The remarkable rise in homes sold and sale prices that we experienced in the latter half of 2020 continued unabated through the first quarter of 2021. Sale prices showed strong appreciation with increases in both average and median prices as well as dollar volume as reported by the Park City Board of REALTORS® Multiple Listing Service. Fears that the market might be overheated and that the boom could foretell another housing market balloon just before a crash to rival 2008 were quelled by consistent financial indicators pointing to a sustained bull market in housing.
How is this market different from 2008?
- More stringent lending requirements – we learned our lesson from 2008 when banks were pushingexotic loan products to people who could not normally qualify for or afford them.
- Supply shortages keep prices higher – as opposed to 2008 when supply exploded as more peoplewanted to cash in on their newfound equity only to find themselves under water.
- Mortgage interest rates are low but not zero – among the exotic loans being offered before the last crash were super low interest, even negative amortization, zero down payments, and 110% of market value re-fi’s. None of those are prevalent now.Optimism about the housing market closely parallels that toward the COVID-19 crisis. As more people are vaccinated and the restriction on gatherings starts to ease, more people are getting back to work and reestablishing their “normal” lives. Which means for many they are looking for new housing.The pent-up demand that the isolation mandates created started to be released with full force and vigor. As buyers returned, competition for the limited number of available homes increased, and pending contracts far outstripped new listings coming to market. PCMLS recorded record low inventories in March and April and the numbers continue to decline during a spring market when one would expect more homes offered for sale, not fewer.Some neighborhoods fared better than others in first quarter, but few had any negative results to report. Comparing the 12-months ending March 31, 2021 to the same period in 2020:
- Total New residential listings for the first quarter of this year were 786, up 17% from 673 in 2020.
- Pending sales grew even faster than new listings. PCMLS members signed 1,070 purchase contracts in Q1-2021, up from half that number (517) in Q1-2020. While more homes were coming to market, they were bought almost immediately creating the dramatic drop in inventory.
- Closed sales likewise were 150% higher. In Q1-21, 643 contracts settled versus 432 in Q1-20.
- With Pendings running much higher than New Listings, available inventory started to shrink dramatically. The quarter finished with just 651 residential and land units available for sale, nearly one- third of the inventory (1,909) on the same date in 2020.
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