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May 2022

Utah Ranks as Best State for Middle Class

Collaboration is not an option. It’s a promise.

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Learn more about our Quick Move-in Homes by contacting 385-232-2999 See a David Weekley Homes Sales Consultant for details. Prices, plans, dimensions, features, specifications, materials, and availability of homes or communities are subject to change without notice or obligation. Illustrations are artist’s depictions only and may differ from completed improvements. Copyright © 2022 David Weekley Homes - All Rights Reserved. Salt Lake City, UT (SLCA99514)

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Turning Houses into Homes®

Table of Contents Features 10 RPAC Jazz Game

Jo Panuwat D©/ Adobe Stock

12 Home Prices Have Begun Falling Sara Ventiera

Home Prices Have Begun Falling

18 Best States for the Middle Class The National Association of Realtors® and Smart Asset 20 Is a Calmer Market Coming? The National Association of Realtors® 22 How Disruption Works in Your Favor Graham Wood 26 What Rebounding Birth Rates Mean for Housing The National Association of Realtors®

Columns whyframeshot©/ Adobe Stock

Is a Calmer Market Coming?

Invest in RPAC and Be Entered to Win a New Car Steve Perry – President’s Message

Departments 8

Happenings

In the News

28 Housing Watch

On the Cover:

Blue Planet Studio©/ Adobe Stock

Cover Photo: Jason©/ Adobe Stock

How Disruption Works in Your Favor

This Magazine is Self-Supporting Salt Lake Realtor® Magazine is self-supporting. The advertisers in this magazine pay for all production and distribution costs. Help support this magazine by advertising. For advertising rates, please contact Mills Publishing at 801.467.9419. The paper used in Salt Lake Realtor® Magazine comes from trees in managed timberlands. These trees are planted and grown specifically to make paper and do not come from parks or wilderness areas. In addition, a portion of this magazine is printed from recycled paper.

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The Salt Lake REALTOR® (ISSN 2153 2141) is published monthly by Mills Publishing, located at 772 E. 3300 South, Suite 200 Salt Lake City, Utah 84106. Periodicals Postage Paid at Salt Lake City, UT. POSTMASTER: Send address changes to: The Salt Lake REALTOR,® 772 E. 3300 South, Suite 200 Salt Lake City, Utah 84106-4618.

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*SOURCE: Scotsman Guide’s 2021 Top Originator Rankings Danielle Young NMLS: 265241 | Cindee Stone NMLS: 273280 | Guaranteed Rate, Inc.; NMLS #2611; For licensing information visit nmlsconsumeraccess.org. Equal Housing Lender. Conditions may apply • AR: 3940 N Ravenswood, Chicago, IL 60613, (866)-934-7283 • AZ: 14811 N. Kierland Blvd., Ste. 100, Scottsdale, AZ, 85254, Mortgage Banker License #0907078 • CA: Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act • CO: Regulated by the Division of Real Estate, (866)-934-7283 • GA: Residential Mortgage Licensee #20973 • MA: Mortgage Lender & Mortgage Broker License #MC2611 • ME: Supervised Lender License #SLM11302 • MS: 3940 N. Ravenswood Ave., Chicago, IL 60613 • NH: Licensed by the New Hampshire Banking Department, Lic #13931-MB • NJ: 3940 N Ravenswood, Chicago, IL 60613, (866)-934-7283, Licensed by the N.J. Department of Banking and Insurance • NY: Licensed Mortgage Banker - NYS Department of Financial Services • OH: MB 804160, 3940 N. Ravenswood Ave., Chicago, IL 60613 • OR: 3940 N. Ravenswood Ave., Chicago, IL 60613 • RI: Rhode Island Licensed Lender • TX: 3940 N Ravenswood, Chicago, IL 60613, (866)-934-7283 • WA: Consumer Loan Company License CL-2611. Guaranteed Rate is an Equal Opportunity Employer that welcomes and encourages all applicants to apply regardless of age, race, sex, religion, color, national origin, disability, veteran status, sexual orientation, gender identity and/or expression, marital or parental status, ancestry, citizenship status, pregnancy or other reason prohibited by law. (20220311-1173400)

Salt Lake

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President Steve Perry Presidio Real Estate

Morelza Boratzuk RealtyPath Hannah Cutler Coldwell Banker

First Vice President Rob Ockey Century 21 Everest

Laura Fidler Summit Sotheby’s

Second Vice President Dawn Stevens Presidio Real Estate

Amy Gibbons Keller Williams Jennifer Gilchrist Utah Key Real Estate

Treasurer Claire Larson Woodside Homes

Tony Ketterling Equity Real Estate

Past President Matt Ulrich Ulrich Realtors®

John Lucky Berkshire Hathaway Jodie Osofsky Signature Real Estate Utah

CEO Curtis Bullock

Janice Smith Coldwell Banker

Directors

Carlye Webb Summit Sotheby’s

Jenni Barber Berkshire Hathaway

Advertising information may be obtained by calling (801) 467-9419 or by visiting www.millspub.com

