435 Podcast: Southern Utah
Explore the heartbeat of Southern Utah with the 435 Podcast, your go-to source for all things local in Washington County. Stay ahead of the curve with our in-depth coverage, expert analysis, and captivating interviews. Whether you're a resident or visitor, our podcast is your key to unlocking the latest happenings and trends in St. George and the surrounding areas. Tune in now to stay informed and connected with our thriving community!
435 Podcast: Southern Utah
The Housing Market Squeeze
The housing market in 2025 presents a fascinating paradox—while inventory levels climb to a ten-year high in Washington County, the fundamental affordability crisis continues to reshape how Utah families approach homeownership and life planning.
Emily Merkley, CEO of the Washington County Board of Realtors, shares eye-opening statistics that reveal a market in transition. With absorption rates hovering around five months of inventory, Washington County has reached what economists consider a balanced market. Yet this equilibrium brings its own challenges. The median home price sits stubbornly at $515,000 while local wages lag $16,000 below the state average, creating what Merkley describes as "extreme conditions" for affordability.
Perhaps most revealing is what one tech worker confided during the discussion: "We realized we had a choice to make. We could either continue to grow our family or get into a home." This heartbreaking decision faced by many Utah families illustrates how the housing crisis transcends mere economics and shapes fundamental life choices. With the average mortgage payment in Washington County reaching $2,800 monthly at current interest rates, even well-paid professionals find themselves priced out of homeownership.
The conversation delves into the market freeze created by interest rates, with 80% of existing mortgages locked in below 5%. This creates a bottleneck effect where homeowners refuse to give up favorable rates, preventing the natural lifecycle of housing—from starter homes to family homes to retirement properties—from functioning properly. Meanwhile, days on market have climbed to 77 days in Washington County, giving buyers more leverage to negotiate than they've had in years.
Looking beyond numbers, Merkley and the host discuss how zoning restrictions and building requirements artificially inflate housing costs, celebrating builders like Jed Nielsen who've proven affordable homes can still be profitably built when regulatory barriers are reduced. The episode provides invaluable insights for both buyers and sellers navigating this transitional market, where patience and realistic pricing have become essential strategies.
Guest: EMILY MERKLEY Chief Executive Office for the Washington County Board of REALTORS®
Link: https://washingtoncountyrealtors.com/board-leadership/
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[00:00:00] Intro/Housing Market Overview in 2025.
[00:07:30] Utah's Housing Affordability Crisis.
[00:16:10] Washington County's Real Estate Stats.
[00:35:54] Analyzing Price Points and Market Pressure.
[00:43:29] The Value of Housing Diversity.
[00:53:40] The Changing Real Estate Industry.
[01:11:30] Real Estate Agent Statistics and Education.
When you think about the life cycle the starter home, the family home, the retirement home you know there's this life cycle and if they don't keep moving through it and they stall for whatever reason, it creates a backlog of people that are able to enter into the market.
Speaker 2:You combine those two things together, you have the real estate agent and you have the access to the data for the buyer. It's really tough to fool them into paying for something that there's not really value in.
Speaker 1:You know it's interesting when you have the affordability conversation. What is affordable to me may not be the same as what is affordable to you.
Speaker 2:From the Blueform Media Studios. This is the 435 Podcast, the pulse of Southern Utah. If you're looking for a nice cup of coffee and you're in downtown St George, fs Coffee Co that's where you're going to want to stop. It's right there on the corner of Tabernacle and Main Street in downtown St George. So if you've got a bicycle, ride it on down there and grab a drip of coffee and tell them the 435 guys sent you.
Speaker 2:Hey guys, we have CEO of the Washington County Board of Realtors, emily Merkley, here with us today. We're covering real estate. We're going to go back over real estate. It's May 21st, lots has changed and lots has not changed. The market moves pretty quick in some ways and in other ways it does not. So if you're listening, it'd be a good time to move over to YouTube. Check out some of the data here. But if you're watching, I'm going to do my best. If you're listening, I'm going to do my best to kind of break down just the analysis. We're going to start at kind of 20,000 view. We're going to start up in Utah as a whole to look over what the health of the market is. She's going to jump in, but we're going to rapid fire this off so that you guys can get an idea of what's going on in the housing market in Utah and in Southern Utah in general. You can always go to realestate435.com and check it out for the housing market updates. We do them mainly quarterly, but things keep changing and I'm seeing a lot of movement that they're shifting, continuing to happen and kind of an accelerated pace for a couple of different reasons. I know there's a lot of agents that are, you know, saying otherwise, but in my perspective I can see there's a shift coming stronger and stronger towards the buyer's market over the next few months and I'll tell you why as we get along. So home sales 2022 through 2025.
Speaker 2:This chart is can be a little bit tough to look at because there is four years of data on this. I'll zoom in. We are on pace to have the slowest year in total home sales that we've had in the last five years, which isn't saying much because we're looking at the post-COVID boom that happened and the number of home sales jumped dramatically. But I was hopeful that we were going to do better in 25 than we were in 2024. But total home sales in Washington County are only up 2%, but basically statewide we're not tracking for total home sales statewide, so we're down a little bit. Only 34, 3,424 homes sold in March. April data isn't included in this, but it did not do better than 2024.
Speaker 2:2023 was a slow year as well. It was the initial bump in rates that pushed a lot of buyers out of the market and as we've settled into those higher interest rates, more and more people are getting kind of used to it. Wages have come up a little bit and the requirement to get off the fence is there's not a lot of hope for rates to come down. So they're just getting off the fence from my perspective. But home sales continue to be sluggish in 2025. And even if you look back post-CO COVID, there are still pretty sluggish from 2019 numbers as well.
Speaker 2:If you go all the way back there, um annual months of inventory. So that was looking at just what. How many homes are selling total, right, we're a little bit down statewide. Uh, we're a little bit up. So far this year in Washington County, only 2%. We'll get get to that in a second.
Speaker 2:Um months of supply of inventory. This is an important number to look at because this is basically the index as to are we in a buyer's market, a balanced market or a seller's market, and this goes all the way back to 2005. This is statewide. You could see 2008, 2009,. We had 11 and 12 months of inventory. That's an extreme buyer's market.
Speaker 2:Obviously, everybody remembers home values collapsed due to a lot of different factors, mainly being supply was already high at the beginning. There there was already a ton of inventory already on the market before the bubble popped. And then the bubble popped, demand dried up to almost nothing and supply, as the annual months of inventory goes, skyrocketed. And then you can see, as interest rates came down, the annual months of inventory goes down to a bottom in 2021 of 0.9 months of inventory. Things were flying. Washington County more homes sold than were listed. Prices soared and we started to climb back up.
Speaker 2:For statewide we're at 3.6 months of inventory, which is still a pretty strong seller's market. There's going to be appreciation on values statewide. Not quite the case in Washington County, but it's an indicator of things that are coming and you can see on the chart 2022, 2023, 2024, and 2025, it's a climbing number. Basically it's the point is people aren't selling their house because they don't need to sell their house. They have a great interest rate and they're not going to want to move, but we can see this shift happening. So statewide we're still in a seller's market at 3.6 months of inventory. Anything over four months of inventory correct me if I'm wrong, emily anything over four months of inventory is a balanced market. We like to see four to six months of inventory to keep pace with the market so that home values don't skyrocket or move at an unsustainable rate. So we're just kind of approaching that balanced market statewide. But it's just one indicator. It's just one indicator, but it is the best single indicator to look at, I think, as to what the health of the market is. It is the best single indicator to look at, I think, as to what the health of the market is.
Speaker 2:Average days on market. This is a secondary element. A metric to look at is how long are homes staying on the market to determine, you know, am I priced right? Is the inventory being accepted by the demand, the buyers that are out there? And we've seen a huge jump statewide. We go all the way back to 2014 to get to 69 days in the market, which is the current Utah average days on market.
Speaker 2:69 days on the market that goes all the way back to 2014 was the last time we were that many days on market, which shows buyer sentiment is not in a rush, and I think if you talk to realtors across the board, they're all saying the same thing Buyers aren't in a rush. And I think if you talk to realtors across the board, they're all saying the same thing Buyers aren't in a rush. Sellers are feeling the pressure which, when you have lingering days on market, sellers decide I should probably lower the price in order to get somebody off the fence. So you'll continue to see as those days continue to climb. If they do continue to climb which I think they will continue to climb you're going to see the absorption rate follow is my assumption. There's a lot of agents that only use days on market to determine buyers or sellers markets. What do you think about that?
