Transcript Washington County Housing market

WASHINGTON COUNTY
HOUSING MARKET
REPORT
Mid-year Report Prepared Exclusively for the
Utah Association of Certified Public Accountants
July 17, 2014
WHO WE ARE TODAY
Washington County’s population has
grown some 7 percent to 147,800 people
in the last four years but little has
changed to buck the area’s reputation
as a hot spot for retirees with little racial
or cultural diversity.
Like much of the nation, Washington
County is getting older, with the median
age jumping from 32.5 in 2010 to 34.8 last
year.
The Spectrum – June 2104
WASHINGTON COUNTY BY RACE, ORIGIN
Total Population:
147,800
Non-Hispanic White:
126,269 (85.4 percent)
Hispanic:
Black or African-American:
14,591 (9.9 percent)
790 (0.5 percent)
American Indian:
1,573 (1.1 percent)
Asian:
1,094 (0.7 percent)
Native Hawaiian / Pacific Islander:
1,114 (0.8 percent)
Two or More Races:
2,369 (1.6 percent)
U.S. Census Bureau
WHAT’S HAPPENING IN THE 435?
Washington County continues to lead the
way in Southern Utah, with the region’s
largest economy showing two straight
years of job growth rates at about 5
percent.
The real estate market has stabilized as
well, after some late-2013 concerns over
interest rates led to first-quarter dips in
building permits and real estate
transactions.
The Spectrum – June 2014
IMPROVING LOCAL ECONOMY OUTLOOK
The economic growth curve is getting steeper in southwestern Utah, with newly
revised jobs data from the U.S. Bureau of Labor Statistics showing unemployment
rates falling below 4 percent with job growth much higher than previously estimated.
Updated figures show Washington County at 3.9 percent unemployment for May,
after the April numbers were revised from 4.8 percent to 4 percent. An estimated
2,225 new jobs have been created in the 12 months prior to June, a 4.3 percent
growth rate.
Statewide, unemployment is at a five-year low of 3.6 percent. Reports indicate the
state has the third-lowest unemployment rate and fourth-highest job-growth rate in
the country.
The Spectrum – June 2014
JOB GROWTH CONTINUES IN MAY
Utah’s labor market continues to improve, having added 37,500 jobs in the past 12
months and pushing the unemployment rate to a five-year low of 3.6 percent. The
state continues to report better job numbers than the rest of the country, outpacing
the nationwide unemployment rate of 6.3 percent and generating across-theboard improvement. Construction was the fastest-growing of all 10 private sector
industry groups, expanding 7.3 percent over the previous 12 months.
In southwestern Utah, Washington County’s unemployment was reported at 4.8
percent in April, with an estimated job growth rate of 4.3 percent. Iron County was
at 4.9 percent unemployment, with a 3.2 percent job growth rate.
The Spectrum – June 2014
UNEMPLOYMENT RATES
Steady job creation has driven unemployment
rates downward across southwestern Utah.
U.S. ……………………………………………… 6.3 percent
Utah …………………………………………….. 3.6 percent
Washington County …………………………. 3.9 percent
Iron County ………………………………........ 4.1 percent
Garfield County ………………………………. 8.0 percent
Kane County ………………………………….. 4.5 percent
Beaver County ………………………………... 3.1 percent
RETURN TO PEAK EMPLOYMENT
Preliminary May 2014 employment data indicates that the US economy has at last
re-gained its peak employment level before the recession, that of January 2008. The
economy is now poised to make headway in expanding employment opportunities
to those who have recently joined the labor force but unable to find jobs, and to
those who have left the labor force prematurely due to the lack of job prospects.
At year-end 2013, 123 (34%) metros had returned to their pre-recession employment
levels. That number will grow to 175 (48%) this year and to 219 (60%) in 2015.