Managing Editor Dave Anderton Publisher Mills Publishing, Inc. www.millspub.com President Dan Miller Art Director Jackie Medina Graphic Design Ken Magleby Patrick Witmer

Invest in RPAC and Be Entered to Win a New Car

Sales Staff Paula Bell Paul Nicholas

Office Administrator Cynthia Bell Snow Salt Lake Board: (801) 542-8840 e-mail: dave@saltlakeboard.com Web Site: www.slrealtors.com The Salt Lake Board of REALTORS® is pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the nation. We encourage and support the affirmative advertising and marketing program in which there are no barriers to obtaining housing because of race, color, religion, sex, handicap, familial status, or national origin. The Salt Lake REALTOR® is the monthly magazine of the Salt Lake Board of REALTORS®. Opinions expressed by writers and persons quoted in articles are their own and do not necessarily reflect positions of the Salt Lake Board of REALTORS®. Permission will be granted in most cases, upon written request, to reprint or reproduce articles and photographs in this issue, provided proper credit is given to The Salt Lake REALTOR®, as well as to any writers and photographers whose names appear with the articles and photographs. While unsolicited original manuscripts and photographs related to the real estate profession are welcome, no payment is made for their use in the publication.

This year when you pay your annual membership dues, please be sure to make an investment in the Realtors® Political Action Committee (RPAC). Each $15 invested to RPAC this dues season will enter your name into a drawing for a chance to win a 2022 Honda Accord Hybrid Sport. This vehicle will be given to one lucky member in August. If you pay your dues in May, you will automatically triple your entries for each $15 invested. If payment is made in June, you will double your entries. Remember, the deadline to pay your dues is July 31. When you invest in RPAC, 30% of your dollars go to help elect Realtor®friendly candidates at the national level, while 70% stays in Utah to support local and state candidates. RPAC is a big reason why real estate was deemed an essential service by the Utah Legislature during the 2020-’21 pandemic. That designation allowed Realtors® to continue to show homes, using safety precautions, to prospective buyers. The result? Home sales in 2020 hit an all-time high. More than 19,200 homes were sold in Salt Lake County alone. In contrast, real estate services nearly ground to a halt in New York City, which prohibited in-person showings of residential and commercial properties. The result? Residential sales in the Big Apple dropped 28% year-over-year between March 2020 and February 2021. During that same period home sales increased 5% in Salt Lake County. Roughly 45% of Salt Lake Board members invested in RPAC in 2021. Of 172 large and mega associations in the United States, our association in 2021 was the No. 1 Realtor® association in per capita money raised for RPAC, according to the National Association of Realtors®. RPAC is also why Utah consumers don’t pay transfer taxes on the sale of real property, don’t pay taxes on services, and are not required to hire an attorney when closing on the purchase of a house. Let’s keep real estate in Utah unencumbered by burdensome regulations and taxes. Invest in RPAC today!

Steve Perry President

Views and opinions expressed in the editorial and advertising content of the The Salt Lake REALTOR® are not necessarily endorsed by the Salt Lake Board of REALTORS®. However, advertisers do make publication of this magazine possible, so consideration of products and services listed is greatly appreciated.

OFFICIAL PUBLICATION OF THE SALT LAKE BOARD OF REALTORS ® REALTOR® is a registered mark which identifies a professional in real estate who subscribes to a strict Code of Ethics as a member of the NATIONAL ASSOCIATION OF REALTORS®. October 2005

May 2022 | Salt Lake Realtor ® | 7

Happenings

In the News

Image licensed by Ingram Image

Home Buyers Turn to ARMs

Soho A studio©/ Adobe Stock

Homeownership is the most Expensive in a Generation In the first half of April, the median price of a single-family home in Salt Lake County climbed to $650,000, as mortgage interest rates increased to 5.1%. Based on a median price home of $650,000 and 5.1% interest rate, with a 10% down payment, home buyers today are paying, on average, roughly $3,250 for a monthly mortgage – $1,278 more each month than buyers that purchased a median price home ($500,000) a year ago. According to Freddie Mac, “As Americans contend with historically high inflation, the combination of rising mortgage rates, elevated home prices, and tight inventory are making the pursuit of homeownership the most expensive in a generation.”

