2020 3rd Quarter Report

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Real Estate

As the second quarter of 2020 ended, the overwhelming effect of the COVID-19 virus pandemic was in full force and fury in Summit and Wasatch counties. The area had weathered the near complete shutdown of businesses and recreational activities. The entire U.S. was going through a bounce in reported cases as many states reopened too soon and without appropriate safeguards in place to quell the spread of the disease. Many governors were forced to reinstate closings and issue mask mandates. The only good news seemed to be that the real estate market, at least in the Wasatch Back area, was resilient and rebounding.

So, not surprisingly, as we started into third quarter, many were wondering if the resiliency we were beginning to see in June would hold, or if a resurgence of the contagion would once again shutter businesses, and force a mandatory masking program. Thankfully, those fears never materialized.

From July 1 through September 30, the numbers were nothing short of spectacular and surprisingly so given the economic climate.

  New listings exceeded those in the same week of the prior year every week of the entire quarter
  Total New listings for the quarter were 1,239 compared to 861 the year prior, a 44% increase
  Pending sales accelerated at an even greater pace with 1,503 contracts signed in Q3-20 compared to 736 in Q3-19, more than double the previous year’s production.
  Closed sales likewise were 45% higher than the year before (982 vs. 675).
  With Pendings running 25% higher than New Listings, available inventory started to shrink dramatically. The quarter finished with just 1,364 available units for sale, a full 20% lower than the previous low mark of 1,715 set in December 2017.

As expected, the negative economic impact of the pandemic has been widespread. Unemployment has spiked to nearly 15% nationally by April. Locally, the tourism industry has been hardest hit with local businesses, particularly restaurants, that rely on summer vacationers struggling to stay afloat. But the effect on housing at least on a local level has not been nearly as bad as anticipated. Our local market results are running counter to the prevailing norms elsewhere in the country.

What is pushing the market?
  Mortgage lenders kept rates the lowest they have been in 60 years, some dropping below 3%. This has made borrowing more attractive even for not just first-time home buyers but everyone.
  Low inventory attributed to Sellers being slow to return to the market out of concerns about strangers touring their homes without sanitation awareness has created more competition among buyers for prime properties.

This has pushed median sale prices higher, particularly in “outlying” areas, with single family homes appreciating 12% and condominiums 15% higher across the primary service area of Summit & Wasatch Counties.

The more surprising trend, seen not only in Park City but across the country, is the urban exodus away from compact city centers into more suburban, even rural, areas as many find working from home removes the restriction to have home close to work. Renters, vacationers, and time-share owners started looking for second or even primary homes in the spacious Wasatch Back, seeking to distance themselves from the urban chaos the pandemic had precipitated. They are happy to find not only ski and red rock recreational treasures but also room to social distance from others free of lockdowns.

Other attractions

  Summit and Wasatch school systems opened to in-person classrooms—a huge draw for parents dreading spending hours tutoring their kids or turning them into Zoom zombies.
  Utah’s unemployment rate at 4.5% is less than half the national average of 9.2%. People can find work here that is not available elsewhere.

College students from affluent families who would rather ski between remote learning classes are finding no better place to “learn” than Park City. As the Salt Lake Tribune recently noted, “Utah also has emerged as a more affordable alternative to Aspen or Vail, Colo., for college collaboration houses, clusters of students renting vacation homes to take advantage of the outdoors while they complete their coursework online.”

Before the celebration gets out of hand it is important to note that the pandemic has not subsided. Instead, Utah is facing an escalating incidence of infections, hospitalizations, and deaths. If that trend continues, local officials will be faced with the harsh reality that more restrictions on gatherings will be needed to stem the tide, further complicating the economic relationships between business, education, and recreation? Add to that the arrival of the usual fall and winter influenza season and we have a continuing situation that must be closely watched.

What do Park City agents see coming in the next three to six months? Here are a few observations and predictions from those with their fingers on the pulse of the market.

  Multiple offers on many listings are driving prices higher. We are setting new all-time high sales prices in some markets, even when the individual properties are not that special or different. Buyers are driving the market.

  Buyers coming to Park City from larger and higher priced cities (NYC, San Francisco) are not daunted by PC prices which are often lower than what they are used to.

The report below compares the 12-month period ending 9/30/20 to the same period the year before. But comparing just third quarter to third quarter, the price increases are more pronounced. Median price on residential properties in Park City proper are up over 50% year to year in third quarter alone.
  The new developments in Silver Creek Village are selling briskly and 75% are primary residences reinforcing the trend we’re seeing away from second home purchases.

Want more data and insight?  Drop me a line!