Thursday, March 02, 2006

Slow Down

The market it slowing down and more inventory has been building on the market. It is pretty obvious by now- most people have noticed.

Interest rates have been bouncing around with the national average in November being the highest in 3 years at 6.33%. Now it has fallen to 6.27% in December 2005 and in January 2006 to 6.15%. A coorelation between where interest rates are and the number of purchases does seem to exist. However, relatively speaking, interest rates are not that high and as such moderate purchasing will probably still take place.

A recent (3/2/06) article on MSN says that while home sales cool off, prices don't. Some of the same exists here in St George. However, we have seen lots of homes get price reductions, meaning perhaps that many have thought to get a lot higher price for their homes than the current market will render. So homes are sitting a lot longer and inventory levels are up. Interestingly, while it is not a Sellers market anymore, perhaps because prices are still relatively sustaining themselves, it is not a Buyers market either.

Projections and outlook is that things are stabalizing and prices will have to cooperate for those needing to move there houses in a faster time frame. Buyers will have to be astute to recognize those houses that are priced right in order to move on something. Occasionally a seller of a piece of property will show evidence in the price (either at first being introduced OR of having a price reduction) of being very motivated-- those homes/condos/land may appear to have been sitting and then all of the sudden... be gone. This is our update on the market.

In our view, St George Utah real estate will always be a safe bet as people increasingly look for better places to live. We have it all here: National Parks in close vacinity, low crime, family freindly, mild climate, snow sports one hour north for those needing a flavor of that, hiking, golfing, bicycling, water sports, etc. You name it, we most likely have it. You can't say that about Arizona, that I know of. Yet, most people do not know that huge population explosions are taking place there because of the mild weather. So, in my view, we are still one of the nations best kept secrets. With all the fan fair of yester year, most would not still think so.

I think we still need to do something to make it easier for our teachers, policemen and city workers to settle into our area. Some denser housing projects might be the answer. Think about the gap between home owners owning in the 150K to 200K range and those in the 250K range. Now think about the gap between those who own some real estate and those who don't. Where is the bigger gap in those two examples? Well, after last year I side with those who need to just get into any piece of real estate. However, one view expressed also is that with the slow down of appreciation, the new home owner will not see a lot of equity built, particularly if as many first time home buyers of now-a-days do, come in with no money down.

Sellers will need a good realtor to be able to make sense of pricing because pricing it wrong can have LONGER consequences.

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