Canovo Group Newsletter - September 2023

Your Utah Market Update 📈 - will the rebound continue?

September 06, 2023

Dear ,

The real estate landscape over the past 18 months has been nothing short of dynamic. We witnessed home values soaring to unprecedented highs in early-2022, only to experience a decline of nearly 15% to start 2023. Since then, the market has shown resilience, recouping approximately 8% of its losses. Furthermore, the past four months have seen less than a 2% fluctuation in the median sales price for single-family homes showing surprising stability amidst the greater economic turbulence.

It's evident that actions taken by the Federal Reserve have significantly influenced demand. Surprisingly, as demand dipped, supply mirrored this trend, keeping prices relatively stable despite the Fed's interventions.

In times of market ambiguity, there are always opportunities to be found. We are confident that those who act strategically in the present market will reap benefits in the future.

I hope you find our market reports informative and helpful. If you have any questions about buying or selling investment property in Utah, just click here to book a  time for a brief call.

All the best,

David Robinson

Top Headlines, Reports, and Articles

Jerome Powell, the Chairman of the Federal Reserve, provided an extensive speech regarding the current state of the economy, inflation, and the Federal Reserve's (Fed) response. Here are the key takeaways from his address:

  1. Inflation Control: The Fed is committed to reducing inflation to their 2% target. Despite a decrease from its peak, inflation remains high, and the Fed is prepared to raise rates further if needed.

  2. Monetary Policy: The policy rate was increased in March 2022, aiming to slow aggregate demand growth and reduce inflation.

  3. Inflation Data: Headline inflation dropped from 7% in June 2022 to 3.3% in July. However, core inflation remains high, indicating further action is needed.

  4. Factors Influencing Inflation: Declines are noted in core goods and housing sectors, while the nonhousing services sector remains stable.

  5. Economic Outlook: Restrictive monetary policy will be essential to reduce inflation, which might result in below-trend economic growth and changes in labor market conditions.

  6. Labor Market: Rebalancing is ongoing, with signs of easing wage pressures.

  7. Uncertainty and Risk Management: The Fed faces challenges navigating the current economic landscape due to several uncertainties.

Conclusion: The Fed's priority is to restore price stability and achieve strong labor market conditions, even amidst the uncertainties.

Source: federalreserve.gov

Annual rent growth turned negative last month, for the first time since the beginning of the pandemic. Today it stands at -1.2 percent, meaning that on average, apartments across the country are 1.2 percent cheaper today than they were one year ago. This is a major deceleration from recent years, when annual rent growth neared 18 percent nationally and soared to over 40 percent in a handful of popular cities.

Source: apartmentlist.com

Zillow’s forecast of the nation’s typical home value was revised upward in July as tight inventory conditions continue to place upward pressure on home prices, despite persistent affordability challenges. Zillow forecasts the national Zillow Home Value Index (ZHVI) to end 2023 5.8% above where it began the year. That’s an upward revision from June’s forecast, which called for 5.5% growth in 2023. Typical home values are predicted to rise 6.5% from July 2023 through July 2024. 

Source: zillow.com

With mortgage rates hitting their highest level in over 20 years, along with stubbornly sticky prices, U.S. housing market affordability is even lower than at the peak of the housing bubble in 2006.

Source: Katie McKellar - Deseret.com

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