Tuesday, May 23, 2006

St George Ut Real Estate Update

A quick update on the market. While everything looks to be getting price reductions and more houses "hang", I've heard two views; one from my title guy who has had a pulse on the real statistics (# of transaction) from March 2006 and one view from two other sources about the builders getting "hung-out" with the prognosis to be lower land prices even if it takes till 2007.

The first view with an eye on statistics from March says that homes are selling and selling at NOT much lower prices, just that they are taking a lot longer to do it in. In March, sales parallel 2004, which was still a pretty high year. Nothing will compare with 2005 anytime soon. But Aprils stats show a considerable drop that while is nothing tell tale of the future, as the market has gone up and down from month-to-month as a fairly common phenomenon, but none the less a considerable drop in the number of transactions.

One interesting thought process from my title company reference is that the jump in the average price from 270k to 320k (don't quote me on the exact figures) or there abouts, is because there are less investors buying into homes that are in the lower price brackets where they can have the rent cover the mortgage.

I've had two seperate sources repeat the same thing, that many builders are in "trouble" with the new homes they have built that are still sitting on the market and that in needing to liquidate are having to sell them at practically cost. Another tid-bit was about how investors who had planned to flip a few of those new construcion homes are now into a default condition without them moving. Also, a comment from a school executive that was that his awareness leads him to predict land coming down in price by next year, as much as 20%-30%. By the way, he also conceded how it was that the district has had a huge problem with many teachers applying to the area- yes and yes when they went to house shop we pretty much lost them all. Much of that was bolstered by an infusion of older, retiree-aged, teachers who are the better with experience and with the desire to teach 'not because they have to but because they want to', he said. That did help buffer our great loss.

I side more along my title guy's March optimism based upon those numbers, and attribute Aprils lack of transactions to a blip along the radar screen and do not yet pretend to know what I do believe is a trend from some builders and investors getting "nailed" to how large the reprocussions will be felt throughout the entire market to include the resales. Our area has boasted a huge growth in the small business factor, enough to gain ranking in the nation. We are centrally located and gaining more and more notariety. But we are still relatively small compared to bigger city and we have to remember that growth takes place over time. So, I believe the market will "steady itself out" without the increases in prices we saw in 2005, almost to compensate for a time; but not to the level of decompensating. Yet, some do feel the affects of and almost all do feel the affects of in terms of 'time on the market'. Interest rates are going up right now too- still relatively lower though in the lower 6's.

Your eye on the market wants you to remember that our services are on the front end of the curve, so if for all your real estate needs we hope you call us- you deserve it!