St George Real Estate Historical Market Conditions & Trends
St George Real Estate Market Conditions are such that we spiked harder and faster in price appreciation between 2004 and 2006, with gains of doubling value.
From 2004 through 2006, largely due to investors, real estate values for the area rose about 50-60% then depreciated 41.4% from 2007 through 2011. This is according to data from Fiserv and Federal Housing Finance Agency. The data may be limited in that it reports only on those getting government backed loans. Additionally, across many homes, as I have been checking the actual price appreciation of each one when showing them, my own case-study referencing of overall price appreciation during 2004 through 2006 seems to be closer to 45% to 50%.
What goes up must come down and then we fell just as hard and fast to pre-state conditions. Into 2011, it is long enough now for distressed properties showing some trends toward not increasing and rather slowly diminishing in inventory levels. We have been pretty much flat lined all through 2009 to 2011. 'Notice of Defaults' are numbers showing how many people are in trouble of not being able to make their house payments and these are becoming less here in our local area.
St George area growth numbers from the U.S. Census Bureau News that focus on 2000-2006, report that we were the nation's fastest growing U.S. metro area! Located in the mid-west United States along interstate I-15, many people know about this area from having traveled through it.
So, to summarize values spiked and have now settled back down close to where they were before and are set to appreciate once again.
St George real estate has been on a roller coaster. It also has a special charm and location in the mid-west. Remember how location, location, location can set a place apart, even though it has not priorily been appreciated. "Appreciated" is the key word, for we did appreciate, but let's say, locally, some of us believe, we did not altogether as a location completely get appreciated like it showed promise- not all did hear of or get to fulfill on our illustrious attractions and appeal. These and many other factors makes it tricky to figure out what is a normal market. Among the factors determining what is normal for our local area are:
St George Real Estate Market Trends - Inventory and Rate of Sales
The below graph depicts the St George Real Estate Market Trends from January 2005 to January 2011. This will help guide your thoughts regarding our area. You may want to access more detailed graphs on our St George Ut real estate statistics page.
The thing to realize below is, that the height of the bars on the graph do not represent inventory, but the inventory based on the rate of sales- the St George Real Estate Absorption Rate. The absoprtion rate relates to how many months it would take to deplete the existing amount of inventory given a certain rate of sales. Basically, low-er bars mean that potentially demand is outstripping supply and high-er bars represent supply potentially outdoing demand. But the question still remains, what is a normal absorption rate (given months to deplete existing inventory at current rate of sales)? More indicative still of what the absorption rate can help discover, is when the absorption rate moves off what it was prior, as the 'now not normal' or typical rate of sales to deplete given inventory levels. Perhaps the lower bars represented in 2005, during a time of when there was both an 'increasing of home appreciation artificially' with low supply of homes on the market [when investors swarmed in], is not an accurate gauge for the "normal" absorption rate. It just may be that a higher supply of homes and accompanying higher absorption rate, is the new water we are wont to swim in.
A trend relating to the absorption rate off of normalcy will tell us something about how consumers demand and consume more real estate or less real estate, thus most potentially influencing pricing of that real estate and possibly the supply, if it is assumed that supply and demand will try to tend it back to homeostasis/normal levels. Remember, there are other economic factors, besides market supply, that have also put a stop to the otherwise increasing demand of real estate to always appreciate like it has in the past. Therefore, the components of how the absorption rate works are only often related (not always) to the somewhat causal relationships of how supply and demand of real estate work.
When the supply or inventory of homes is high (as apposed to normal), it can be indicative of lower demand and thus, perhaps, trending toward lower prices. However, if the supply starts to decrease at a faster rate than new sellers list their homes [or put new supply onto the market], then the absorption rate is reflected as a low-er bar and inventory or supply is going down. However, this may notnecessarily reflect that prices will go up. The bars trending lower in May of 2009, instead of representing increased prices with increased rate of sales, really represented a market that went from falling prices to modulated or flat lined pricing. So really, the absorption rate is a sign of increased or decreased activity in terms of sales, and represents some telling of where the market is headed in the short immediate run.
A trend relies on a consistent picture of the overall market and sometimes its readiness to move off of that consistent measure in a somewhat consistent manner. We have a consistent measure from about May of 2009 until now to go off of.
Also, 2005 does not represent normalcy by any means. Consider that Utah real estate in 2005 appeared to be the last best hope for investors to get non-appreciated assets or a good deal. The lower height of the bars in 2005 could reflect an inflated picture of demand, or in other words, speculators making purchases based on the areas prior low appreciation rate vs. the rest of the nation. Thus, it is not necessarily true that a now 'correcting itself' market, and even an eventual recovered market, would show bars that low again.
However, St George may tend to attract more people than will want to move out. Conversley, with a lot of skilled construction and blue color workers put out of business with home construction being halted, we may have enough of them wanting to 'set sale' or move somewhere else for the time being. At least for the immediate future, a lot of factors are contributing to keeping prices flat lined.
Other St George Market Trends- What Fuels Our Real Estate Appeal
Other variables involving trends in St George are tourism, which supports a large investment of awareness to our area to include retirees and second home owners which already compose a huge percentage of our housing. Other factors that have been salient towards our housing sector have been new construction, distressed sales, interest rates, lending conditions, commercial development and how good our national economy is doing. Let's examine a little segment on each of these.
How much does commercial development fuel housing development? If it does, then we might be on the up with the new St George Regional airport. The airport has been built up and out onto a new belt way south of town. A small commercial district segwaying toward that belt way near the airport is located out along South River Road.
New construction starts being overall down, but on the increase, either represents less opportunity, or more for you right now. Which way do you lean?
When looking at supply on the market, could new construction eventually replace the supply that has priorly been represented by distressed properties? Will normal re-sales also likely pour on with new found opportunity? These questions are unanswerable at this point. One thing seems apparent however. When distressed sales diminish, prices most likely will improve, such that it might have been wiser to get in earlier? Or will there perhaps be a more seamless and gradual transition with new construction helping keep supply up, therefor prices down? We already have some indications of new construction getting a foot hold, believe it or not.
Right now, the Notice of Defaults (start of Short Sales and Foreclosures base) on the market are trending down. It is yet to be seen if this will persist.
Don't forget interest rates and how that will affect both buyer confidence and builder confidence.
How will the governments desire to privatize Freddie Mac and Fannie Mae, or the spurring on of higher down payments being required, influence all of this?
I think many variables right now are cooking. All of that being said, my own personal take is that the masses of people also will make decisions on an uncertain future, based on the attractiveness of low crime rates and solid community values friendly to family and retirement lifestyles. As such, I think St George's future will be a solid bet for investment. If you need help with your real estate needs, I, Brian stand ready to help- contact me, your St George Utah Realtor.