Speaker 1:I would agree, and I think they're missing out on valuable data by not also including the absorption rate.
Speaker 2:Yeah, it's kind of a two function thing.
Speaker 1:It is.
Speaker 2:Because sometimes you're sitting on the market because you're just so far priced out of the market and it's a good barometer to see. Okay, if I'm lingering on the market even though absorption rate is staying in a seller's market, then what is the problem here? The issue is likely the house and the price that we're asking for the house.
Speaker 2:Exactly so. Average days on market 69 days statewide and climbing going all the way back to 2014 was the last time we saw that Housing affordability. This is something I actually want to talk to you about here in a little bit, but this is the index of how. The affordability index takes into account three functions it's the interest rate, the median value of the home, the home and then the wage the median wage of the area. So this is statewide, uh, housing affordability and the index basically a a perfect affordable market where those things align in. Perfection is 100. 100 is like hey, that's, it's perfectly affordable about 30% of the income to purchase the house, right? Anything below 100 means less affordable. Anything above 100 is more affordable.
Speaker 1:Yeah, I think there's a couple of different indexes you can look at. You're basing off of the 100 scale. I look at a different index and a three is a, which means that your income is three times more than what the median household payment would be, is an indicator, right, because that says that housing is affordable, and the last graph that we pulled showed Washington County at a 6.9.
Speaker 2:6.9, and three is affordable.
Speaker 1:And three would be considered affordable.
Speaker 2:And so below three would be more affordable, extra affordable, three is affordable and three would be considered affordable.
Speaker 1:And so below three would be more affordable. Extra affordable, extra affordable, yeah, and we're just great conditions for housing right and for affordability and housing anything over a three. It starts to get less and less affordable.
Speaker 2:Does that? So that's just the income, it's just the income function, is that right?
Speaker 1:Yeah, they base it off of several factors, like you said, but a lot of it has to do with income and then the housing price. And what's fascinating about, if we look at Utah, Utah's median and I think you have that here is about 500,000, right.
Speaker 2:I think so yeah 500.
Speaker 1:Washington County is 520. So our median is currently sitting it's come down slightly since last year and hovering in the 514, 515. But we sit higher than the state's median. But our wages, our annual median income wages, sit about $16,000 lower than the state's average, which kind of gives you a picture of what affordability is like in Washington County.
Speaker 2:Yeah.
Speaker 1:We're experiencing they're experiencing extreme conditions. Ours are just a little bit more extreme.
Speaker 2:Yeah.
Speaker 1:And even though our wages are keeping pace with the state average, there's still that difference that's causing problems. And then you have the disparity between the median house price as well.
Speaker 2:The interesting thing about this affordability index? Yeah, so, looking right here, this is the Utah home prices by year. So 500,000 year to date, so far in 2025, 500,000 in 2024. And then also, this graph is also showing the percent increase from the years above the average, which is a 4% long-term average right. And so in 2024, the value of a home was 51% higher than the long-term average trajectory and at the top in 2022, we're 67% above the trend line. And if you look at it going back to 2007, 2008, we were only 27% above that trend before the bubble popped.
Speaker 2:Which is really fascinating to me is to see, you know, as markets shift, if a shift is indeed coming, if this is a new trajectory the Fed creates. You know, basically the numbers between five and six trillion dollars over the course of three years. You pump that money into the supply, you create new trends, you create new markets, you create new values, and that's where inflation is coming into effect on this. So I don't necessarily think that that 4% trend line is one that we're going to revert back to anytime soon for it to correct. I see a lot of plateauing happening until that trajectory comes up. At least from my perspective, I don't see that there's a huge correction on the horizon, but short-term corrections are definitely going to happen. So, going back to the housing affordability in Washington County, even though it is so affordable or it is so unaffordable, we also have basically 30% of the county that's retired and drawing income from other places. That's not the working class that's factoring into these housing prices, right?
Speaker 1:I mean you, you certainly have a little. You have that. That people moving into the area that you know mortgage rates aren't an issue. They're a second home buyer, so they're they're cash buyer, so economic conditions aren't as important to them as it is for somebody that is financing that mortgage. We do have these retirees, but data is showing that sometimes these retirees are still some draw additional income from pension, whatever. But there are others that are Social Security based and as these housing prices go up, so do their property taxes, and even they are becoming cost burdened by the acceleration of home prices.
Speaker 2:Yeah, it's been an interesting dynamic at play, for everybody for sure, and I think it's interesting to go back to 2012. So, with that 6.9, as your index goes as affordability, if you look at this one, we're at 76. So, basically, it's hard to. It's not like a percentage, right, but out of a hundred we're at 76. So 24 points, uh, less affordable than we were in a perfect market, which was back to 2021. We were at at affordable rates.
Speaker 2:And then, if you go back to 2012, we were at 159 from the affordability scale, and that's really interesting because home values had fallen so far, because that was basically the bottom, at the very bottom, where home values were at the minimum. So it'd be even more interesting and I'd have time to look back and say, okay, what was affordability like back in the 80s? Right, if we think of like 70, because this moment in time is a really similar to the late 70s, early 80s, where interest rates rose up significantly, which really put a big strain on housing across the country, right, and so it'd be interesting to see affordability index. But the 2022, we were at 69 out of 100. So we've gotten a little bit more affordable, but not by much, not by much, and that's, I think, a function of wages. Just don't keep up pace, because it's moving so fast.
Speaker 1:No, and unfortunately it's not as simple as telling business owners to just pay your employees more Just pay them more.
Speaker 2:I was talking to Michelle Tanner. I was like I think the government has something to do with this. It's like 30 to 40% of our workforce is government, so the government could just pay them more. I mean, if they're going to be printing all the money, they can just pay their employees.
Speaker 2:More Might bring up the private market, but that's not really how it works. It'd be great in a pretty world that might work. Utah median home payment. This is an interesting chart as interest rates. The yellow line is interest rates gone up and down. This goes all the way back to 2003. 2008,. We had a 6.3% interest rate. We just crossed over 7%. Today, as the 10 years continues, the yield continues to go up. Mortgage rates are going to go up. We just crossed over 7%. So this is 2024. Our interest rate was right around the six and a half let's call it six and a half percent, but our payment was 2,500. The median home value payment was $2,500. And just three years before it was 1,500. So $1,000 a month, which is huge.1,500. So $1,000 a month, which is huge, huge, huge.
Speaker 1:In Washington County it's about $2,800 based on our median.
Speaker 2:Yeah, our median At the current interest rates yeah $2,800. And it's a tough thing to bite off, especially when you're on a fixed income, if you're wanting to move up or move down and you don't have the full cash, which most of them do a big portion of them do, but that for a first time home buyer, it's completely out of the realm of possibility, right? It just pushes so many people out of the market.
Speaker 1:Well, it's interesting. I was talking to a gentleman from up north. He works in a silicone slopes tech company and he said you know, I get paid really well. I get paid really well for the job that I have and for what I do. My wife and I just had our first baby. And he said we were sitting down and looking at our finances I had even just gotten a raise and we realized we had a choice to make. We could either continue to grow our family or get into a home.
Speaker 2:Yeah.
Speaker 1:So like think about the dynamics for that, If that's the choice that Utah families are having to make do I have children or do I get into a home? Think of the dynamics in Utah that would change if people stopped having children.
Speaker 2:Yeah.
Speaker 1:You know what I mean. Yeah, and what it, what it would actually do to the economy and and that's truthfully, the decisions that a lot of Utah families are trying, and Utah individuals in general, are trying to make right now. What's more important, a family or a home. Yeah, because based on where I'm at right now, I can't have both.
Speaker 2:Yeah, and the tough thing is rent continues to climb. I mean it's pulled back a little bit just in the last year, but even the HUD to get uh HUD financing or uh basically vouchers, grants for like lower income housing for a three bedroom, it's the. A fair rent is, uh, I think, $2,000 for a three bedroom Right and so 2200 to 2200.
Speaker 2:And so it's. Even rent is putting pressure and that's just what the fair housing market has said. Is the rent, All the rent is above that. Every county across the state is above what the fair housing rate for rent is. And so you're looking at north of that, $2,000 just to get a three bedroom home and if you got kids you got to have some bedrooms, right, Unless you're like me and I put all my kids in one room, I just put them all in one room. I don't know if that's going to play out in the long term, but it seems to be working out now while they're little, while they're little. So yeah, it's expensive to buy houses across the state median sales price and the payment is high. Projected housing demand. This is I don't know how they come up with the number. I would like a little bit more deep dive into this, your perspective on how they come up with these numbers. But in Washington County we're short 22,000 homes. Utah as a state, we're short 44,000 homes based on the demand. People that are.
