2023 Utah Housing Market Predictions

With interest rates double what they were a year ago, many people are wondering what to expect from the Utah Housing market in 2023. Is now a good time to buy or sell? Will interest rates continue to rise or drop? These are the questions that seem to be on everyone's mind. It is important to note that we do not have a crystal ball (unfortunately), and our “predictions” are based on historical data from last year, as well as insights from industry experts. 

Before we jump into what experts are predicting for 2023, we want go over key data points from Q4 in 2022. In November last year, around 2,557 homes were sold in Utah's housing market, down – 45.6% from last November, according to a report published by the Utah Association of REALTORS®. YTD sales were 41,708, down – 18.8% from last year. However the statewide median sales price was up 3.5% to $484,500. Last year at the same time, the median sales price was $468,000. So what does that mean for 2023?

It is difficult to predict exactly what will happen with the housing market, as it depends largely on government actions and interest rate policies. However, industry experts predict that rates will continue to rise slowly through the 1st quarter of 2023, reaching around 6.35%, then on average slowly start to decline, possibly dropping to the 5% range in the 4th quarter. The high interest rates have certainly slowed the housing market, but it has become much more normalized than what we saw in the 2020-2021 markets.

According to researchers Jim Wood and Dejan Eskic from the University of Utah’s Kem C. Gardner Institute, the market is expected to enter a correction phase that will persist into 2023. This is due to the Federal Reserve's aggressive rate hikes to combat inflation. They note that this will present challenges, especially for homebuilders, but it will also help to rebalance a market that has priced out many Utah residents from affording a median-priced home.

The researchers also predict that new construction is expected to continue to slow down, which could have a negative impact on Utah’s housing supply. Before the interest rates rose and pushed many buyers out of the market, the state had a housing shortage of roughly 31,000 units.

“I expect our housing shortage to worsen a little bit in the next three to four years.” - Esick

Despite the high interest rates and slowed market, housing prices are not expected to drastically fall. A big indicator of a healthy market is employment growth rate, which Utah (As of September 2022) showed  solid employment gains and an annual growth rate of 3.5%. With positive job growth leading to an increase in demand, experts are forecasting Utah Prices to drop another 5-10%. (See National Predictions for 2023 Home Prices by top research firms)

There are still many buyers entering the Utah market, particularly cash buyers and investors looking for good deals. With 32% of listings having a price reduction in Utah, the market presents opportunities for buyers. Additionally, many young adults are entering the market and asking sellers to contribute towards closing costs to help buy down interest rates. There are also many creative financing options that do not involve a traditional mortgage. We are finding our clients that are looking to find a better rate have found success with seller financing deals.

The Red Sign Team agents are experts in the Utah housing market and are ready to help buyers and sellers navigate the opportunities and challenges presented in 2023. Our team of experienced agents are well-versed in the latest market trends and data, and they provide expert guidance on pricing, negotiation and closing, regardless of the market situation. With our team's help, buyers and sellers can make informed decisions, and navigate any challenges the market may present, or take advantage of the many opportunities that lie ahead.