Real Estate. Two years ago the scenario ... Our local rea

1
The Washington County Board of REALTORS
PresentsTrends in Real Estate

• LEADERSHIP DIXIE
• Thursday, November 11, 2008

2
(No Transcript)
3
Understanding Foreclosure Data

• A recent report by RealtyTrac indicated that Utah
  foreclosures
• jumped by 294 percent in July compared to the
  same month a year
• ago, ranking Utah the 9th highest foreclosure
  state in the nation.
• What the RealtyTrac report failed to mention and
  what newspaper
• and television reporters neglected to explain is
  that RealtyTracs
• methodology counts defaults as foreclosures,
  inflating the actual
• foreclosure count. Defaults or delinquencies,
  mortgages 30 days
• or more late, sometimes never formally enter the
  foreclosure
• process.
• A more accurate foreclosure picture is provided
  by the Mortgage
• Bankers Association. According to MBAs latest
  data, nearly 99
• percent of Utahs 435,000 serviced mortgage loans
  are not in the
• process of foreclosure.
• Salt Lake REALTOR Magazine / September 2008

4
(No Transcript)
5
(No Transcript)
6
Foreclosures

• Notices of default declined steeply (nearly 24)
  from 200 in July to 153 in August. This is the
  first real decline in notices of default in over
  a year.
• Trustees Deeds or actual foreclosure sales,
  similarly fell from 92 in July to just 60 in
  August. The assessed value of 153 Notices of
  Default in August rose to 43,000,000 as compared
  to Julys assessed value of 29,000,000. This is
  a trend to watch as higher dollar homes begin to
  hit the foreclosure blocks.
• Over 73 of the foreclosures initiated this year
  were for mortgages taken out in 2006 (40), 2007
  (30) and 2008 (3).
• Developer Services August 2008

7
EXPERTS Housing needs to improve

• NEW YORK Washingtons financial bailout
  plan is now law. So the credit spigot will start
  flowing again, banks will resume lending, and an
  economic recovery can begin, right? Wrong.
  Experts say the most important thing that needs
  to happen before the 700 billion bailout even
  has a chance of working home prices must stop
  falling. That would send a signal to banks that
  the worst has passed and its safe to start
  doling out money again.The problem is the
  lending freeze has made getting a mortgage loan
  tough for everyone except those with sterling
  credit. That means it will take several months or
  longer to pare down the glut of houses that were
  built when times were good and those that have
  come on the market because of soaring
  foreclosures before homes start
  appreciating. Associated Press / October
  2008

8
Economic Recovery How and When?

• Housing is a critical component to the
  U.S. economy and by extension the availability of
  credit. Roughly one in eight U.S. jobs depends
  on housing directly or indirectly from
  construction workers to bank loan officers to big
  brokers on Wall Street. A turnaround in housing
  prices would boost confidence in the wider
  economy and, experts hope, goad banks into
  lending again.Housing traditionally does lead
  the economy through a recovery.I think its
  going to be critical for a sustained recovery in
  this cycle, too, said Gary Thayer, senior
  economist at Wachovia Securities. Associate
  d Press / October 2008

9
The Cyclical Nature Of Real Estate

• Two years ago the scenario was much different
  from today. New homes were being purchased in
  favor of existing homes. Likely, towards the end
  of year 2009 the tables will turn again and new
  homes will be springing up in all areas of the
  county on so many of those now well-priced lots
  which lay there gathering dust, taxes, and weeds.
• While it is important to note that it has been
  20 years since our permitting levels were as low
  as theyll be in year 2008, this temporary
  respite will pass, and the run-up will begin
  anew. Our local real estate market has never
  been more attractive if you are a buyer. Truly,
  the buyer with the resources and money has clout
  at a level not seen in a quarter century.
• MainStreet Business Journal June 2008
• Alan Carter Southern Utah Title

10
Home Building Permits At A 20-Year Low

• The number of new construction permits issued in
  Washington County changes depending on property
  inventory levels and product availability for new
  purchasers.
• Frankly, it is unlikely that local contractors
  and builders can build a new home for a price
  within 10 percent of the price of an existing
  home. Hence, those new residents are settling
  into a bank repossession, a short sale, or a
  stressed property of some type just to save
  money.
• So we are purchasing fewer permits and building
  less new homes, and the existing home market is
  extremely active, particularly for products that
  are well priced.
• MainStreet Business Journal June 2008
• Allan Carter Southern Utah Title