Realtor® Reaches $50,000 in Lifetime Investment to RPAC Grady Kohler, principal broker, and partner at Windermere Real Estate Utah, has invested more than $50,000 in lifetime contributions to the Realtors® Political Action Committee (RPAC). He joins just eight other Salt Lake Realtors® who have invested $50,000 or more to RPAC in their lifetime. RPAC promotes the election of pro-Realtor® candidates in Utah and across the United States. RPAC is a big reason why Utah consumers don’t pay transfer taxes on the sale of real property, don’t pay taxes on services, and are not required to hire an attorney when closing on the purchase of a house. Grady was instrumental in growing Windermere from a five-agent operation to more than 13 offices across Utah that generate more than $1 billion in sales. 8 | Salt Lake Realtor ® | May 2022

Rising mortgage rates are having an even more dramatic impact on refinancing, with the Mortgage Bankers Association Weekly Applications Survey showing demand for refinancing falling 9% April 20 when compared to the previous week, and 71% from the same week a year ago. Requests to refinance accounted for 35 percent of applications. Mortgage Bankers Association forecaster Joel Kan said that with mortgage rates increasing by 1.5 percentage points over the last three months, some borrowers are coping by applying for adjustable-rate mortgages (ARMs). ARM loans typically have a lower introductory rate than fixed-rate mortgages, but that rate can go up or down an introductory period that typically lasts for three to seven years. The MBA survey found that ARM loans accounted for 9% of mortgage loan applications the third week of April— double the share they commanded just three months ago. Because borrowers seeking ARM loans tended to apply for bigger loans — $728,900, on average, compared to $359,000 for borrowers requesting fixed-rate mortgages — ARM loans represented 17% of the dollar volume borrowers applied for the third week in April. “Prospective homebuyers have pulled back this spring, as they continue to face limited options of homes for sale along with higher costs from increasing mortgage rates and prices,” MBA forecaster Joel Kan said in a statement. “The recent decrease in purchase applications is an indication of potential weakness in home sales in the coming months.”

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RPAC Jazz Game Major investors of the Realtors® Political Action Committee in April watched the Utah Jazz clinch the 2022 playoffs in a 121-115 overtime win against the Memphis Grizzlies at Vivint Arena. Members also enjoyed a pregame practice, dinner, and a chance to shoot hoops on the floor. Thank you to all members that participated and for your support of RPAC. 10 | Salt Lake Realtor ® | May 2022

Photos: Dave Anderton

May 2022 | Salt Lake Realtor ® | 11

Home Prices Have Begun Falling The spring housing market got off to a strong start, but rising mortgage interest rates topping 5%—plus high inflation and soaring rents—appear to be starting to temper high prices. By Sara Ventiera Realtor.com What goes up must come down, right? Well, Newton’s law of gravity has been pressure-tested in recent years as homebuyers have anxiously watched home prices shoot up and up, to record heights in the wake of the COVID-19 pandemic. Double-digit monthly price growth in many hot markets? Check. Panic and despair settling in among many wannabe homebuyers? Check. The price hikes have seemed unstoppable—until now. The spring housing market got off to a strong start, but rising mortgage interest rates topping 5%—plus high inflation and soaring rents—appear to be starting to temper high prices in certain housing markets. To be clear: Overall affordability remains a challenge. Many would-be buyers are being priced out of homeownership as higher mortgage rates mean more expensive monthly housing payments. But when there are fewer buyers competing for homes and bidding them up, prices typically go down. Realtor.com® found the metropolitan areas where home prices are doing what recently seemed unthinkable: They’re falling. Some of these dips are because prices grew too out of whack with what locals in many Rust Belt communities could afford. So prices had to come 12 | Salt Lake Realtor ® | May 2022

down a little to find buyers. In other cases, it’s not that the same house costs less. Rather, the lower prices are due to fewer larger homes, which generally fetch higher prices, going up for sale. (Metros include the main city and surrounding towns, suburbs, and urban areas.) “Many of the metro areas seeing median list price declines have seen an [influx] of smaller homes come to market, which carry lower price tags,” said George Ratiu, manager of economic research for Realtor.com. “At the same time, several of the cities have unemployment rates, which, while still historically low, are above the national level. [This indicates] that buyers may face steeper affordability challenges from rising mortgage rates.” This is not a repeat of the Great Recession when a housing bubble popped and prices plummeted across the country. These are mostly smaller decreases that don’t portend another crash. To figure out where prices are moving south, the Realtor.com data team looked at the year-over-year median list prices in the 100 largest metros in March. To ensure geographic diversity, we limited our list to just one metro per state.

to snap up the few listings that had come onto the market—and folks who could suddenly work from anywhere were moving in. Demand is still high, but an increase in new listings in the Flower City is making a dent in the housing prices. Like with many of the cities on this list, it appears that local investors have been trying to take advantage of these record-high price increases, selling off former rentals before rising interest rates make it too hard for entry-level buyers to afford the monthly mortgage payment. This three-bedroom, one-bathroom Colonial is on the market for just $164,900. 3. Detroit Median listing price: $75,000 Median listing price change: -15.4% Already struggling with the loss of auto manufacturing, Detroit got hit hard by the Great Recession, exacerbating a multidecade exodus of residents. But the story of America’s favorite comeback city has changed in the past 15-years.

