3rd Quarter 2022 Park City Market Pulse Newsletter

Much like the changing weather, a shift is underway in our real estate market. After two years of pandemic-induced hyperactivity, the market seems to be returning to a more balanced state. Listing inventory is rising, and prices are starting to level off in many sectors. Consequently, buyers are taking this opportunity to be more thoughtful in their purchase decisions, dramatically decreasing the instant offers that were prevalent during the past few years.

Sales-to-list price ratios are normalizing back to 95 - 96%, which is more typical of our pre-pandemic market. Sellers are re-evaluating the market, and when necessary price improvements are now occurring in a more timely manner.

During the third quarter, sale prices for single-family homes in Summit and Wasatch Counties showed moderate increases in both average and median prices, up 7% and 3% respectively. These numbers pale in comparison to the pandemic-fueled market increases of 40% and 50% that were commonplace during the past two years. However, they are in-line with the longer-term historic averages for our market. While prices were up, the number of transactions and the overall dollar volume dropped 30% for single-family homes and 27% for condominiums from the year prior.

There are a broad set of circumstances contributing to the moderating of sales activity, including fears that the market might be overheated, continued interest rate increases, and concerns about a potential recession in the near future. While these shifts can be cause for trepidation, market corrections are indeed an integral part of a balanced, healthy economy. From a real estate perspective, these inflection points can provide strong opportunities for judicious buyers and sellers.

I will, of course, be watching the numbers closely moving forward, making sure to keep you posted on the latest news. In the meantime, I look forward to hitting the slopes very soon and hope to see you out there.

Let it snow!

Despite fluctuations in the regional markets, single-family sales activity along the Wasatch Back was markedly down compared to the prior year, with sales volume off 25% and median prices up 3% year over year.

It’s important to not utilize the broader market trends to paint the picture for every local neighborhood. The market is highly segmented, and each neighborhood in Park City has unique values and pricing trends. See below for some noteworthy stats for single-family areas during the 3rd Quarter of 2022.

HIGHLIGHTS   |  Stats by Neighborhood

• Within Park City Limits, total transactions were down 54% to 133 units, yet sales volume declined just 37% to $613 million year to date. The median price of a single-family home rose 33% to $3.9 million.
• In the popular Old Town area, transaction numbers were down 71% (110 to 32), as the median price set a new record above $3.6 million (+63%).
• The Prospector neighborhood led all others for the greatest increase in median price at 54% year-over-year to $2.6 million.
• In the Snyderville Basin, sales volume is down 33%, yet there was a modest gain in the median price, up 5% to $2.0 million. All but two Snyderville neighborhoods (Kimball Junction and Silver Creek South) saw declines in the number of transactions, with Jeremy Ranch dropping the most, down 60% to 31 units. Silver Creek South had the biggest gain, with 22 homes sold, up 69%.
• Jeremy Ranch and Old Ranch Road areas saw the biggest price increases with the median prices rising 53% and 44%, respectively. The median sale price in Old Ranch Road rose to $6.9 million, making it the second highest in the region behind Canyons Village, where the median price came in at $9.6 million.
• The Heber and Kamas valleys showed substantial median price increases of 25% and 31%, respectively.

Condominium sales prices were strong across the entire market area, while total sales volume declined due to a lack of inventory. Median price increases were greater than in the single-family market, with every major area across the region reporting increases of 20% or more.
 

• The condominium market in Park City saw a 40% decrease in transactions while median sale prices increased by 20% to the current $1.5 million.
• Price gains were nearly uniform across all neighborhoods, with only Upper Deer Valley declining (4%). Old Town and Prospector led the gainers, up 68% and 62% respectively.
• In Wasatch County, Jordanelle Park doubled its sales volume over the prior year on a substantial gain in median price, up 48% to $976,000.

After explosive growth in 2021, land sales declined across the region with every major area showing drops in units sold. Total sales volume dropped in all areas except Jordanelle, where sales volume was up 48%, and prices were up 61% from the year prior.

HIGHLIGHTS  |  Stats by Neighborhood

• Jordanelle showed the most activity, selling 431 lots this past year with a median sale price of $726,000, up from $450,000 the prior year.
• Overall, land sales in Summit and Wasatch counties were down 35%. However, price increases pushed the median sales price for lots region-wide up 42% to $695,000.
• All the major areas of the market saw a drop in transaction volume. Snyderville, Heber Valley, and Wanship/Hoytsville saw the greatest drops, with volume dropping by half from the previous year’s total.
• Only 35 lots sold within the Park City Limits, but the lack of available lots coupled with high demand pushed the median sale price for the few that did sell to $2.1 million, up 45% from the year before.

The current Absorption Rate for residences in greater Park City is currently 4.2 months. Six months ago, it was just 1.5 months. The average over the seven years from 2013 to 2019 was 7.2 months, so we are still selling homes much faster than in recent history. Still, the timeframe is more than twice what it was six months ago.

How much is the market changing?

We are witnessing some easing in prices as mortgage rates rise and competitive bidding becomes less frequent. Economic forecasts are predicting a continuing economic slowdown, but none has projected a real estate downturn such as we experienced in 2008. So, what are the key takeaways from this quarter’s numbers?

• Inventory is finally improving. Since the end of 2021, inventory has increased from 287 to 836 properties for sale, about half of the pre-pandemic levels.
• Demand is slowing. Q3-2022 sale transactions were down 30% from Q3-2021. Condominium sales are down 27%; single-family sales are down 30%; vacant land sales are down 35%.
• Pending sales are back to about 2019's pace. Demand is waning in the face of 7% mortgage interest rates, which are likely to keep rising in 2023. Important to note is that roughly 50% of all transactions in the Wasatch Back are cash, so interest rates typically exert a little less influence on our market than in many other areas of the country.