11
(No Transcript)
12
(No Transcript)
13
(No Transcript)
14
(No Transcript)
15
Population Growth Sparks A Healthy Economy

• Washington County is no stranger to growth.
  We have been growing since the pioneers made
  their homes along the banks of the Santa Clara
  and Virgin Rivers. The rate at which an area
  grows is due in large part to its history,
  topography, climate, job prospects, the arts,
  leisure activities and educational opportunities.
  We as a county possess countless reasons for
  people to want to call this place home.
• People will flock to an area with a high quality
  of life. Businesses will flock to an area known
  for its educated work force and its strong work
  ethic. We cannot stop people from coming here.
  Growing pains are to be expected, but the rewards
  will be unparalleled.
• Representative David Clark
• The Pipeline Spring / Summer 2008

16
Current Growth Rate

• With a current growth rate in Washington County
  of about 3.5 percent, approximately 2,000 new
  families will locate here this year. As each
  family makes its search for nirvana, pricing will
  likely be the driving mechanism and determinant
  for most purchases.
• And so we remind everybody, that it is the lower
  prices in the real estate market that act as a
  beacon and lure to attract those who previously
  spurned the thoughts of owning a piece of Utahs
  Dixie. truly, there has never been a better time
  to purchase a home in Washington County than
  NOW and during the next year.
• MainStreet Business Journal June 2008
• Allan Carter Southern Utah Title

17
ACCRA Cost of Living IndexSecond Quarter 2008

• Metro / Micro 100 12.49
  29.84 9.94 4.07
• Area State Composite Grocery Housing
  Utilities Health Care
• St.George, UT 97.3
  100.7 105.0 72.3 97.5
• Salt Lake City, UT 98.8
  102.8 99.6 70.0 103.9
• Las Vegas, NV 106.3
  103.1 123.1 94.8 100.8
• Cedar City, UT 91.5 100.9
  89.5 78.6 85.6
• Lake Havasu, AZ 111.2
  104.5 137.3 100.0 96.9
• Kingman, AZ
• Riverside, CA 119.3
  109.6 157.3 86.3 106.1
• San Bernardino, CA
• Ontario, CA
• The Council For Community And
  Economic Research

18
(No Transcript)
19
(No Transcript)
20
(No Transcript)
21
(No Transcript)
22
(No Transcript)
23
Economic Development Relies On Adequate Water
Supplies

• As in the past, the future of the area depends
  on a safe and reliable water system. The Lake
  Powell Pipeline water development project
  represents the future either the area grows and
  prospers with it or is restrained and
  economically crippled without it.
• The pioneers realized that economic development
  is not possible without sufficient water
  resources. Hopefully, todays generation also has
  a keen appreciation for that reality.
• Scott Hirschi WCEDC Executive Director
• The Pipeline Spring / Summer 2008

24
Water Will Play A Major Role If Economic Growth
Is To Continue

• Water is a vital resource that we cannot take
  for granted. It is central to our daily personal
  needs, to manufacturing, agriculture,
  landscaping, recreation, tourism, health care and
  local businesses. Water shortages negatively
  impact industries, which in turn reduces job
  creation and job preservation. There is nothing
  to indicate that growth in Washington County is
  going to subside any time soon and we need to be
  ready to meet the projected water needs.
• Todays water development projects will meet
  tomorrows need. Tomorrow is never far in the
  future. A water development project must be
  planned years in advance if we are to be prepared
  to meet future demand.
• Representative David Clark
• The Pipeline Spring / Summer 2008

25
Lending

• The number of recorded trust deeds (loans)
  continue to decrease, reaching a several year low
  of 577, down from this years previous low in
  July of 619. Wells Fargo, Zions First National
  Bank and Countrywide were the top three lenders
  in Washington County with approximately
  91,000,000 (67 loans), 24,000,000 (38 loans)
  and 6,000,000 (32 loans) respectively.
• Year-to-date (January thru July) loan volume is
  off 50 and totaled 1,391,000,000 in 2008 as
  compared to 2,779,000,000 in 2007.
• Southern Utah Title - September 2008