Jo Panuwat D©/ Adobe Stock

1. Toledo, OH Median listing price: $115,000 Median listing price change: -18.7% Toledo has had some of the not-great luck most Rust Belt cities have experienced over the past few decades. The city already had major job losses in the 2008 recession, then the closure of the Jeep Cherokee plant 10 years later put 3,700 more workers out of a job. Builders stopped building homes. By the time a new Jeep Gladiator plant opened in 2019, there was a huge lack of homes on the market, which caused home prices to go up. While bidding wars are still common, it seems prices are starting to cool down. Unemployment is higher in Toledo than in the rest of the U.S., so home prices can go only so high before residents get priced out. “I have more and more buyers that are starting to lean toward ‘We’ll do some cosmetics, we’ll do some work,’” said Karen Kinder, a Realtor® with Key Realty, on the choices her clients are making to save money. “They’re open-minded to that now; even just a few years ago, they all wanted everything all fixed up.” There are plenty of deals here for very low-priced homes, including this three-bedroom for just $39,900. 2. Rochester, NY Median listing price: $149,900 Median listing price change: -17.0% Rochester’s housing market has been red-hot since summer 2020 when buyers were in a frenzy attempting

It started with more artists seeking cheap housing who wanted to see Motor City revived to its former glory. Then developers and prospectors came to inflate real estate prices in spite of its still dwindling population. But many locals can’t afford those homes, especially with higher mortgage rates. Meanwhile, the number of new listings has increased by 6.7% year over year in March, according to Realtor.com. That means buyers don’t have to bid quite so high when there are more options available. Those who are looking for a deal and don’t mind putting some work in can check out the many fixer-uppers on the market. This three-bedroom brick home listed for 59,900 is marketed as an “investor’s special.” 4. Pittsburgh, PA Median listing price: $230,000 Median listing price change: -13.7% House hunters in Pittsburgh have been struggling to get properties under contract. Recent interest rate hikes have weeded some buyers out and have deflated a bit of the pressure, but competitively priced homes are still receiving multiple offers, often from folks who are moving to the area or moving back from other parts of the country. “I personally have had multiple buyers who say, ‘We just have to wait,’” said Bobby West, a real estate agent with Coldwell Banker. “When you’re writing offers on seven to 10 houses, I think you lose a little bit of interest.” Given the competition, it is a bit surprising that listing prices have decreased. However, West said, he has seen a lot of absentee landlords throwing their rental properties onto the market to capitalize on the heat. Those listings are often a little less expensive and provide more affordable opportunities for buyers to become homeowners. May 2022 | Salt Lake Realtor ® | 13

blvdone©/ Adobe Stock

In Penn Hills, a Pittsburgh suburb, buyers who aren’t afraid of some elbow grease can find a growing number of homes listed at ultralow prices, including this $110,000 four-bedroom Cape Cod. 5. Springfield, MA Median listing price: $239,900 Median listing price change: -5.8% Just an hour and a half away from Boston, Springfield attracted tons of new residents who were untethered from the office during the pandemic. Last spring, prices shot up so drastically, that even real estate professionals were wondering whether the increases were rooted in any sort of reality as buyers moved farther and farther out to find more affordable real estate. However, those price hikes might not have been sustainable. In January, the CoreLogic Market Risk Indicator, which looks at the health of housing markets across the country, predicted that Springfield was one of the cities at the highest risk (50% to 70% probability) of a decline in home prices over the next 12 months. While the price per square foot has not dropped yet, smaller homes have been coming onto the market, including this two-bedroom bungalow for $215,000. 6. Tulsa, OK Median listing price: $220,000 Median listing price change: -5.0% The former “Oil Capital of the World” has long offered buyers great deals on giant homes. This five-bedroom mansion asking for $1.2 million is less than the cost of a two-bedroom condo in San Francisco. Right now, affordable homes are scarce in Tulsa, known for its art deco architecture, and buyers are waiving contingencies. But, like several places on this list, the city’s median listing price has been affected by the uptick of smaller 14 | Salt Lake Realtor ® | May 2022

homes coming onto the market. While the price per square foot has increased, these smaller properties are bringing down the median listing price for the entire city. That’s helping some buyers get in. Buyers who don’t need a lot of space can find deals. A good example is this 875-square-foot, three-bedroom house in the Brookside neighborhood asking for $225,000. 7. Los Angeles Median listing price: $985,000 Median listing price change: -5.0% Given that home prices in Los Angeles are already so unreachable for so many buyers, the hike in interest rates has forced a lot of wannabe homeowners out of the market. However, the farther out buyers go from the Los Angeles Basin, the more inventory has grown and home prices have at least flattened a bit. “I’m seeing a lot of [contract] cancellations by the time interest rates have been locked into place,” said Rafael Oseguera, a Realtor at Pacific Inter Capital Investment Solutions. “We are starting to see some home values taper off.” Real estate agents are reporting that bidding wars are dying down and price reductions are becoming more common. Attractively priced, move-in ready homes are still receiving multiple offers, but not nearly as many as they were before mortgage rates increased. That’s keeping high offers over asking price in check. “There’s still not that much inventory; there’s still bidding going on,” said Oseguera. “It’s just not as aggressive as it was three or four months ago.” Plus, all throughout the metro, smaller homes have been coming onto the market, bringing down the median list price. For example, this 800-square foot, three-bedroom house in the L.A. suburb of Palmdale is asking $344,999, which is very affordable for California.