IHS Global Insight – June 2014
EMPLOYMENT PEAK BEFORE THE LATE 2000’S RECESSION
PRE-RECESSION
PEAK
JOB LOSES
(THOUS)
DECLINE
(%)
RETURN
TO PEAK
BUILDING PERMITS – THE TELLER OF THE TALE
Homeownership is a Major Driver of the U.S. Economy. Fully 15% of the U.S.
economy relies on housing and nothing packs a bigger local economic impact
than home building. Constructing 100 new single-family homes creates 297 full-time
jobs, $28 million in wage and business income and $11.1 million in federal, state and
local tax revenue.
Washington County Single-Family Housing Permits
2013 Total Permits:
1469
2014 Year-To-Date
481 (5/31/14)
2013 Year –To-date
648 (5/31/13)
Construction Monitor – June 2014
CITY OF ST.GEORGE
MONTHLY BUILDING REPORT
May 2014
April 2014
March 2014 February 2014
Single Family Residential
57
54
22
32
Townhomes
15
9
5
5
0
3
3
0
Commercial/Industrial
11
7
8
9
Miscellaneous/Additions
58
71
60
62
Public/Airport/Parks/Etc
2
1
0
1
143
145
98
109
$14,295,400
$8,913,400
Condominiums
Monthly Totals
Total Valuation
$15,828,000
$16,277,100
CITY OF ST.GEORGE
ANNUAL BUILDING REPORT SUMMARY
May 2014
Single Family Residential
May 2013
May 2012
May 2011
210
234
204
79
42
61
38
27
Mobile Homes
0
2
1
2
Condominiums
8
0
0
0
43
47
70
82
283
240
215
199
Institutes/Schools/Day Care
0
1
0
0
Public/Airport/Parks/Etc
6
4
2
4
Religious
0
1
1
1
Townhomes
Commercial/Industrial
Miscellaneous/Additions
BUILDER CONFIDENCE REMAINS
IN A HOLDING PATTERN
Derived from a monthly survey that NAHB has been conducting for 30 years, the
Housing Market Index (HMI) gauges builder perceptions of current single-family home
sales and sales expectations for the next six months as “good,” “fair” or “poor.” The
survey also asks builders to rate traffic of prospective buyers as “high to very high,”
“average” or “low to very low.” Scores for each component are then used to
calculate a seasonally adjusted index where any number over 50 indicates that more
builders view conditions as good than poor.
Builder confidence in the market for newly built, single-family homes fell one point to
45 in May from a downwardly revised April reading of 46. After 4 months in which the
HMI has shown little signs of fluctuation, it is clear that builder sentiment is becoming
more in line with the market reality of a continuing but modest recovery.
NAHBNow – May 2014
A GRADUAL CLIMB BACK TO NORMAL
The Leading Markets Index (LMI) scores more than 350 metro areas by taking
their average permit, price and permit levels for the past 12 months and
dividing each by their annual average over the last period of normal growth.
For single-family permits and home prices, 2000-2003 is used as the last normal
period, and for employment, 2007 is the base comparison.
The LMI shifts the focus from identifying markets that have recently begun to
recover, which was the aim of the previous gauge known as the Improving
Market Index, to identifying those areas that are now approaching and
exceeding their previous normal levels of economic and housing activity.
NAHBNow – June 2014
WHO IS LEADING THE WAY?
Baton Rouge, LA., continues to top the list of major metros on the LMI, with a
score of 1.4 – or 40% better than its last normal market level. Other major
metros at the top of the list include Honolulu; Oklahoma City; Austin, Texas;
and Houston. Rounding out the top 10 are Los Angeles; San Jose, California;
Harrisburg, PA.; Pittsburgh and Salt Lake City – all of whose LMI scores indicate
that their market activity now equals or exceeds previous norms.
“Markets are gradually returning to normal levels of housing and economic
activity,” said NAHB Chairman Kevin Kelly. “When we see more sustainable
levels of job growth, this will unleash pent-up demand and bring more buyers
into the marketplace.”