Speaker 1:The demand between now and like eight years from now, I think is what that statistic shows. That yes, and it is based on population growth. So internal migration, net migration, and then influx of people from outside the state. You know it's interesting when you have the affordability conversation what is affordable to me may not be the same as what is affordable to you. And when people from outside the state look at Utah, yes, to us living here and with the wages we we have, it feels and it looks unaffordable. But to somebody who's in a market like california or washington dc or new york, which our mls shows, those are heat maps like where a lot of there's a lot of look eyes looking at our mls, um, it's very appealing yeah to them our housing prices are low.
Speaker 1:To them our taxes, our property taxes, are low.
Speaker 2:Yeah, on the last episode we covered a bunch of different areas where what is their median price moving here from, and Indiana was another hotspot.
Speaker 2:For whatever reason, indiana people are more we're appealing In Indiana no, that was the only one that the median home price was less, but everywhere else was significantly higher. Not just like a little bit, but you can get a lot more house for less money, Right. And so that migration to your point. And this is dwellings, right. So this isn't like projected housing demand for affordable units, this is just rooftops, Rooftops in general, Just rooftops in general. 44,000 across the state. Short in Washington County we Wait a minute. Utah County is 44,000. Utah County is 44,000. Utah statewide is much bigger than that, Right. So 44,000 Utah County, 42,000 Salt Lake County and then Washington County coming in at third at 22,000 units that we need.
Speaker 1:And I'm glad you point that out, that it's rooftops, because our market is so unique where we have a second home market. There's the vacation rental element, there's the affordability and we see we still have this high demand for these luxury multi-million dollar houses.
Speaker 2:There's everything, yeah.
Speaker 1:McMansions.
Speaker 2:So it's a need for the whole rate, the whole range of homes and dwellings, utah mortgage rates. This is an interesting stat and this is just keeps dwindling every time I look at it. 80% of mortgages have less than a 5% interest rate, 28% have almost 29% have 3% or lower interest rate, 38% have between three and 4% and those are the people that are never going to move. Yeah or they're forced to be landlords. They're going to be forced to rent that house out.
Speaker 1:Right yeah.
Speaker 2:Right.
Speaker 1:Even if they don't want to.
Speaker 2:Yeah, it's for them to give that up, and we've seen the number keeps dwindling. We look at this almost quarterly and it's getting smaller and smaller. It was 89% last year it was 89% of mortgages were less than 5%, and so it's shrinking, but it's a slow shrink.
Speaker 1:It's a really slow shrink. Well, I think there is an element of people are forced to move, right. I think where you have areas where the cost of living is increasing, they leave right. Where can I go where I can find a lower cost of living, lower housing and still get the wages?
Speaker 2:that.
Speaker 1:I have, and so I think that there has been a shift in people who probably didn't want to lose that 3% but for whatever reason, had to because of other extenuating circumstances, job relocation, whatever Divorces.
Speaker 2:Divorces right. You're just kind of forced to do it. You can't keep it right. There's a lot of equity in there and the value of the house is there and typically they don't have the money to buy one or the other person out to keep that rate the same. So divorce is a big part of it. Job transfers obviously death has a function into it, but those are, in my mind, those are the only. And that's where the market, I think, is so frozen is because there's such a big portion of the market that's not moving. They're just not moving. They're not looking to go up. They don't need to go down. You know, if you have a big house and you want to sell and downsize, right, kids are out of the house You're not forced to do it. It's like well, I can keep living in my big house. I don't really want to keep living in that house.
Speaker 1:But Right, and see, that's the problem. When you think about the life cycle, the starter home, the family home, the retirement home, you know there's this life cycle and if they don't keep moving through it and they stall for whatever reason, it creates a backlog of people that are able to enter into the market. Right, so you have people that are going well. I bought this home when my needs were less.
Speaker 1:I was single. I didn't have a family, so I went with the two bedroom, one bathroom, 900 square foot bungalow. But now I have a wife and two kids and I'm forced to make this work because there's nothing available that I can afford. Mortgage rates are keeping me here and nothing else is opening up that allows them to transition through that life cycle.
Speaker 2:Right, exactly, so it's keeping things locked up. Okay, moving on, washington County. So absorption rate in Washington County, year to date is just under five. So five months of inventory, we're right there in a balanced market, right, right in the mix of the balanced market. And if you look at the average sold, if you jump down to the average sold price, we're actually down 4% from last year, almost $30,000 less on the average. But the median price has gone up and we'll go into kind of some of the individual price points that things have changed.
Speaker 2:So yeah, the absorption rate, five months of inventory, in April we were, uh, 5.23 it client. It keeps climbing right. But if you look at annual change in that absorption rate 25 year over year change in the absorption rate it's a big jump. It's a huge jump. It's a big jump and these are rolling. The way they function, this is they look at the past 12 months of sales to create this absorption rate. So it's not just saying in this one month, this is what the absorption rate is based off, the last 12 months of how many homes sell and then. So that's how they come up with this months of inventory. So it is a good picture in absorption rate as to where the health of the market is, and as we continue to see that absorption rate climb up, you're going to see more and more pressure on pricing coming down. More and more pressure on pricing coming down. If you look at the average list price, we're trying to list and sell for more we're almost 2% higher than we were last year even though we're getting 4% less right?
Speaker 1:I mean, you're an agent. You probably experience those clients who say to you well, I need to sell my house, but I want what I could have got two years ago. That's true, and oftentimes these sellers push for that list price and in a month, six weeks, when they're not getting any traction, they're making price corrections. So we are seeing the list to sales price ratio expand as well.
Speaker 2:Yeah, and I'll cover that here in a second. It definitely expands. The other way I think of this list price is that if I don't sell it for this, I can't make the change Because it's like it might not be what the market's saying. But if I can't sell the house for this much, I'm just not going to move because I don't have enough equity. If I don't sell it at this price to go on to that next house, right Going back to, I'm stuck here and if I could get this price then I don't have to be stuck here.
Speaker 1:But if I can't get this price then I guess I'm stuck here and I just right, and I'm hearing from agents to a lot of sellers saying, well, I want, I want to see what I can do. Yeah, and that's not helpful really either, Because if you're not serious about selling, you're going on the market. I mean it just it fluctuates the data. It's not helpful in the long run. Right, but there's more and more people with that mindset that I can only move if I can net X. If I can't net X, then I'm staying put.
Speaker 2:Right, exactly, and so it's a tough conversation. I've had thousands of conversations. I remember in 2015,. I was working with Jeremy Larkin and we would go into Entrata and this is 2015. You think we were, we were already kind of digging out of the bottom of it. And 2015, 2016, they were still in trotter homes that were like hundred thousand dollars upside down in the properties that they had bought in 2005, you know. And this, 10 years later, and they were still 100 grand and they're just like get out of here. And then they'd hit the market for the price that they want and it wouldn't sell, and then it expired and it doesn't move. And there's just countless examples of like expired, expired, expired. Some houses just don't sell but it's mainly because the price that they're asking the buyers aren't willing to pay that right.
Speaker 1:They see the value. I do think because of the challenges that buyers are facing today. They are more savvy, and they really are. They're not. The COVID days are gone, where they were willing to risk paying over list price or over appraisal price and and deplete a savings account just to get into a home. They're more savvy now. They're going to be more careful.
Speaker 2:Yeah, and this goes back to the value of a realtor because, if you know, zillow was a baby in 2005 and six, like it, didn't really start picking up steam till 2007. So if you look at the, the data, the amount of data, whether it's accurate or not, the, whether they have data at their fingertips, online, that they can, they can establish an understanding of the market without going to a real estate agent, and so you combine those two things together you have the real estate agent and you have the access to the data. For the buyer is it's it's really tough to fool them into paying for something that there's not really value in. Right, it's really difficult to do these days, especially these days versus uh generations past. As markets change.
Speaker 2:Um median sole price I think it's an interesting number is really just been stable Um month over month. You know April of 25 versus April 24, it's 5% less, but year to date, all of the months combined. You know the last four months because it's just up to date at the end of April I know it says here folks who are paying attention it says March, but it's April. Up to April's data, the median sales price is $515. It's pretty much been low fives for like six months right.