26
House Price AppreciationMetropolitan Statistical
Areas

• MSA National Ranking 1-Yr. Qtr. 5-Yr.
• Houma-Bayou 1 9.06 1.49 47.58
• Thibodaux, LA
• Salt Lake City, UT 88 1.96 -0.74 56.27
• St.George, UT 233 -5.12
  -2.32 67.85
• Las Vegas 278 -17.67
  -7.53 49.56
• Paradise, NV
• Office of Federal Housing Enterprise Oversight
  June 2008

27
OFHEO MSA-LevelHouse Price Indexes
YEAR QUARTER ST.GEORGE
LAS VEGAS 2008
1 -3.65
-12.0 2007
4
-1.72 -6.04 2007
3
-0.85
-3.54 2007 2
2.71
-0.58
2007
1 4.79
1.61
2006 4
11.6
5.37
2006
3
17.9 9.53


2006 2
25.5
11.6
2006
1 37.2
15.7 2005
4
35.3 15.7
2005 3
33.2
14.2 2005 2
29.2
27.1 2005
1 19.8
34.9 2004
4 16.3
38.3
2004 3 12.4
43.5






Office of Federal Housing Enterprise Oversight
June 2008
28
(No Transcript)
29
(No Transcript)
30
(No Transcript)
31
(No Transcript)
32
(No Transcript)
33
(No Transcript)
34
(No Transcript)
35
(No Transcript)
36
(No Transcript)
37
(No Transcript)
38
The Bright Side Of Real Estate

• For awhile there, call it 2003-2006, we got used
  to expecting quick and huge appreciation,
  plentiful deals, easy funding, and abundance in
  general. Today doesnt feel so great in
  comparison, but there is still much to celebrate.
• Market adjustments (the polite term for real
  estate heart attacks) accomplish some very
  positive things they force a return to more
  conservative and safer practices they clear out
  the wannabes and charlatans and they create
  opportunity for the little guys. Right now, if we
  look at our markets, it is clear that this is
  happening.
• Certainly, lots of good folks (taxpayers for
  example) will have to bear the cost of this it
  is a price of our democratic and capitalist
  society that we will make mistakes and have to
  fix them ourselves.
• Craig Griffin October 2008
• Coldwell Banker Commercial KGA

39
The Bright Side Of Real Estate

• One important silver lining is the return of
  available workforce housing. For many high growth
  communities, the boom saw investors gobbling up
  homes that were conceived and built for our
  workforce, seniors and new families. This pushed
  up prices and then rents, which made it hard for
  community services and businesses to attract and
  maintain a stable workforce.
• Today however, most cities are seeing a good
  level of affordable housing which is critical for
  stable and sensible community and business
  growth. Developers are once again building for
  the market and for real people, not just throwing
  up product because somebody will buy it.
• As always, there are good times ahead, new
  lessons, and opportunity.
• Graig Griffin October 2008
• Coldwell Banker Commercial KGA

40
Summary

• Short sales and foreclosures continue to drive
  down existing home prices and put increased
  pressure on builders to supply low-cost new homes
  to compete with the reduced-priced existing
  homes. Lot sales and building permits continue to
  be slow allowing the market to absorb the more
  than ample supply of already built but not moved
  into new homes.
• Banks and mortgage companies are still lending,
  the rates are still favorable, and those willing
  to navigate the effects of the foreclosure market
  on underwriter requirements are able to take
  advantage of bargain basement prices.
• Total sales, new sales, and existing sales were
  all up in August over July. Despite a steep
  decline in total loans, they may rally back in
  light of the drop in interest rates in early
  September.
• Developer Services August 2008

41
Conclusion

• The Washington County real estate market has
  been sustained for decades by selling attractive,
  affordable and quality homes in a premier, fun
  part of the country with deep moral values and a
  tremendous sense of community.
• As foreclosures and the oversupply of lots and
  homes are absorbed, look for a flattening of home
  prices and a slow climb up sustained by
  well-priced homes in one of the nations premier
  Communities.
• Developer Services August 2008

42
Acknowledgements

• Salt Lake REALTOR Magazine
• Southern Utah Title
• defaults4you.com
• Developer Services
• Associated Press
• MainStreet Business Journal
• Terra Title Company
• Utah Bureau of Business and Economic Research
• The Pipeline Washington County Water
  Conservancy District
• Council for Community and Economic Research
• Utah Governors Office of Planning and Budget
• U.S. Census Bureau
• Office of Federal Housing Enterprise Oversight
• Washington County Board of REALTORS
• Utah Association of REALTORS
• Coldwell Banker Commercial KGA