Park City Housing Market Update – Summer 2022 in Review
As summer comes to a close and hot sunny days give way to moody clouds and rain indicating fall has arrived in Park City, chatter surrounding the local real estate market remains steady. It’s never a dull moment in the housing and mortgage industries of late, with seemingly all eyes on pricing, inventory, and rates, and what it all means now and in the future.
As we like to say, if we could predict the future we’d already be retired, but that doesn’t mean we can’t look at historical data and trends, and how it relates to the current market activity. Just as in the springtime, the phrase we are using for the state of the Park City housing market, and that of the greater Wasatch Back area, is back to normal. Instead of homes selling over asking in 24-48 hours, they may be selling for 97-98% of the list price, in 24-48 days. By all accounts this is still a sellers market, but the days of slapping a price on a property for 10% above the previous record and then watching the offers roll in is behind us.
All in all, we feel that this is good news across the board. Values largely have remained strong with owners retaining their equity and forecasts touting single digit annual appreciation going forward instead of the incredible 20% and 30% jumps we’ve seen over the last few years. Buyers have more choices, and usually a bit more time to view property and make a decision, helping ensure that their purchase is a good decision and the right fit, and not just the latest case of FOMO. Trend lines continue to point towards a market that resembles what we experienced between 2013-2019, a more stable, gradually appreciating market with opportunity for all.
What We Are Seeing in the Marketplace
- After residential inventory in the Park City MLS hit its all time low (since the Park City Board of Realtors started tracking this data in 2007) of 290 units in the week ending February 5th 2022, it has been rising steadily before likely hitting its peak for 2022 at 924 units for the week ending July 30th.
- Since July 30th, inventory has been steadily decreasing each week, down to 841 residential units in the week ending September 10th, a 3.1% decline from the previous week.
- Historically between 2013-2019, residential inventory on the PCMLS peaks in the summer months, and averages 1,414 units at its annual peak, which means even at our inventory peak of 924 units in July 2022 we were still 35% below where inventory would “normally” be.
- While a bit anecdotal and not derived from a particular statistic, it is worth noting that we have had discussions with a wide array of fellow, high performing agents who have remarked that while inventory numbers are largely up from their record lows earlier in the year, the quality of inventory – meaning good, well finished, well located, and accurately priced homes – is still lacking as many buyers continue to search for their perfect place.
- As stated in the opening paragraph, the overly ambitious, frothy list prices and offers well over asking have largely left the marketplace. Regardless of how you look at the numbers, most areas in the greater Park City market appear to have hit their all time high median sales prices sometime between March and July of 2022, and have come slightly off those prices since.
- With that said, many areas including neighborhoods within Park City limits and those around the Jordanelle have seen large double digit price increases both on a monthly and year-over-year basis.
- The sales to list price ratio for residential units on the PC MLS hit its all-time high in March of 2022, with listings selling, on average, for 2.1% over the asking price. That metric has been on the decline since then, yet homes are still selling at nearly full price with a current sales to list price ratio of 99.4%, which is still up from the average historical sales to list price ratio for 2013-2019 which was 97.0%.
- When looking at the data, it’s apparent that areas with more moderate prices and a larger percentage of financed buyers have seen more downward pressure on pricing due to mortgage rates, while those at higher average prices and with a larger percentage of cash buyers have seen less of a drop, and in some cases even continued appreciation.
- One added note, it’s important to look at pricing data with a sense of nuance, and realize that every property is different. We are speaking in averages using large data sets, and in our observations a large portion of downward movement in pricing has resulted from prices being reduced on properties that were priced too ambitiously in the first place.
Days On Market
- After hovering in the single digits for the entire first half of 2022, the average days on market for residential properties (doesn’t include land) on the PC MLS saw a jump up to 31 days in July, and dropped slightly to 29 days in August.
- Year-to-date, these numbers average out to an incredibly low 9 days on market for 2022, though we expect that number to rise for the year as we receive data for the 3rd and 4th quarters.
- To put these numbers in perspective, the average days on market for residential properties between 2013-2019 was 40 days, which still represents a solid sellers market, and at this point we are still about 25% below that number for 2022.
Advice and Observations for Buyers
- Make an Offer
- We said the exact same thing earlier this year, but it bears repeating. Most properties aren’t flying off the shelves anymore. If a property checks 80% of a buyers criteria, but they feel the price is too high and there aren’t competing offers, we would encourage them to make an offer even if it’s not at asking price, and then negotiate from there. To modify a famous Wayne Gretzky quote, “You don’t buy 100% of the properties that you don’t write offers on.”
- Don’t Expect a Big Discount
- Based on the inventory and days on market data above, this is still a sellers market at this time, and we would not advise any buyers to go in expecting a substantial discount. That said, the advice in the bullet point above still applies, so writing an offer at 5% off asking may be a good starting point.
- How Long Do You Plan to Hold Your Property?
- Whether you’re an investor, a second home owner, or looking to purchase your first home, knowing the length of time you intend to hold the property is very important. While we don’t see a large price correction in the forecast, even if there were to be substantial downward pressure on values, most historical downward market cycles – in housing, the economy, or the stock market – have lasted less than 5 years. Purchasing now enables you to lock in an interest rate at a time when we expect rates to continue upwards, further depleting purchasing power due to increased monthly payments. Marry the house and date the rate, then refinance when rates decline.
Advice and Observations for Sellers
- Be Realistic
- Pricing a property today means knowing which comparables and data points to use, and which ones are statistical outliers. Gone are the days of pricing your home at or above the previous record just because you can. Pricing today needs match up with the functionality, features, finish level, and location of your property (much as it always has, except for mid 2020 through early 2022) and present it as a competitive value when compared to other listings in your price range and section of the market.
- Be Patient
- Good properties are still selling, some in less than a week, but others may require a few months and that is okay! Prior to the last few years, a $4,000,000 that took 75 days to sell was deemed perfectly acceptable and a realistic timeline. Even when presented and priced well, some patience is still required to find the right buyer who is a good match with the home, especially with many buyers sitting on the sidelines due in large part to watching too much news and reading fear inducing headlines.
- Who You Work With Matters
- Real estate is a largely a relationship based business, and the best agents will market your property publicly online, and also through their brokerage and peer networks. While the pandemonium of 2020-2021 may have allowed some to get away with poor ethical decisions or sub par negotiating tactics, now more than ever it matters that you work with an agent that other agents want to work with. When agents on both sides of the deal can vouch for the legitimacy and professionalism of their fellow broker on the other side of the table, it does a lot to build confidence in the deal and keep buyers and sellers focused on the closing table.
Choose Park City Real Estate Sales for June – August 2022
- We put 8 properties under contract for our clients for a total of just over $15,000,000 in pending contract volume
- 11 transactions closed for just over $22,500,000 in sales volume
- Of our buyers competing against multiple offers, 100% of them had their offers accepted
- 2 of our listings went under contract before coming to market due to networking efforts with our agent peers
Thanks for reading this months market update, and as always, reach out to us if you have questions on how these numbers will affect you and your situation. Whether you are a possible Park Meadows home buyer, potential Deer Valley home seller, or an interested property investor, we can put the stats and our Park City housing market knowledge to work for you no matter what your needs and budget are. Everyone’s situations are different, so knowing how to apply the data is integral to making wise real estate decisions.
-Brendan Trieb, Choose Park City