Speaker 2:It's like that's the median price of 515. It's pretty much been low fives for like six months, right, it's like that's the median price of a home. Uh, days on market we actually saw days on market go down in the last few months, uh, and this year, but not by much one day on the median cumulative days on market and then the average cumulative days on market is 77 days on the market. Um, cumulative being sometimes it goes on the market and then comes off the market under contract and then goes back on the market or they pull it off the market for whatever reason and then they put it back on or they change agents. So the total amount of days consecutively without a two-month break, I think it's two months, 30 days, 30-day break, that's where it's collected and then even from pending to going under contract, because typically about 30 days on the market it's still not fully closed until that number. So take it for what you will, but days on market is staying pretty stable as right now, but 77 days average on the market is still significantly higher. It's over that 69 days statewide. It's taken a lot longer to sell homes than it has in a long time.
Speaker 2:Just at a glance, 30-year rate 6.99. This was as of yesterday, but today I know it just crested over 7%. As an index, it's a 30-year index. It's looking at a bunch of different mortgage rates, everybody's mortgage rates I say this every time. Everybody's mortgage rate is different Debt to income ratio, what's your credit score, what's your payment histories, all these different things. Your rate is going to be different. So you got to make sure you talk to a qualified lender. We can help you with that If you need talk to a lender and they can give you what your interest rate would be. But this is an index of all the mortgages that are going out.
Speaker 2:Balance market I think we covered. We covered that oh, what sellers want versus what they get. So I like to look at what the original uh most of the data like. If you look on zillow or you look at even uar data, they use uh, the, the final list to sale ratio. I like to look at what was the original list like, what did they start at and then what did they start at and then what did they sell at? Because the price reductions, I think, have a function in watching where buyer sentiment is and we've hovered around the 95% to 96% and good agents will look at the true, the full history, the full history.
Speaker 2:Because if you look at it, just list to sale, it's about 98%, 98% to 99%.
Speaker 1:Yeah, about 2% less than.
Speaker 2:Which is the reason why the buyer they saw value and then they're like, okay, once I see the value, most people they don't want to negotiate super hardcore. That's not their natural way. There's probably 10% of the market in there is like let's go in, pull the Trump, you know art of the deal, let's super low ball them and see where we can get them. But that's not typically the case and so that original list price is showing hey, it failed at this point and we've hovered around the 95%, which is historically pretty low, pretty low. I mean it typically is like 97, 96 to 97%. Most of the time it's 97 or above original list price to sales ratio. So we're below that, which means buyers are they're they're not looking, they're not putting offers in on homes that they don't see value in.
Speaker 2:This is like I said they're getting savvy. They're getting savvy. This is because everybody always asks well, my neighbor's house sold for this price per square foot. They always go to price per square foot. I want to get that for my house because this is what price per square foot is. There's two totally different numbers. Your house is not the same as your neighbor's house. Depending on size, there's diminishing return on size. So if they're 500 square feet, 600 square feet that's just one bedroom, but that skews what the price per square foot does. And then if they're two story and you're a single level, that's not going to match up. Or if they're a single level and you're a walkout basement, it's also not going to match up Also year that the home was built.
Speaker 2:The year the home was built and a lot of them with your neighbors, like the neighborhoods, a lot of that is pretty close.
Speaker 1:I mean, I'm about to build in a neighborhood where the surrounding homes are 20 years older than me. Yeah, which is?
Speaker 2:tough, but you got an infill lot, that, but you got an infill lot. That's a good one. We want to keep building in those infill lots. Okay, year to date single level. So single level price per square foot $302 a square foot. Two story price per square foot $265 a square foot. So you get less, less per square per square foot as you go up. So, yeah, there it is. That's, that's the what's going on in the market. So average prices declined for the first time in 2025 from a month perspective, just the single month. If you looked at over year to date, the average has fallen, but the single month average price declined for the first time in 2025. So, out of all the months the average price declined, active inventory remains 10 year high.
Speaker 2:We have 1700 and this is dwellings. This does include land, lot and water and some of these other listings commercial multifamily and specifically Washington County, and this specifically Washington County 1700 homes. So it cuts out Iron County because our MLS covers stuff in Sandy and then in Cedar City. So this is just Washington County, but it's a 10 yearyear high. So I went back to the data. 10-year high was the last time, march of 2015 inventory was 1800 homes. Uh, so we've we've hit a 10-year high, which is is relatively speaking.
Speaker 2:If you go back to 2005, we had like 3 000 homes on the market in 2004 and 5, 3 000 most of them were vacant. It's crazy. I stumbled into a uh brad, uh habel brad, I don't brad habel uh agent here in town. I forget his first name, josh josh habel uh. When I was doing research it pulled a blog post of his from 2006 and it was showing how much active inventory is like 3000, which I thought was funny because there wasn't a lot of MLS data Like our MLS data, I think, only goes back to 2007 and then 2006, 2005,. It's like all sporadic. There's like you could see months that data was getting transferred over Um. But yeah, 3000 homes back when the market popped before, which is crazy, but information nonetheless for you guys to take in. Numbers sold units are up 2%. So number of units were up 2.9, almost 3% year to date in Washington County. So, unlike Utah as a whole, we're still seeing increased growth from last year in number of units sold.
Speaker 2:So demand is staying strong. Compared to last year, interest rates hovering over 7% we covered that Absorption rate. Rapid growth days on market, slight drop year over year. Those are kind of the key functions. So I've done this a couple of times, looking at different price points.
Speaker 2:If you're looking at this chart, if it's in green, that means supply and demand are both increasing. So supply is going up. The number of new listings hitting the market in this year has gone up and also demand has gone up for that supply. If it's in yellow, that means supply has gone down and demand has gone down for those price points. And then red is supply has gone up and demand has gone down, meaning there's downward pressure on pricing. So I think the most notable numbers is that three to 350 mark.
Speaker 2:I was going to say yeah, yeah, really three to four. I mean as a whole three to four. We're not keeping up with supply at that price point and I think that has to do with size and the ability to build in this price point and the existing home inventory. Because we're not building new inventory, this existing home inventory is pushing up into that 400,000, which you can see is 400 to 450 is up 21% in supply. So because we can't build in that lower price point, then you're going to see a lower supply number and demand is down because there's not a lot of options out there. Also, it's just a side note can you talk to the mls to see if we could fix this? Uh, these, the five to 750 mark really throws me off, because it's the biggest chunk out of all of them but it's hard to see down more.
Speaker 1:We can break it down a little bit more. Break it down more um, it would.
Speaker 2:It would be helpful because everybody's you know you have these little price windows for the house and so for me to be able to see, okay, this is seeing supply demand in price points is really actually helpful when I'm talking to sellers about it and there's a lot of inventory between five and seven and I can separate it out. But you got to go to the quick search and then you got to do the CMA statistical.
Speaker 1:I can take care of that.
Speaker 2:You're the best. I appreciate that. So $450,000 to $500,000, we have a 24% increase in supply and a 6% decrease in demand, which is really interesting, especially considering demand $450,000 to $450,000 has gone up. So there's this water line based off interest rates that I think are keeping people from being able to crest over that $450,000 mark. But our builders have done a good job at building in that $400,000 to $500,000 mark, I think, over the last two years. So that's helped a little bit. But there is a little bit of downward pressure in pricing just below $500,000.
Speaker 1:The state down payment incentive for the grant for new construction first time home buyers was helpful. I think it really motivated builders to focus more on that price point and meet that price point to also meet the demand and the opportunity for those buyers to enter the market.
Speaker 2:Yeah, there's been some policy grants and things like that. That's helped have builders start building more of that product. And I know SITLA. They've offered up four parcels of land in Washington County and they're trying to hit a $400,000 price point. They are. I don't think they're going to make a $400,000 price point for those, but I'm hopeful. Maybe they can. Maybe Jed can figure something out to get that done.
Speaker 1:I mean, he's showing that it can be done. He's showing that it can be done and it's fascinating too, because a lot of people were skeptical and if you talk to him, even his own accountant that was like I can't make sense of this. Why do you want to sell a $375,000 single family home? You know, and the after the news article broke, that he was doing this.
Speaker 2:Jed Nielsen Nielsen homes yeah.
Speaker 1:Um. Over a hundred people showed up to the model home that day and he said, yes, tell me, there's not a demand for this home.
Speaker 2:Yeah, you're like why would I do it? Well, because we wouldn't have. We wouldn't have this property to build on, it would. We'd have to go build somewhere else. And so why would I do it? It's because there's demand for it.
