With all the headlines about a softening economy, people are asking me about the Park City real estate market. I was selling real estate in Park City 12 years ago when the market changed and am sensitive to the small signs that signaled a shifting market.
Today’s market differs from that of 12 years ago primarily because loan standards tightened and buyers now have “skin in the game”. The zero down payment, stated income loans that people walked away from 12 years ago went away. Buyers who obtain financing are using significant amounts of their own money for down payments that they will not easily walk away from. In fact, the Mortgage Bankers’ Association recently revealed that:
“The percentage of loans in the foreclosure process at the end of the fourth quarter was 0.95 percent…This was the lowest foreclosure inventory rate since the first quarter of 1996.”
In Park City, we have seen massive appreciation in the past several years. The chart above shows that in the past two years, the median sale price for single family homes increased 28.3%. This is absolutely unsustainable. What we are starting to see is a leveling off of pricing. Of the 100 experts reached for the latest Home Price Expectation Survey, 94 said home values would continue to appreciate through 2019, but at lower rates.
The chart below shows that inventory has increased by 16% over the past two years. This shows us that as home prices rise to unrealistic levels, buyers show resistance to purchasing homes. As over-priced homes sit on the market, inventory builds. With more inventory, buyers will have better selection opportunities and will be able to choose homes that are well priced and in top condition. This is good news for buyers. It is not necessarily bad news for sellers. It just means that they will need to carefully price and prepare their homes for sale if they want to stand out from the crowd.