NAHBNow – June 2014
BUYING A HOME: THE COST OF WAITING
Whether you are a first time buyer or a move-up buyer, you should look at the
projections housing experts are making in two major areas: home prices and
mortgage rates.
Over 100 economists, real estate experts & market strategists were recently surveyed.
They were asked to project where home prices were headed. The average value
appreciation projected over the next twelve month period was approximately 4%.
In their last Economic & Housing Market Outlook, Freddie Mac predicted that 30 year
fixed mortgage rates would be 4.8% by this time next year. As of the end of June, the
Freddie Mac rate was 4.14%
keepingcurrentmatters.com – July 2014
COST OF LIVING – 1ST QUARTER 2014
Metro / Micro
Composite
Grocery
Housing
Utilities
Health
Misc.
Cedar City
90.5
102.4
80.6
86.3
89.8
93.7
St.George
93.8
100.6
95.1
87.0
91.1
93.8
Salt Lake City
94.8
94.9
92.3
91.7
94.6
93.8
Las Vegas
104.6
108.4
107.3
91.7
102.1
106.8
San Francisco
163.9
126.0
300.1
102.3
117.2
118.2
Honolulu
175.1
157.7
274.4
205.7
111.9
123.5
Manhattan
220.3
145.9
443.8
140.7
110.0
150.2
Norman, OK
81.2
88.1
67.3
82.6
93.9
86.0
UTAH GOVERNORS OFFICE
ON ECONOMIC DEVELOPMENT
Surprising fact...Utah’s economy has been consistently ranked as one of the
nation’s most diverse.
Utah’s recovery from the Great Recession has been one of the strongest in the
nation. A key reason behind that recovery is an economy that mirrors the
nation in its mixture of industries.
With manufacturing in the northern Wasatch front, a varied services sector in
Salt Lake County, the tech hub in Provo-Orem, mining/oil and gas in the
Eastern region, and leisure and hospitality in Summit County and in southsoutheastern Utah, it is not hard to see the diversity in Utah’s economy. A
quantitative assessment backing up this observation is the Hachman Index,
which ranks Utah #4 in the nation
#uutah – June 2014
UTAH HAS CONSISTENTLY HAD ONE OF
THE NATIONS MOST DIVERSE
ECONOMIES
METROPOLITAN ECONOMIES AND
GROSS METRO PRODUCT
Metropolitan areas continued to be the beating heart of the U.S. economy in
2013. They were home to 84% of the nation’s population, 86% of the total nonfarm employment, 87% of real income, 90% of new housing starts, and 90% of
real gross domestic product.
In 2013, 294 of the country’s metropolitan areas saw their real GMP increase. Of
those 294, 21 metros saw growth of 4% or more, 52 of 3% or more, 120 of 2% or
more, faster than the national rate, and 230 of 1% or more. Conversely, 69
metros last year saw no, or declining, growth.
The fastest growers among the 100 largest metro areas were mostly in the West
and South regions where the real estate market recovery has fueled economic
growth.
IHS Global Insight – June 2014
METRO ECONOMIES IN 2014 AND 2015
It is anticipated that US real economic growth will accelerate in 2014 to 2.3%. This
will occur despite a tepid first quarter in which payrolls expanded by less than 1%,
as economic activity was restrained by extreme winter weather, which led to
supply disruptions and slowed real estate and construction markets. For the year,
344 metros (95%) will see real GMP growth.
The labor markets of metropolitan areas will continue to heal, as payrolls increase,
unemployment falls and employment levels return to their pre-recession peaks.
By the fourth quarter of 2013, 284 metropolitan areas had seen their
unemployment rates fall below 8%, while 205 fell below 7%, 121 dropped under
6%, and 49 had rates less than 5%.
IHS Global Insight – June 2014
THE LONG ROAD BACK TO NORMAL
Fueled by a booming energy sector that is producing solid job and economic
growth, Texas, Louisiana, Oklahoma, Wyoming, North Dakota and Montana
are on the forefront of the housing recovery, with North Dakota now the first
state to surpass its normal level of housing production.