Speaker 1:There's demand and and quantity. If you give me the opportunity to build the number of units, then I'm not losing anything and I'm providing. I mean, he's providing that something that's so needed in Utah right now and he proved that the demand exists. And when you talk to buyers right now, they just want an opportunity to get into the market. And when you have these cities set these size restrictions or design standards and you have these buyers going, I'm okay with Formica. I don't need a stone countertop, I just need a tile roof. Right, right.
Speaker 2:Yeah, I don't. I don't know why we require block walls everywhere. I get. I get it. The sun beats up the wood and the vinyl. I get it and it's it's expensive to maintain over time, but at the same point it's like you're you're requiring we have to build block walls. This is crazy. Well, I think that's crazy.
Speaker 1:And two I think oftentimes we talk about homeownership and the main benefit being wealth generation, and that is huge. But I think people forget that data shows that homeowners are more civically engaged right, they're involved and they pay attention. They are more likely to maintain that home. Their kids are more likely to achieve higher education, I mean socially. They're invested because they've now created this community right, and if they don't have that opportunity, we're setting them back for disadvantages down the road.
Speaker 1:And so if they had opportunities, if these design standards would that that cities would alleviate or be a little bit more flexible to allow for that, I think that they would see so many more benefits in within their cities and within these communities.
Speaker 2:Yeah, I just think it's unnecessary. I do too, and I think there's an argument to be made. You have these developers that are greedy, right, but when you put their P&L under a microscope, nobody would be able to argue that because the profit margin for a developer is right around 10%, they'd be so happy with 15%, but it's about 10%. And Jed's not making 10%. When he's selling those 750, you know, or a 375 to $400,000 houses, he's not making 10%, but he's making a marginal enough to know that if this is impactful to the community, he cares about the communities that he's building in and he sees the demand and the need and it's more about creating something that has a lasting legacy than just just the dollar, dollar.
Speaker 2:And there are a lot of those developers out there and I think, uh, it's easy to paint a paint, a broad brush to developers and home builders to say they're just greedy and they're just building these houses because you know they want to make a lot of money. It's like, well, they're, they're weighing out demand versus what do I know I can sell. Like, if I'm going to invest in a two million dollar house, it's because they're pretty confident they might actually have a buyer already. That's putting them into a position to build that $2 million house right.
Speaker 1:And something else that I think is really notable about what he's doing is he invested the time. And when you talk to developers they say you know for every day, for every month, that I'm delayed in a development, that I spend in planning or fighting the city to alleviate some of these restrictions or to allow for higher density. It's costing me money and that end cost is tacked on to the cost of the home for furthering an unaffordable unit. And so there are oftentimes builders and developers who are who say city, just tell me what I can do, right, because I I don't, I don't want to make this any more affordable than than what it is.
Speaker 1:So I'll try to comply and and what Jed said was no, no, no, we're not going to do that, we're not going to do this, we're going to make this work, and he invested the time and think he set a standard that I think other I'd love to see other builders follow. And he's going around the state promoting what he's doing to other cities in an effort to see cities kind of pull back. And that's the thing. That's hard too is a lot of people will say to me, emily, the government can't solve all your problems. Right and OK, there's truth to that. But it's. Ok, the government is here to save us.
Speaker 1:But also government created some of these problems. Yeah, and it's only through the government process that we can pull back Right, there was an interesting article I read. I can send it to you. But they talked about how, you know, this government oversight was necessary. You know, in New York, you know, 100 years ago, where multiple families' health conditions were bad and so they had to come in and say, okay, we've got to create some rules and laws to preserve and create safe and stable living environments. But now we've swung a little bit too far.
Speaker 2:Yeah, right, well, and interestingly, I don't know how to talk these days. The interesting part about that is that because younger cities, small towns, didn't want to put the work and effort into adopting zoning codes or rules, they just blanket adopted these rules that across the entire country. Right, and it's like so what was well? If it was okay in Dallas, then it's okay across the entire country.
Speaker 2:Then it works here, right? Which isn't the case, right? Every community should be a little bit different. But it took a lot of work and it was like oh, you can just adopt these housing policies and these guidelines, this code, and now we're going to you know, freddie and Fannie Mae, we're going to give lending if you adopt this one. But if you don't adopt this one, you come up with your own. Then it's going to have to go through approval process to get lending qualifications on this type of housing unit, right. And so, instead of oh, we're just going to figure out our thing, we're just going to adopt the one that they did across the country, and then it never changed. Those standards and policies just never changed, right. And a lot of those policies were predatory in nature to different socioeconomic classes, specifically like line items, oh, absolutely Specifically across the South, right, it was specifically to cut out lower socioeconomic areas from them owning homes. And then those codes and policies were adopted across the entire country.
Speaker 1:Google the redlining maps.
Speaker 2:The redlining maps. Yeahlining maps for Salt.
Speaker 1:Lake City and you see that that dynamic it may not have been as much of a race thing but a religious thing and if you look at that redlining and I'm not trying to be disrespectful at all, but you look at that redlining map and based on what was happening in the 40s, has had very negative effects on today. I mean, you think this shouldn't be happening right now, but it's because of those practices back then that have shaped the, have shaped the communities and the problems that exist today.
Speaker 2:Yeah, and it goes it always. And I, the reason I say socioeconomic is because they they put it into a perspective of a finance terms, but whether it's the color of your skin or your religion or it, came down to.
Speaker 1:What class are you? What class are you?
Speaker 2:Right. And if you were in that class, you were basically excluded from owning a house because banks didn't want to lend on this lower socioeconomic class, and then that's had compounding effects for decades, right, well, right, they viewed you as higher risk, right, exactly, it was social credit score all the way back then. We had that already. We think it's new. It's not new.
Speaker 1:You know what, though? I mean? You see it today. You go and you attend any city council meeting or a fair housing class that I was teaching just last month, and you talk about exactly what you're talking about and the need for more diverse communities, and when I say diverse, I'm not just talking about the color of your skin, right, I'm talking about housing types and allowing for different socioeconomic backgrounds to move in, and I had a realtor raise her hand and say, but what about my home value? Yeah, and you're going oh my gosh, okay, this is the problem.
Speaker 1:This is the problem, and you've got these people that are embedded in communities that they are far more concerned about who their neighbor is going to be, far more concerned about who their neighbor is going to be, and I think what they don't realize is, by you trying to fight or restrict different housing types and different housing accessibility to different groups of people, you're eventually going to price out your own children from being able to live here. You're also going to impact your own quality of life, right? Because if the barista from Starbucks can't live here and the nurse who takes care of your ailing parents can't live here, right, that impacts the quality of your life and, truthfully, when we look at different multi-unit or high density communities around the nation, it actually shows the opposite. It doesn't show that it results in housing prices dropping in different housing types. It actually shows the opposite.
Speaker 2:It doesn't show that it results in housing prices dropping in different housing types.
Speaker 1:It actually shows that it actually supports appreciation.
Speaker 2:Yeah, there's a certain buyer out there. It's like I use Middleton If you're familiar with Washington County, like Middleton it's an older area on the border between St George and Washington City. It's off I-15. On the border between St George and Washington city it's off I-15 and you are required to drive through Middleton to get up to a bunch of really luxury view homes up top. And I've had a couple buyers be like man, you really got to kind of drive through some some old stuff to get here, right, and they kind of have this like face that's like oh, that's hilarious.
Speaker 2:Yeah, this, this is kind of a rundown part of town, right. Like yeah, it's, it's an older part of town but it's, it's just down the street and ultimately all of those homes sell over a million dollars, like ultimately, like that perspective of, oh, I got to drive through this area, maybe it's not the ideal thing to drive through because it was industrial space and there was mobile homes there at one time. There's still a few left. It doesn't really change the value of the home Ultimately it doesn't do it. And but this goes back to home ownership versus, because right now what we're dealing with is the difference between a McMansion and then a bunch of condos, yeah Right. And like, if I'm looking at the type of person that I'm or the quality of a neighborhood, if we just stack a bunch of apartments, which isn't necessarily a bad thing in certain areas of town, again, all housing types are needed.
Speaker 1:All housing types are needed.
Speaker 2:You know the type of person that can't afford a home, isn't going to invest in their community and they're not going to take care of it. But if they can own that property, whether it's a condo or a townhome or a small single family home, that ownership piece will. They will on the on the long, broad margin they will take care of it.
Speaker 1:They're an asset to the community Exactly.