8. Memphis, TN Median listing price: $173,500 Median listing price change: -4.6% Memphis real estate surged since the start of the pandemic. The metro, long popular with investors buying up inexpensive properties to rent out, saw a rush of buyers attempting to get into a limited number of homes. Those buyers were often competing for larger places in suburbs where they could upgrade to bigger yards with play areas and, in many cases, swimming pools. That rush led to the city becoming one of the most overpriced housing markets in the country, according to a report from Florida Atlantic University’s College of Business earlier this year. A lot more homes have come onto the market recently. New listings are up 5.4% from the same time last year, according to Realtor.com. Meanwhile, smaller homes are going up for sale. That’s helped bring prices down. 9. Chicago Median listing price: $399,000 Median listing price change: -3.7% There are more deals in the Windy City if buyers don’t mind living in a condo. An overabundance of condo buildings downtown is one factor dragging down prices in the metro area. There are at least 6,000 units on the market right now.

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That provides opportunities for buyers on a budget to get into the housing market at a lower price point. This one-bedroom condo with views of downtown near the Dearborn Park neighborhood is asking for $185,900. It has been listed multiple times with one price cut since the start of the pandemic. 10. Richmond, VA Median listing price: $310,000 Median listing price change: -3.4% There simply aren’t enough entry-level homes to meet demand in Richmond right now. Since prices have risen so much and bidding wars are all but expected, a lot of homeowners who have comfortable houses in the lower price ranges are too scared to sell and trade up, because they worry they won’t be able to find another place they can afford to live. So why have listing prices decreased? Two reasons, said Jenny Maraghy, CEO and founder of the Jenny Maraghy Team. One is the influx of smaller homes that come onto the market, such as this two-bedroom cottage asking for $199,000. The other is that most local agents underprice homes to help with marketing. “If I know I’m going to get $325,000 for a house, I’m likely going to price it at $299,000 and let it ride the market,” she said. “The biggest mistake we can make [here] is overpricing.”

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Best States for the Middle Class At 46.62%, Utah has the highest concentration of middle-class households. By The National Association of Realtors® and Smart Asset The middle class comprises the largest economic group in the country. It’s also a segment that has been increasingly cost-burdened in real estate, often paying more than 30% of their income toward housing. Its members are in search of affordable housing markets, bolstered by a strong job market—middleclass jobs are growing in most parts of the country. So which states offer the best potential for the middle class? SmartAsset, a personal finance website and resource, compared the 50 states and the District of Columbia across seven metrics, including the percentage of households in the middle class, median household income adjusted for cost of living, median home values, homeownership rates, and more.

18 | Salt Lake Realtor ® | May 2022

Given these factors, Utah and Idaho topped the list, offering more equitable income distribution and strong homeownership rates for the middle class, according to the study. Utah remains the state with the highest percentage of middle-class households and second-most equitable income distribution. Idaho also ranks well for its more equitable income distribution, along with its homeownership rate, four-year change in median household income and increase of middle-class jobs. Across all 50 states and the District of Columbia, Utah has the highest concentration of middleclass households (46.62%), defined in our study as households with an annual income between $60,000 and $149,999. Additionally, Utah’s Gini index – a measure of income inequality, where 0 indicates perfect equality and 1 indicates perfect inequality – is the

5. Colorado 6. South Dakota 7. Iowa 7. Michigan (tie) 9. Vermont 10. Indiana. To find the best states for the middle class, SmartAsset looked at data for all 50 states and the District of Columbia. We compared them across seven metrics: Percentage of households in the middle class. This is the percentage of households with an annual income between $60,000 and $149,999. Data comes from the Census Bureau’s 1-year 2020 American Community Survey. Median home value. Data comes from the Census Bureau’s 1-year 2020 American Community Survey. Homeownership rate. This is the number of owneroccupied housing units divided by total occupied housing units. Data comes from the Census Bureau’s 1-year 2020 American Community Survey. Four-year change in median household income. This is the percentage change in median household incomes from 2016 to 2020. Data comes from the Census Bureau’s 1-year 2016 and 2020 American Community Surveys. Gini index. This is a statistical measure of income inequality. An index of 0 indicates perfect equality, and an index of 1 indicates perfect inequality. Data comes from the Census Bureau’s 5-year 2020 American Community Survey. Median household income adjusted for cost of living. Household income figures come from the Census Bureau’s 1-year 2020 American Community Survey and cost of living data is from the Bureau of Economic Analysis.

