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Washington County Housing market REPORT

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.

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Washington County Housing market REPORT

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  1. Washington County Housing market REPORT Mid-year Report Prepared Exclusively for the Utah Association of Certified Public Accountants July 17, 2014

  2. 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

  3. Washington county by race, origin Total Population: 147,800 Non-Hispanic White: 126,269 (85.4 percent) Hispanic: 14,591 (9.9 percent) Black or African-American: 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

  4. 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

  5. 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

  6. 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-the-board 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

  7. 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

  8. 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

  9. employment peak before the late 2000’s recession Pre-recession Job Loses Decline Return Peak (thous) (%) to peak

  10. 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

  11. City of st.georgemonthly building report May 2014April 2014March 2014February 2014 Single Family Residential 57 54 22 32 Townhomes 15 9 5 5 Condominiums 0 3 3 0 Commercial/Industrial 11 7 8 9 Miscellaneous/Additions 58 71 60 62 Public/Airport/Parks/Etc 2 1 0 1 Monthly Totals 143 145 98 109 Total Valuation $15,828,000 $16,277,100 $14,295,400 $8,913,400

  12. City of st.georgeannual building report summary May 2014May 2013 May 2012May 2011 Single Family Residential 210 234 204 79 Townhomes 42 61 38 27 Mobile Homes 0 2 1 2 Condominiums 8 0 0 0 Commercial/Industrial 43 47 70 82 Miscellaneous/Additions 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

  13. 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

  14. 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

  15. 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

  16. 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

  17. Cost of living – 1st quarter 2014 Metro / MicroCompositeGroceryHousingUtilitiesHealthMisc. Cedar City 90.5 102.4 80.6 86.3 89.8 93.7 St.George93.8 100.6 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

  18. 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 south-southeastern 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

  19. Utah has consistently had one of the nations most diverse economies

  20. 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 non-farm 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

  21. 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

  22. 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

  23. 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).”

  24. 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

  25. 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

  26. 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.

  27. 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

  28. 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

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