Speaker 2:But I'm going to wrap this part up so we can kind of keep rolling forward. My, my biggest price fear is a million to 2 million. So supplies grown 13% and on the flip side demand has dropped 13%. So it's like a big swing and it's the biggest swing on the map here right now is between a million and 2 million and I think a lot of that has to do with the new construction is landing in that price point. As well as the move, the buyer that's moving out or around, whether it's a second home, because this fits into a lot of different categories. This is just single family homes where they moved out of the area or they want just something different. They have the ability financially to make a change left or right. So you have new construction and existing inventory competing in the same market as well as a drop in the ability for people to buy those homes.
Speaker 2:They're buying powers down. They're buying powers down, so, and they're going to end up just getting something a little bit less right Between 750 and a million and there's a little bit more inventory in that price point but demand has grown down below that million. So I think that's that big price point where we're going to see a big squeeze and basically everything over a million there's. There's a squeeze going on Million to 2 million. We're down 5% in supply, demands down 52%. But the total number we're only at 19 units. Uh, nine nine homes between two and 3 million have sold so far this year. We're 19 sold last year. Um, where we have 50 of those units have hit the market. There's a tight squeeze over a million. That and that always happens as the market squeezes. You're going to see it squeeze from the top down and we're seeing that start to trickle on down. Overall, supplies up 16%, demands up only 2.9%. Something to keep a watch on. That's why I think we're pushing more and more closer to a buyer's market. If you're watching it closely, let's see what else we have here. Okay, a realtor data. So that's kind of the wrap for the housing market update.
Speaker 2:My advice to buyers is it's okay to be patient, negotiate. Don't be afraid to negotiate. If you see a house just hit the market and it seems like it's overpriced, you can watch it or potentially go in and put an offer in and see what they do, because I think sellers who have put them a house on the market they're motivated. Still, it's hard to identify that, but don't be afraid to negotiate a little bit more right now in the market Sellers, be realistic with where the market's headed.
Speaker 2:The values are going down, they're not going up, especially if you're over that $500,000 mark. The demand is just not supporting a lot of those values. So be realistic about your sales price. If your neighbor sold for a number, it's, or a comparable home is sold for a number, it's likely a little bit less, or right at that. Don't try to go more than what your neighbor sold just to have this. You know, feather in your cap, that you had the nicer house than your neighbor, right, right. But yeah, be realistic with the prices. So those are. That's my advice for buyers and sellers.
Speaker 1:I think, to don't get discouraged. I think there's a lot of challenges that buyers face, but opportunities are there. Yeah, just work with an agent, work with a realtor, be patient, just like you said, and be ready so when the opportunity, the right opportunity comes you're ready.
Speaker 2:Yeah, be ready, be ready. Do the financing part first. Let's look at go talk to a lender and we can direct you to a few that we trust. But definitely go find a mortgage broker. I appreciate your banks and your credit unions and they can give you these deals and all this stuff. But go to a mortgage broker that's looking at a lot of different products across the board and and draw out a game plan right, Take, take a few months ahead of when you really want to go buy to get that, that foundation set, so that way, when you do find the one that you want, you can pull the trigger Right. Anything else on that? Okay, let's talk about real estate and what's going on in the industry.
Speaker 2:So if anybody's been following, anybody who's still listening is probably a realtor or has somebody in the real estate business and they want to know what's going on. The industry has changed a little bit over the last six months in some ways and it hasn't changed in other ways. Yeah, NAR versus UAR membership report. There's just thousands of realtors out there. There's 1.5 million realtors across the country.
Speaker 1:I think everybody knows somebody that's a realtor.
Speaker 2:Everybody knows somebody. There's 19,000. And this is according to UAR membership report. But you were saying before we got started that that membership number might not be 100% accurate.
Speaker 1:No, the membership number is right, but membership versus licensees. So there are a lot of people in Utah that have a license but don't subscribe. Maybe they're a part-time or they're working a referral network or property management. But the last number I saw of total real estate licensees in the state it was close to 30,000.
Speaker 2:Wow yeah, that's crazy. So so I think this Utah, the KW Utah, probably scrubbed. These are probably selling agents. So 19,000 agents according to the Utah Association of Realtors. What's that number look like in Washington County?
Speaker 1:So in Washington County right now we have about 1,650 local agents. I do have about 400 more in kind of surrounding Southern Utah areas Kanab, iron County, places like that so about 2000 that live and work here in the area In our area and how many of those actually sell real estate, like how many of them have closed a deal?
Speaker 2:Do you know the number of how many have actually closed a deal?
Speaker 1:I do check from time to time and it is fascinating because there is a small percentage that does about 50% of the sales volume and it's about 10%. Wow, now, and these are your. This is my full-time job, you know every day, this is how I make my money, type of agent. Now, kind of the beauty about being in real estate is you get out of it what you put in. And so I often see teachers who, during the summer months, when they're not teaching, this is a way to supplement income, and so certainly there are a lot of part-time agents. I believe, far more part-time agents than there are full-time agents.
Speaker 1:I also think and you know I came from Logan, which is a very different market and a very different demographic of agent there are a lot of agents that retire down here and there are a lot of agents that retire down here and there are a lot of agents that they still have their license, they still maintain membership with a realtor organization, but they're not actively selling, and so, if I were to pull data from our MLS, about 50% of our members did not participate in one transaction side last year.
Speaker 2:Wow, yeah, that's crazy. So that cuts it to like a thousand agents that are actually doing business. And then you said 10% of the agents are doing 50% of the sales. Yeah, just under 50%. Yeah, that's pretty crazy. Is that number changing? Has it changed, like in the last five years?
Speaker 1:I mean it's hard to say, I've only been down here for about three and a half, so that's kind of my window of time and insight into this market. I grew up in Salt Lake and then lived in Cache Valley for 16 years before coming down here, so but in terms of the last three and a half years that I've been down here, that has stayed pretty consistent. We are currently I did a membership report today we are currently sitting at about 170 agents less than at September 1st of last year. Interesting.
Speaker 2:So there's a few getting out.
Speaker 1:There are people getting out, but I am also so. Typically, if you're a realtor, October 1st comes your dues renewal time. And we generally see the biggest drop off at that time, and so when I say we're 170 less, we had a drop off of about 350, 360. And we've made that up just since last September.
Speaker 2:Yeah, the attrition rate, from what I understand, is about 80% of agents that get their license will stop selling within two to three years. That's correct About 80% attrition rate and so if you made it it's not almost 10 years.
Speaker 1:This is my 10 year mark.
Speaker 2:This is my 10 year mark.
Speaker 1:It is not easy. It is not easy.
Speaker 2:It's a tough job.
Speaker 1:It is a tough job and I think that there, I think good agents pay attention to the details, pay attention to what's happening in the industry, not just here locally, but nationwide and and truly and I gotta be careful saying this but they're the ones that are best serving their clients. Let's be honest, there is an element of if I'm only in this business part-time, I'm only giving it part-time attention.
Speaker 2:Yeah.
Speaker 1:And um, you're right. In the last six months to a year, so much has changed. So much has changed, and I was an agent in um 2005 to 2010, 2011. Things are changing at a far faster pace now than they were back then. In terms of what, and I experienced the recession Like the market- Just, industry changes, market changes, the amount of lawsuits that we have going on in terms of the real estate tech, you know, and data that's out there. I mean it's on a whole nother level than it was 20 years ago.
Speaker 2:Yeah, it reminds me of like when they just transferred to the MLS, like from like printing out the active listings.
Speaker 1:I still have those MLS books at my office.
Speaker 2:Yeah, you'd have to like line up every day and everybody be printing out the newest listings for that day.
Speaker 1:Well, and by the time that booklet was printed, some of those houses were already gone. I mean they were not up to date, Right.
Speaker 2:And so I think it was more difficult to be an agent back then, in my opinion. Oh, sure it was far more difficult to be an agent back then in some ways and then in other ways. But you can see, even over time since 1990, like this is almost parabolic increase in number of agents, like up to 2007, 2008, there was this huge jump up of agents and then we had this huge drop off till 2012.
Speaker 1:And then it's just been a sharp climb. Yes, and COVID brought a whole lot of agents to the market because, I'm sorry, it was easy money, yeah, right.
Speaker 2:Yeah, I mean, it's easy short-term money and you can supplement your lifestyle by doing it this way.
Speaker 1:Sure, and that's truly what we're seeing. It's not a way to live a life.