Four-year middle-class job growth. This is the increase in employment for jobs with average earnings between $30,000 and $70,000. Data comes from the Bureau of Labor Statistics and is for 2017 and 2021.

second-lowest nationwide, at 0.42. Utah ranks third best for its median household income adjusted for cost of living, at about $81,500. In addition, from 2017 to 2021, the number of jobs earning an average salary of $30,000 to $70,000 increased by more than 33% (ranking third best). Middle-class jobs are growing in most parts of the country. Nationally, jobs with average earnings between $30,000 and $70,000 increased by 19.29% from 2017 to 2021. These jobs grew in 47 states, with Arizona seeing the largest increase over the same time period (47.68%). Four places, however, have seen a decrease in these jobs, namely the District of Columbia (-14.41%), North Dakota (-7.16%), Vermont (-1.58%) and Washington (-0.85%). The following 10 states benefit the middle class the most by those criteria, according to SmartAsset’s study: 1. Utah 2. Idaho 3. New Hampshire 4. Minnesota May 2022 | Salt Lake Realtor ® | 19

Is a Calmer Market Coming? The sudden large gains in mortgage rates have reduced the pool of eligible home buyers. By The National Association of Realtors® The housing market is showing some early signs of normalizing. Contract signings dropped in March, the fifth consecutive month that pending home sales have fallen, the National Association of Realtors® reported. The Northeast was the only major region of the U.S. that saw a monthly increase in contract signings. All other regions dropped. “The falling contract signings are implying that multiple offers will soon dissipate and be replaced by much calmer and normalized market conditions,” said Lawrence Yun, NAR’s chief economist. “As it stands, the sudden large gains in mortgage rates have reduced the pool of eligible home buyers, and that has consequently lowered buying activity. The aspiration to purchase a home remains, but the financial capacity has become a major limiting factor.” NAR’s Pending Home Sales Index, a forward-looking indicator of home sales based on contract signings, dropped 1.2% in March to a reading of 103.7. (An index 20 | Salt Lake Realtor ® | May 2022

of 100 is equal to the level of contract activity in 2001.) Overall, contract signings fell 8.2% year over year in March. The drop comes at a time when inflation is running at a 40-year high and living costs are rising. Yun expects inflation to average 8.2% in 2022. He predicts that it will start to moderate, however, to 5.5% in the second half of the year. Home buyers are also facing higher borrowing costs. Yun predicts the 30-year fixed-rate mortgage to average 5.3% by the fourth quarter of this year. He expects rates to average 5.4% by 2023. Higher mortgage rates and sustained price appreciation has led to a year-over-year increase of 31% in mortgage payments in March, according to NAR’s data. “Overall existing-home sales this year look to be down 9% from the heated pace of last year,” Yun said. “Home prices are in no danger of decline on a nationwide basis,

“The falling contract signings are implying that multiple offers will soon dissipate and be replaced by much calmer and normalized market conditions,” said Lawrence Yun, NAR’s chief economist.

but the price gains will steadily decelerate such that the median home price in 2022 will likely be up 8% from last year.” Rental costs are also surging higher. Monthly payments have soared, and Yun predicts more renters will explore homeownership as a result to the higher costs. “Fast-rising rents will encourage renters to consider buying a home, though higher mortgage rates will present challenges,” Yun said. “Strong rent growth nonetheless will lead to a boom in multifamily housing starts, with more than 20% growth this year.”

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May 2022 | Salt Lake Realtor ® | 21

How Disruption Works in Your Favor Regardless of how new technologies change your work, remember that your intangible assets—your personality, intellect, and ability to bond with clients— cannot be replaced. By Graham Wood “Disruption” is a buzzword that has stirred considerable angst in the real estate community. As elements of the transaction become digitized, automated, or handed over to robots, it’s easy to worry about your role. But consider the opportunities disruption provides to enhance your customer service. While technology supplants some laborious human tasks like scheduling showings, organizing paperwork, or submitting a bid on a property, it also frees up time and head space for growing your business. It expands possibilities for 22 | Salt Lake Realtor ® | May 2022

connecting with prospects you might never have found otherwise—and it may even lower the potential for transaction fraud when the digitized ledger system known as blockchain becomes established. Automation, in fact, strengthens the demand for human connection in the transaction. Your customers may appreciate the convenience of certain apps and websites, but they also depend on the support and knowledge you offer. To get a disruptor’s perspective, we talked with several participants in the REach® technology accelerator, a

program that connects tech startups with the industry. REach® is operated by National Association of Realtors® subsidiary Second Century Ventures, a venture capital fund focused on promoting innovation in real estate. “Disruption is, essentially, forced change,” said Sebastian Tonkin, CEO of transaction management company Glide. “The source of disruption is a gap between consumer expectations and what the industry is delivering. You can [look at disruption and] say, ‘I only know how to do things the old way,’ or you can say, ‘Wow, most of the industry doesn’t understand this, and I can jump on it and get ahead of the curve.’”

