,000 the year before.
• Overall land sales in Summit and Wasatch counties were down 35%, however, the price increases expected when supply decreases and demand remains steady pushed the median sales price for lots region wide up 74% to $704,000.
• All the major areas of the market saw a drop in units sold. Snyderville and Wanship/Hoytsville were hit the hardest, dropping by half from the previous year’s total.
• Only 34 lots sold within the Park City Limits but that lack of available lots coupled with high demand pushed the median sale price for the few that did sell to $1.97 million, up 65% from the year before.
Opinion and Observation
What do Park City agents see coming in the next three to six months? Here are a few observations about the important market results that point the way coming from those with their fingers on the pulse of the market.
· Buyers are starting to pull back, taking longer to pull the trigger, feeling the market is moving in their direction after being a sellers’ market for the past 18 months or more.
· Membership costs in some of the area golf course resorts are rising, making resales a bit tougher for buyers and sellers.
· With mortgage rates rising, buyers who need a loan are acting now before they get priced out.
· Lots of “wait and see” buyers waiting for their stock portfolios to recover.
· We still see a broad range of buyers, still plenty looking for second homes from out of state, but just willing to take their time in deciding.
· We are still seeing multiple offers in properties priced well in ski areas and in Park Meadows/Prospector/Deer Valley, but they must be priced based on sales and with sellers no longer reaching for unrealistic prices.
· We are slowly returning to a more balanced market, much closer to what was happening pre-COVID.
· It’s important not to use the broader market trends to paint every local neighborhood. The market is highly segmented, and each neighborhood in Park City has unique values, and unique pricing trends. In a superb example of how dramatically this market is changing, Rick Klein, long-time, frequent contributor to our agents’ understanding of magnitude of the changes in the local market, showed the changes in absorption rate over the past two years. Absorption Rate (AR) is the average time it takes to sell a home. Rick has compared market times for Single Family homes and Condos sold in 2022 to those in the past three years.
The current AR for residences in greater Park City is 3.75 months. Three months ago, it was just 1.5 months. The average over the seven years from 2013 to 2019 was 7.2 months, so we are still selling homes much faster than in recent history, but the timeframe is more than twice what it was three months ago.
To illustrate how the asking price affects market time, Rick calculated the AR for single family homes based on whether the list price was above or below the median.
At the end of June 2022, the median price of a single-family home in Park City was just over $3.7 million and the average market time was 2.9 months. Homes priced below the median sold on average in 2.1 months while those above the median sold in 4.0 months.
These differences in market time based on price confirm that a Realtor’s help in setting a realistic list price is crucial for achieving a quick sale.
How long can this continue? How long can Park City homeowners expect this explosive market to continue? They are starting to see some easing in prices as mortgage rates rise and competitive bidding becomes less frequent. But the past two years continue to be described with the most superlative of adjectives: “extraordinary,” “unprecedented,” “unbelievable.” This market, and the past two years of activity, can perhaps be best illustrated with a snapshot of just second quarter sales totals since the great recession of 2008.
In the 16 years from 2005 to 2020, looking at just second-quarter sales, the market total for residential and land combined exceeded $500 million only two times and that was in the run-up to the great market crash of 2008.
Economic forecasts are predicting a continuing economic slowdown, but none has projected a bubble bursting crash such as we experienced in 2008.
What are the key take-aways from this quarters numbers?
· Inventory: finally improving. Since the end of 2021, inventory is now up 173%
· Demand is slowing. Q2-2022 sales are down 29% from Q2-2021. Condo sales are down 22%; Single Family down 21%; Vacant Land down 73%
· Appreciation continues. For all of greater Park City median prices rose 35%. Excluding vacant land, median prices rose a more sustainable 13%.
· Affordability is becoming more of a challenge with both interest rates and sale prices continuing upward.
Real estate in the Wasatch back consists of highly segmented markets with nuances that vary significantly from one neighborhood to another and one house to another. Comparisons are hard to read on paper due to the unique features of individual properties, such as amenities, condition, style, location, age, view, and inventory. Buyers and Sellers are advised to contact a local Park City Board of REALTORS® Professional for the most accurate, detailed, and current information.