Speaker 2:Because if you look at that 50% that didn't sell anything, they didn't make any money, so they likely had another job. And then of the remaining 40%, if 10% are doing 50% of the work, the remaining 40% most of them are closing four to five deals a year, which is like 40 to 50 grand a year. Like it's not that great. It's not a living wage? No, it's not. And so, that being said, with the changes that have happened, with commissions being offered on the MLS and no longer being offered on the MLS, have you seen commission percentages go down?
Speaker 1:No.
Speaker 2:No, and that's why Ricky Carruth you know Ricky Carruth. So he's a big agent. I think he's in California but he's got teams all over the country, right, he's one of those agents that builds a team in different markets and he manages a bunch of agents, kind of like a brokerage, but he does it nationwide. But he was talking about how the buyer agent commission hasn't changed at all, Like nothing's changed in six months.
Speaker 1:So I was at a meeting up north last week. I met with a lot of other board execs throughout the state and this is pretty consistent across the state. Buyer's agents are actually reporting, making more.
Speaker 2:Interesting.
Speaker 1:Than they were before. I mean, when you think about the dynamic before, you know seller was offering a buyer agent commission. It could have been anything from a dollar to you know. I mean we saw four and a half percent being offered to a buyer's agent Sure.
Speaker 1:Um, these agents were saying, well, I was just accepting what was being offered, you know, and, and sometimes that meant this still was a 1% and this still was a half percent, maybe this one was four, right.
Speaker 1:And now these buyers agents, especially the, the buyers agents that I think have embraced the changes.
Speaker 1:I was, because I'm in this environment where I'm saying to a buyer these are the services that I'm providing, this is the value I have placed on those and, by the way, I'm good at what I do and I can negotiate to help get this fee covered for you in negotiations of a rep, see, and they're going forward and they're actually getting what they, what they asked for, right, and I and I think that that has been super beneficial to the consumer, because, number one, um, and if I had to put like a, a title on everything that's happening the MLS changes, the settlement, it's transparency, the, the buyers, the consumers in general, are far more informed and because of a lot of these industry changes that came in a way that was not ideal, right, they're empowered to make more informed decisions, right. And I do think that those agents who embrace the change, who operate on a platform of transparency and I'm going to give you all the information you need. They're actually seeing more success and their clients and customers are far more satisfied.
Speaker 2:From the beginning, like so, if you don't know kind of the background, Sitzer Burnett is a a court case that happened in missouri where intentionally in missouri- intentionally in missouri which was the perfect.
Speaker 2:It was a perfect field of there's anti uh, antitrust, uh. Law being violated is basically what their stance was is that the sellers did not realize. Their argument was the sellers did not realize that the commission they were offering the listing agent half of that was going to the buyer agent and that if they would have been offered a different option, they would not have given value to the buyer agent. My first, my first thought is the whole case was was uh was really set up from the beginning and the nar didn't do a very good job of defending themselves?
Speaker 2:I would agree with that my thought is that they did a poor job in the case if you get into the details of it.
Speaker 2:But what they found was across the MLS in Missouri it was 6% was like 99% of the deals that agents weren't disclosing listing agents weren't disclosing that they were sharing their commission with a buyer agent.
Speaker 2:It's not in the contract there in the MLS where it is here in Utah it was yes, it was here and has been for decades, For a long time. So there was clarity in that already here in Utah but there wasn't that in Missouri and so they were able to craft this case that the agents were collaborating together to basically trick. Their thought is that they're trying to trick the seller into thinking that was the argument that that um, that this commission was, didn't need to be paid for and there was a set standard. You couldn't sell the house if it wasn't six percent. Now there are there is plenty of evidence to where agents would say if you're not offering me three percent, I'm not showing the house. There is plenty of evidence to where agents would say if you're not offering me 3%, I'm not showing the house. There's plenty of evidence that happens still to this day across the board.
Speaker 1:Yeah Right, it happens.
Speaker 2:I know agents specifically that I've had this conversation with them and that's their belief. Right coming out of that is now there is, in a weird way, less public disclosure of the commission, because now it can't be marketed on the MLS as this commission is being offered to a buyer agent, so there's less public accountability for being able to see what the commission is being offered.
Speaker 1:Do you really think the public was looking at that amount as they were going? I mean, let's be honest.
Speaker 2:I think the general public no. But the agents were aware of what is the typical commissions coming in and being offered right. So they got to see the lay of the land to see what are the sellers willing to pay for in commission and here in Utah I had that conversation with the sellers. I said this is the commission, but this commission is split with. We're going to give a bonus to a buyer agent to be able to bring a buyer. It's an incentive to a buyer agent to bring a buyer buyer's agent to negotiate against them.
Speaker 2:I see that it's like wait, I'm a seller and I'm gonna pay an agent to negotiate against me. This doesn't make any sense. So, like the whole thing from the beginning, the lawsuit the lawsuit made less sense to me because what ended up falling out is the solution to where I don't know is better for the consumer. I don't know if it's better or not. I think the jury's out is whether it's better for the consumer, because at the whole point it was is this better for the consumer, this route? So the solution to what fell out from the case I don't know is better and I still think there's something that just doesn't make sense. We're the only industry that does it this way.
Speaker 1:Yeah, it is kind of bizarre, but it's also proven to be effective. I agree with you that NAR handled the case really well. I think they thought they were untouchable and this has shown them that they're not and they did a poor job at defending. Now, with that said and here's an interesting fact, at the time that that lawsuit was filed, only 13 states had agency representation agreements, utah being one of those. Oh wow.
Speaker 2:I didn't realize it was that few.
Speaker 1:So again, that's why I say having that class action in Missouri was largely intentional, because it was in a state where transparency and maybe full disclosure may not have existed on the level that it has here right. Right.
Speaker 2:And so how many states just going back to how many states required an attorney to review the contracts, Because I know there's a lot of states where an attorney has to be involved.
Speaker 1:I know states where an attorney has to be involved for closing as a they're. They're an attorney state for closing. But in terms of where an attorney has to review purchase contracts, I don't think there are any. But like, look at Florida. Attorney has to review purchase contracts, I don't think there are any. But like, look at Florida. Florida was was largely a transactional state, so sellers had agreements with the agent, buyers did not. They were getting representation but they didn't have any type of buyer broker agreement. That that explained, commission.
Speaker 2:So and duties and things like that Right.
Speaker 1:right, that's changing 18 States now and I'm sure we'll start to see more as because because this whole class action kind of upended the industry and, um, I mean even the state of utah, our licensing division started looking at the settlement going well, wait a second, do our, do we have not that. They thought they had problems. But how are these rules now going to affect licensees? Because it is different right.
Speaker 1:The division sets the minimum standard, the legal standard, but the realtor organization has this ethical standard in these practices that you have to adhere to. You know, in terms of whether or not I think it's effective, I think it has been effective for a couple of reasons. Number one agents are talking more, and this is important because you mentioned the booklets from decades ago. It required agents to be communicating with other agents all the time instead of just relying on a data sheet on the MLS right. Number two it is projected over time to result in $40 billion worth of cost savings to sellers and buyers. So there's a report out that says, because a lot of people were asking well, is the settlement going to bring down home prices? No, that seller is still going to ask what he can ask for his property and get that amount.
Speaker 2:It's ultimately always come down to the net number. Yeah, it's always come down to that, but what's?
Speaker 1:going to happen is agents. In order to be competitive, they are going to start you're going to start seeing commission rates fluctuate right and then you're going to start seeing buyers and sellers actually having the conversation, which could result in savings. So, for example, if I were willing to represent a buyer for 2% and that seller was willing to have paid me three, I'm now in a position where I can negotiate that to benefit my buyer. Right, I'm taking the two he was willing to take. Pay three, there's a percent on the table. Let's ask for your closing costs to be paid. So therein lies where consumers are projected to see savings and they are already starting to see those savings.
Speaker 2:But commissions haven't come down.
Speaker 1:Not with. It depends on the agent. You know I mean there are agents that. I mean they're full service agents. They are not take photos with their iPhone and throw them up on the MLS. They're helping you stage, they're getting professional.
Speaker 2:Yeah, I'm like $1,500 into photos for one of my listings right now.
Speaker 1:Right and weeks in preparation trying to help that seller get their property ready to market right. And so for them. They're looking at it from a business standpoint that a 3%, a two and a half, whatever. I've seen agents charge as high as four and if consumers see the value in it they'll pay it. But I think there are still a grouping of agents We've talked about the agents that sell less.
Speaker 2:Yeah. So this is where I see is that you're going to see the quality agents maintain their commissions and the part-time agents probably lose their commission as a percentage of what the purchase price is. They're going to get squeezed.