Shifts Aren’t New, They’re Inevitable Throughout the 110 years of NAR’s existence, the industry has confronted change, yet the inherent value of real estate pros has remained intact, said Mel Myers, CEO of photo editing company BoxBrownie, another

member of the 2018 REach® class. In fact, real estate photography is a great example of a technology that has been in constant transition as technology makes it easier to shoot, edit, store, and publish photos. “A photographer used to shoot photos on film, deliver them to real estate offices, and then the broker would have to sort through them,” Myers said. “Now the process is digitally mainstreamed.”

You Cannot Be Replaced Most innovations require your input to be effective, points out Lane Hornung, co-founder and CEO of Zavvie, a content marketing company focused on connecting real estate with consumers at the hyperlocal level. “This so-called ‘disruption’ has actually been great for practitioners,” he said. “It has enabled those who have adopted new technologies to achieve previously unheard-of levels of productivity and service.” May 2022 | Salt Lake Realtor ® | 23

opportunities for agents to get in front of their clients— to enhance a crucial element of customer service, not replace it, he adds.

BoxBrownie Many agents delegate tasks to virtual assistants. In that vein, BoxBrownie acts like a remote support team for photo editing. Pros can submit their listing photos—whether taken by themselves or professional photographers—and request whatever edits they seek, such as turning a gray sky blue. BoxBrownie, staffed with professional graphic designers, returns the photos in ready-to-publish condition. “My attitude is that Photoshop has been around forever, but a lot of people don’t know how to use it well,” CEO Mel Myers said. “We do it really well and make it accessible for agents.” The company, he said, is not aiming to replace professional photographers. “Are we disruptive? Yes and no. We’ve created a better way of doing something, but we don’t replace the keen eye of a photographer.

Regardless of how new technologies change your work, remember that your intangible assets—your personality, intellect, and ability to bond with clients— cannot be replaced. These traits position you to be the person your customers need. “People overlook the fact that they are uniquely placed on Earth to do what they do,” said Conor McCluskey, CEO of video marketing firm BombBomb, part of the founding REach class of 2013. “You can learn technology—use something 10 times, and it becomes second nature—but nothing and nobody can learn to be you.”

Within Your Reach Since its launch in 2013, NAR’s REach® accelerator program has partnered with four dozen tech companies to offer guidance on how best to serve the changing industry. Here’s a sampling of the ways their innovative tools can help you provide a better experience for buyers and sellers and support your critical role in successful transactions.

BombBomb The video platform enables users to record and embed video directly into email, social media channels, or any other communication vehicle. While written messages often lose a sense of emotion, adding video to your digital marketing, e-newsletters, and client follow-ups can convey “that empathy that people need,” CEO Conor McCluskey said. “The people aspect, the relationships you build, the humanity you bring to the transaction— that’s what BombBomb leverages.” McCluskey called BombBomb an “antidisruption tool.” Its goal is to expand 24 | Salt Lake Realtor ® | May 2022

Another route to a paperless business, Glide offers a “TurboTax-style interface that guides the client through the most important documents and intervals in the transaction,” said CEO Sebastian Tonkin. You enter information only once, and the software provides a single login to manage an entire transaction. “I came to real estate as a client, and I realized that the homesearch process had improved, but the transaction process hadn’t kept pace,” he added. “While most buyers and sellers are willing to tolerate a complex transaction, it simply reflects poorly on the industry. They hire an agent for their expertise, not to shuffle paperwork for them.” The tool can also free up an agent’s support staff so they can focus more on higher-value tasks that generate income or improve the customer-service experience.

Zavvie Hyperlocal marketing is an important part of making yourself a neighborhood expert. But, for those who don’t have time to curate or create content aimed at clients and prospects, Zavvie provides a team of creators and social media marketers to develop content for you. The company’s goal is to create marketing pieces on a neighborhood level that generate leads and listings and help transactions close faster, CEO Lane Hornung said. Zavvie “takes geographic farming into the digital age, supercharging and scaling something real estate professionals have been doing successfully for years, namely being a neighborhood expert and building a business around that expertise.” Graham Wood is Executive Editor of Digital Media for REALTOR® Magazine. He can be reached at gwood@nar.realtor.

What Rebounding Birth Rates Mean for Housing From January 2020 to May 2020, job cuts and business shutdowns led to 62,000 “missing births” in the U.S., but the baby bust spurred by the pandemic appears to have been short-lived. By The National Association of Realtors® The beginning of the pandemic spawned a “baby bust,” with birth rates falling to 100-year lows. But economists say that is quickly reversing. Could a baby boom be next? Not necessarily, economists say, but the latest data still shows an increase. Historically, birth rates tend to go down during recessions and uncertainty in hard times, like

26 | Salt Lake Realtor ® | May 2022

pandemics. Birth rates followed that trend early in the pandemic when the states with the largest COVID-19 cases saw the largest declines in births. From January 2020 to May 2020, job cuts and business shutdowns led to 62,000 “missing births” in the U.S., according to a new paper published by the National Bureau of Economic Research.