Conversely, the hardest hit states during the housing downturn were the
bubble states – Arizona, Florida, California and Nevada – along with the
industrial Midwest, which continues to face challenges in the auto industry and
a declining manufacturing sector. Where individual states stand now has a lot
to do with how far they fell when the Great Recession hit.
NAHBNow – April 2014
WHAT DOES THE FUTURE LOOK LIKE
A growing economy, pent-up demand, competitive mortgage rates and affordable
home prices will keep housing on an upward trajectory through 2015.
With both home prices and interest rates projected to increase, buying now instead
of later might make sense.
St.George has been selected a top retirement destination by WHERE TO RETIRE, a
popular magazine geared toward helping people with retirement relocation
decisions. Each year, 700,000 Americans relocate to new towns to retire. Golf
Course Communities are popular among retirees, propelling St.George to one of the
top “8 Cities for Golf (and much more).”
AN OVERVIEW OF THE
CURRENT ECONOMIC CLIMATE
After a weak first quarter, battered by the harsh winter weather, the nation is
expected to gather momentum during the remainder of the year. Improved global
growth will support stronger exports, while business and consumer spending will also
gain some traction. Metro economies will lead the way, first enabling the nation to at
last recover the jobs lost during the recession, and then propelling the US economy
to achieve its growth potential of greater than 3% real gains per year, a rate not
reached since 2004. In 2015 almost half of all metros will exceed the 3% growth rate.
Of course, not all metros will recover lost jobs this year, or be able to generate such
growth. Economic activity is improving across the nation, but much work still needs
to be done in many of the nation’s metros.
IHS Global Insight – June 2014
THE US LABOR MARKET IN 2014
The labor market now has strong momentum. May represented the fourth
consecutive month with at least 200,000 jobs created. The labor force participation
rate held steady at 62.8% -- a helpful factor to drive future job creation. While the
economy has generated 2.369 million jobs over the past year, a major concern
remains the quality of these jobs. Of these jobs, 388,000 were in administrative
(which include temporary help services); 317,000 in retail; and 311,000 in food and
beverage establishments -- all low-wage sectors. Key higher-paying sectors, such
as manufacturing, government, and financial services, contributed very little to this
annual growth.
IHS Global Insight – June 2014
ECONOMIC FORECAST
Construction along with professional/business services will make significant
contributions to the local economy. The expanding economy will support increased
household formation, and demand for residential and commercial real estate will
tick upwards, fueling advances in housing starts and construction payrolls. The
service-based economy will continue to expand, particularly the professional and
business sectors. Unfortunately, the low paying administrative and support service
division is expected to be the fastest grower, significantly outpacing the more
lucrative management and technical sectors.
In addition to the improved labor market, most other economic indicators are on the
rise as well, with local governments reporting increased revenues from sales taxes
and tourism.
ECONOMIC OUTLOOK REMAINS POSITIVE
The economy is expanding at a moderate rate; employment is rising; inflation is low;
consumer spending is growing at a healthy pace; housing is recovering from its long
downturn; and corporate profits are rising. Monetary policy remains supportive with
the Fed keeping short-term interest rates at very low levels; however, it is reducing
(“tapering”) its quantitative easing bond purchases.
Consumer and business finances are in better shape than several years ago. That’s
because companies and individuals have increased savings and paid off debts in
response to the painful lessons learned the last time the economy faltered.
Consequently, the average consumer debt burden has dropped to its lowest level in
30 years. This may be an indicator of better things to come.
Wells Fargo Advisors – June 2014
ACKNOWLEDGEMENTS
The Spectrum Newspaper
U.S. Census Bureau
IHS Global Insight
Construction Monitor
City of St.George
Southern Utah Title
NAHB Now
keepingcurrentmatters.com
Gallup
Freddie Mac
Washington County Board of REALTORS
ACCRA Cost of Living
Utah Association of REALTORS
Utah Governors Office on Economic Development
Wells Fargo Advisors