Speaker 1:Yeah, or you're just going to have agents say I'm willing to work for less because I haven't had a closing in a while and it's going to result in savings, ultimately to the buyer, to the consumer.
Speaker 2:Because the commission is in the negotiation of the contract. So if people aren't aware most people are not aware the commission of what is being paid to the buyer agent is now right in the purchase contract. The Utah Association of Realtors approved contract which every licensed realtor should be using.
Speaker 1:They're supposed to use it in a residential cell, in a residential cell.
Speaker 2:It's built right into the contract so it is clear to the buyer and the seller exactly what commission is going to be paid to the buyer agent, and the listing agent doesn't have to disclose it because it was already negotiated. It's between the seller and the agent and so that's where there's this. It's another piece of the negotiating from from the beginning Right, and it's right there in front for everybody to see and you can't ignore it.
Speaker 1:And since you brought up as a seller paying a buyer's agent commission to pay a buyer's agent that's negotiating against them, I had an agent um offer an interesting perspective. What if our market flipped again and we were back in a seller's market? Right, he said to me well, there were people willing to pay over asking is it logical to think that now a buyer would offer to pay a seller's agent's fees as a negotiating tool? And I think that it's an interesting concept. Do I see it happening? Possibly it depends on what happens with the market, but I think that ultimately, the conversation is now being had between all parties and, again, all parties are informed about how agents are paid and what they're getting paid. And what they're getting paid for yeah, what they're getting paid and what they're getting paid for.
Speaker 2:Yeah, and so this is where I kind of wanted to dovetail into this. This is a good transition, because my feeling is we should make it more difficult for agents to become licensed agents. You're speaking my language. It's an unpopular opinion for some reason. To the agents when you like, talk to like agent groups as in groups.
Speaker 2:You know it's this well, you're gonna. Uh, if you raise the bar of entry, then my you know 19 year old son won't be able to get his license and start making you know tens of thousands of dollars in in transaction commissions. Where is the feeling if you look at it as an industry from your perspective? Is there a push to see? Do we raise the bar? Because I think of realtors get looked at like used car salesmen there's thousands of those but we get paid like attorneys in a lot of ways.
Speaker 2:Without the formal education, without the formal education without the bar certifications, without these other rungs of requirements. Right, I think financial advisors like what they have to jump through to be able to do this, but or even an appraiser.
Speaker 1:I mean, let's be honest, working under a fully licensed appraiser for an extended period of time just to gain experience.
Speaker 2:Yeah, I think the bar should be higher, whether it's a financial bar, which is an easy way to just be like oh, you got to be wealthy to become a real estate agent, or you know what I mean, or an educational bar.
Speaker 1:And don't interpret this to think that I'm trying to deflect Um as a realtor organization. Um, your eligibility is a license right, so I can't, I can't, deny uh entry into the real, the realtor organization, um, unless you don't have a license right. So we have to look at the licensing regulations. And it's what?
Speaker 2:120 hours and I saw an agent post a article on st george news about how she I'm not, I'll even give you that hint she did her 120 hours in like a total of. She said like a week. There's less hours total to be able to do the 120 hours. That's how she got her license. She did it in less time than there are days in the week which I don't even know how she did that.
Speaker 1:And you can do it all online, right. So where's your attention?
Speaker 2:What did you?
Speaker 1:actually learn. When I went through licensing school, a portion of it could be done through videos, but there was a requirement that a certain amount be done in actual live classes.
Speaker 2:Yeah, now again in comparison now they're free, oh yeah, and in comparison, if you want a free license, go to RD academics academics.
Speaker 1:If you want a free license, go to arty academics. I mean it's, it is. It is frustrating because I mean just a hair technician just to be licensed to do hair. You're like three thousand hours, is that that?
Speaker 2:that may seem high, but I think it's like years I think I think for barber school, I think it's like 350 hours I'm pretty sure, like a barber school of like dedicated yeah, like or like uh I think it's two solid months of them going every single day yeah and you and you, you do you think about the amount of harm that a real estate agent could pose on a consumer?
Speaker 1:you would think that the educational requirement, that the testing requirement and then even the maintenance would be far higher. I mean 18 hours In 2019,. When the division came out with their mandatory core course you know that you've got to take every renewal cycle I was like, yes, we're going in a good step. It's going to be in addition to that 18. And then they said, no, it'll be included in the 18. And I'm like what? It'll be included. It'll be included in the 18. And I'm like what is three more hours of education? What is that in the in two years?
Speaker 2:21 hours or even 25?. So much of it is ethics and and like logical scenarios. It's like just representation type stuff. Ethics it's not. It has nothing to do with uh understanding contracts Like very few of it is like being able to interpret and understand contracts and I think a part of that is because, well, you have these approved forms, you're supposed to use these approved forms. You just got to know those forms. You don't have to think outside of that. And and I don't know exactly how to uh educate people more on the job, cause, truthfully, it's a simple job, like my part of me thinks. Like well, it is kind of basic, it is kind of easy. You know, with a with a relatively average IQ, anybody can do it. So it's not really it doesn't take us a special individual to do the process.
Speaker 1:I saw a real the other day that said you know, in elementary school they they sorted you by the high IQ, the mediocre and then the needs help students. And he's like and in real estate they put us all together. Put us all together.
Speaker 2:And so I even think of like okay, the educational portion and the licensing requirements, Okay, well, what do we require people to learn when it is a pretty simple process? So that's where I lean to. Maybe it's a financial hurdle in order to get people into it.
Speaker 1:Well, and I'll even give you an example of a huge, a huge disappointment, and I have a love-hate relationship with the division. I try to work with them so I can be a part of. You know committees and positive change, which I am participating in a couple right now that I think are going to really impact the Utah licensees. But last year, when they came out with the new Rep-C, they sent out an email and then they did zero training. The division Now keep in mind, this is a division form, this isn't a realtor form. This is a division form and it's like okay, here you go and you're not going to explain to these agents how and when to use it, why it was written the way that it was. And the division I think in a way, they appreciate that the realtor organization exists because we're out here trying to provide educational classes. At my office I hold one class a week. You have plenty of opportunities to stay up to date, educated, informed on all of these things that we've talked about Contracts forms.
Speaker 2:I mean, that's how Keller Williams built their brand around Education you got to educate them, right, right.
Speaker 1:I maybe have 30 agents a week in a class, right and so without 18 hours just isn't enough, and without some sort of requirement that holds the agents accountable to learning. Education becomes the second thought.
Speaker 2:Yeah.
Speaker 1:You know, makes sense, it's interesting.
Speaker 2:It'll be interesting to see how the industry shifts. I think downward pressure on commissions is going to push a lot of people out. I think so too. As a total number. This last data is UAR sides per agent. You can't see it 4.4 sides per agent in the state of Utah in 2024. And that is just above the four sides per agent in 2023. But that's the lowest going back in recorded time that we have 2003. That's the lowest sides per agent.
Speaker 1:The market is certainly saturated with agents.
Speaker 2:Lots of agents but less transactions, just in general, just less transactions. So there's going to be this pressure to get agents out of the industry because I think that's better for consumers. Having more choices isn't always a better option when you're talking thousands of people, because this is the biggest financial decision most of these people make, right, and it does have a big impact on when you make a mistake. It's painful, so it is. It's interesting. Well, it's five o'clock already.
Speaker 1:It goes by fast Went by fast.
Speaker 2:Went by fast. I want to have you on again because we have lots of other stuff policies, local politics coming up. I'm curious about the real estate industry's perspective. As a realtor, I have my own opinion, but as I interview candidates across the county we have two city council seats. Mayors across the county are all up for election. We have two city council seats. Mayors across the county are all up for election. Looking at the different interest groups, they're going to have different thoughts on what they want city council and mayors because it's mainly land use policy is what they're dealing with is the bulk of it. So I'd be interested the Washington County Board of Realtors perspective on what candidates where's value at. So let's have you back on, let's talk about that next, but we hope you guys enjoyed this episode. Talking real estate Emily Merkley.
Speaker 1:CEO, thanks for having me.
Speaker 2:Washington County Board of Realtors. We'll see you out there guys. Have a great week. Thanks for listening in. If you enjoyed this episode, please like and subscribe. Make sure you're following us on all the social media websites. We love your support. We love the dialogue. We want to continue that going. Find us at realestate435.com. We'd love to help you find a house here in town or help you get wherever you're going.