Birth rates have an impact on future housing demand, Jessica Lautz, vice president of demographics and behavioral insights at the National Association of Realtors®, noted on the association’s blog in 2021. Having a baby is often a leading housing decision, prompting new families to buy a home or desire a larger home, Lautz wrote. The decline in births means fewer home buyers with children in the home. But the baby bust spurred by the pandemic appears to have been short-lived. The study’s authors note how unexpectedly quickly it has recovered. Later in 2020, the birth rate rebounded by 51,000 conceptions. Economists say it was due to fast growth in the labor market and to government relief programs that helped households weather the pandemic’s economic impact. But Melissa Schettini Kearney, one of the paper’s authors, told MarketWatch that the rebound later in 2020 is “far less significant” compared with the general U.S. trend over the last 15 years, which has resulted in about a 20% decrease in births. The authors note there are no signs of that overall trend reversing, even with the recent uptick in birth rates.

“Births in the U.S. have now fallen well below replacement levels, a situation that has existed in other developed countries for the past few decades,” the authors noted. “Such low levels of fertility will affect economic growth, the solvency of public retirement systems, and other economic and social outcomes going forward.” An earlier paper by the authors reported that highly educated women in their late thirties and early forties were the most likely to delay contraception in the early days of the pandemic outbreak. Also, other studies are showing a lasting trend: More adults don’t want children. Forty-four percent of adults younger than 50 who don’t have children said they either weren’t likely or were “not at all likely” to have children one day, according to a Pew Research Center survey from October 2021. That is up from 37% in 2018. In 1985, 58% of home buyers had children under the age of 18. That percentage has since fallen to 33%, according to NAR data.

Image licensed by Ingram Image

May 2022 | Salt Lake Realtor ® | 27

MARCH

HOUSING WATCH

Home Sales Fall in March, Single-Family Home Price Exceeds $600K for the First Time

Salt Lake homes sales took another dive in March. It was the tenth consecutive month of falling sales year over year. Falling sales are due to limited inventory, higher home prices, higher mortgage rates, and fewer move-up buyers. There were 1,260 homes (single-family and multifamily) sold in March in Salt Lake County, an 11% decrease compared to 1,409 sales in March 2021. The median sold price of all housing types in March increased to $540,000, up 24% compared to a median price of $435,000 a year ago. Single-family homes sold in March had a median price of $628,975, up 26% from $500,000 in March 2021. It was the first time the median single-family home price exceeded $600,000. The median price of multifamily homes sold climbed to $454,000, up 31% from $346,437 last year. “A report by the Pew Research Center reveals that nearly half of Americans believe the availability of affordable housing is a major problem in their local community,” said Steve Perry, president of the Salt Lake Board of Realtors®. “Further, 70% of Americans said young adults today have a harder time buying a home than their parents’ generation did.” The median sold price per square foot for all housing types in March increased to $254.62, up 22% compared to $208.33 in March 2021. Homes sold in March were on the market a median of five days, the same amount of time as a year earlier. Nationally, home sales year-over-year, fell 4.5% (6.04 million in March 2021). “The housing market is starting to feel the impact of sharply rising mortgage rates and higher inflation taking a hit on purchasing power,” said Lawrence Yun, NAR’s chief economist. “Still, homes are selling rapidly, and home price gains remain in the double-digits.” With mortgage rates expected to rise further, Yun predicts transactions to contract by 10% this year, for home prices to readjust, and for gains to grow around 5%. The U.S. median existing-home price for all housing types in March was $375,300, up 15.0% from March 2021 ($326,300), as prices rose in each region. This marks 121 consecutive months of year-over-year increases, the longestrunning streak on record. “Home prices have consistently moved upward as supply remains tight,” Yun said. “However, sellers should not expect the easy-profit gains and should look for multiple offers to fade as demand continues to subside.” First-time buyers were responsible for 30% of sales in March, up from 29% in February and down from 32% in March 2021. NAR’s 2021 Profile of Home Buyers and Sellers – released in late 20214 – reported that the annual share of firsttime buyers was 34%.

“A report by the Pew Research Center reveals that nearly half of Americans believe the availability of affordable housing is a major problem in their local community,” said Steve Perry, president of the Salt Lake Board of Realtors®. “

28 | Salt Lake Realtor ® | May 2022

May 2022 | Salt Lake Realtor ® | 29

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Coaching, for you. The best athletes have coaches, so why shouldn’t you? Our own Utah coach, Laurann Turner, leads bi-weekly calls for our Windermere agents. From discussions on building your brand to defining strategies for open houses, our coaching community is more than just a place to learn best practices, it’s a way to keep you accountable and on track for success.

Being a Windermere agent is more than a job. It’s a calling. Let’s chat about how we can help you meet your goals. Contact Monica Draper to learn more today and for an one-time invitation to join our next Coaching Community session. 435-313-7905 / monica@winutah.com