Dave's Newsletter- February 2011
Real Estate Trends 2011
Market continues to signal improvement
Reports of trends on the national, regional and local level are fueling an increased level of optimism in the real estate industry as it heads into 2011.
The National Association of Home Builders (NAHB) has recently pointed to signs that some of the worst impacts on the home building industry—job loss and foreclosures—have eased across the nation. Stabilizing home values, jobs expansion and continued low mortgage rates have provided the confidence necessary, they say, to bring many potential homeowners back to the housing market. NAHB economists project that the market’s pent up demand will push the industry to deliver 16 million homes over the next decade to keep pace.
At this point, the NAHB is focusing its efforts on opening up lines of credit for new housing production and addressing issues relating to stabilizing the appraisal process.
Regionally, the southwest continues to take the top spots for growth in the nation. Utah is the third fastest growing state amid a top five that also includes Nevada, Arizona, Idaho and Texas. Area home prices have become a better reflection of local workforce earnings which is easing the path to homeownership for those relocating, as well as for those who arrived over the past several year—but, that due to pricing could not enter the home buying marketplace. The National Association of REALTORS reported that its third quarter 2010 Affordability Index showed the country was experiencing one of the most affordable buying markets since the inception of the index in 1971.
First-time home buyers have a boost this year with lower mortgage rates and lower home prices, as well as with reported rising income levels, especially in Utah. Mortgage industry observers are highly optimistic that rates will continue to remain favorable. The central bank is expected to keep its federal funds rate at zero to .25 percent through 2011. Many concur with Freddie Mac Chief Economist Frank Nothaft’s projections that some rise in fixed rates is expected, however, the 30-year fixed-rate loans should remain below five percent throughout the year.
The National Association of REALTORS reported that its third quarter 2010 Affordability Index showed the country was experiencing one of the most affordable buying markets since the inception of the index in 1971.
Forbes.com: It’s Good to Be in Utah!Utah takes the top spot on the business magazine’s fifth annual ranking of best states for business and careers.
While the country has struggled with its economic situation over the past few years, Utah’s economy has been expanding. According to Forbes, it has grown at a rate of 3.5% over the past five years, second only to North Dakota and three and a half times that of the U.S. as a whole.
As primary factors in its decision to place Utah at the top of its list, Forbes cited Utah’s job growth rate of 1.5% annually (while employment in the U.S. has shrunk), and a household income rate increase of 5% annually (twice that of the national average).
According to the article, Utah’s leadership has been very much at the front of the economic movement. Utah lowered its corporate tax rate from 7% to 5% in 2008, a rate that remains one of the lowest in the nation, and the state is conscious of the balance it maintains in its regulatory climate. Utah’s governor Gary Herbert is quoted in the article as saying, “We want to make sure we don’t have any nonsensical regulations that inhibit the private sector from expanding and having a profitable bottom line.”
Utah’s long history of maintaining a balanced budget has kept the foundation intact for its triple-A debt rating from Moody’s, S&P and Fitch.
High school graduation rates are at 90% in the state and 29% of its populace hold degrees. That, along with low poverty rates and high quality of life earn Utah high marks for a quality labor force.
Companies such as Goldman Sachs, Adobe, Omiture, Oracle, eBay and more have taken notice of Utah’s healthy environment and are bringing ventures into the state or expanding existing operations.
Reference: The Best States for Business and Careers by Kurt Badenhausen, Forbes.com October 13, 2010.
St. George Municipal Airport
The highly anticipated new St. George Municipal Airport opened its doors mid-January, offering area travelers increased air service options and better amenities.
St. George City unveiled its new municipal airport on January 12, 2011 and effectively ended operations at the old bluff top facility that began air service many decades ago. Paving the way for jet traffic, the new runway provides an additional 3,000 feet over the old airport’s runway, while still maintaining room to grow. Built at 9,300 feet, the runway can be extended to 11,000 as the need becomes apparent. The beautifully designed new airport terminal features elements of the area’s surrounding desert and canyons. Expanded car rental, baggage, ticketing and traveler amenities are offered amid beauty and comfort in the 33,000 foot facility. A second story windowed observation deck offers a front row seat to jet take off and landing, while framing some of the area’s most spectacular natural vistas. The new facility can currently accommodate regional jets and others as large as the Boeing 737 and A-320 Airbus. Options for future growth have already been engineered and simply await the demand for larger aircraft service. The airport is currently served by Skywest Airlines, operating as Delta Connection and United Express.
Since a peak in March 2010, foreclosure sales have decreased, and appear to have stabilized. Continued foreclosure sales will likely buffer short-term price increases—but also represent a great buying opportunity.
In the past six years, our market has erased all appreciation that occurred during the real estate boom—and then some. The average price of a home at the beginning of 2011 was nearly $30,000 less than at the beginning of 2005, and almost $150,000 less than the markets peak!! It is a good time to buy a home.
Contact David Ellis, a professional St. George REALTOR®, for more information about buying or selling a home in Southern Utah. Register to receive free updates about real estate in your selected areas.