United States National Economic Outlook Affects St George Real Estate Absorption Rate
The U.S. national economic outlook affects the St George real estate absorption rate in that a higher than normal supply of homes are on the market and will continue to be the case.
The Congressional Budget Office (CBO) of the U.S. has done a next decade or 10 year projection on the state of the economy for 2011 to 2020. Many economic factors are highlighted with the problem of high unemployment looming as a large factor that is projected to continue. Interestingly enough, the CBO lists possible causes being the mismatch of the skills of the unemployed and the requirements of employers looking to hire and the inability of those who are upside down in their mortgages to be able to relocate to find employment. We cannot underestimate the impact of these unused resources on our economic recovery. As such we have gone on the record, here at SoUtah, to incite along with the projections of the CBO, that recovery will be slow going. As such it seems apparent that it would follow that a higher number of homes could exist on the market in relation to actual sales taking place, thus changing the nature of how we look at the normal absorption rate.
St George Real Estate Absorption Rate
In other words, a high amount of homes does not equal a condition of disequilibrium where we "have" to somehow get back to "pre-state" conditions. If the above information relating the state of the economy for the next few years if not decade is correct, then it is also possible that in examining this graph below of absorption rates, that the rates shown beginning from April of 2009 clear through 2010 might not just be, but the norm moving forward. Perhaps the decline of distressed housing will present an entire different absorption rate. However, the overall state of the economy might be the more indicative problem relating to real estates pivotal role to relate how this mismatch between the skills of the unemployed and the requirements of employers looking to hire can easily take place.
While a correlate of unemployment with distressed relocation needs exists, it is not necessarily a causal and indicative factor weighing back in on itself into the future. The CBO related several other factors impacting our overall recovery being very slow, such as: healthcare, medicaid, medicare, health care exchanges, social security, defense and non-defense discretionary spending, lower taxes, economic recovery stimulus money and federal debt and its interest payments. Also viable is speculator investing and rental managements may actually help as a factor to eventually free some new seller to relocate into a new job.
Supply and demand, to include speculative investment buying, will continue to be factors in affecting how consistently homes are bought and sold. The absorption rate on the market, while indicative of an immediate trend, might not tell the whole picture without a continual overall contextual input from various sources on how the overall economy is projected to recover. Will home prices "have" to come back up? Basically, we would all feel wealthier -that there is more equity in our property and land- right? Even non-home owners would benefit because it would mean there is "more feed at the bottom of the bucket for all the horses". Distressed home owners, not being able to more easily relocate, represents a real threat to the vitality of our overall economy. Top heavy investing or rather top heavy lending in the housing market has made it difficult for everyone. However, various factors will go into our recovery, making it a long-term climb or rather a tortoise-like desert stroll. Ergonomic realities make St George real estate just as glamorous a perfunctory purchase as any other investment in our robber baron natures. :-)