The St George real estate market continues to pull ahead, though only by a small margin. The number of available homes in inventory is down a bit in comparison to the prior few months, though is still higher when compared to April of 2013 when the rebound seemed to be at the peak. Essentially, last year at this time was a better market in the way of being a “sellers market”. There were less homes available and there were more sales occurring. Here are a couple of graphs which illustrate this point.
Is the St George Utah Market in a Decline?
Has the proverbial second bubble come under tension and preparing to pop? My opinion is “not yet”. Though it could happen, I believe we are at more of an adjustment; a small bump in our recovery road. Here in St George, we had an extraordinary recovery in shorter period of time, this is when builders began to get aggressive to keep up with demand and competition and started to mass produce homes while simultaneously raising prices almost weekly. When the demand started to adjust as a result of these higher prices, builders were already producing more than what was going to sell. The result? More available homes than anticipated still waiting to be sold, for prices consumers were not prepared to pay. This has caused builders to react with price adjustments, though ironically they seem to be slower to reduce than they were to increase. We have no shortage of buyers in St George, we never have. What we have is a pool of savvy and patient buyers who are not willing to pay more than they believe homes are worth, and I'm sure the residual fear of history repeating itself is fresh in their mind from a time not long ago when prices soared and ultimately crashed. Buyers will wait until prices become where they believe to be favorable, and jump at that point.
What Are Homes are Selling in St George?
While the market does have more homes available and less actually selling (as compared to this time last year) we have also had homes selling for more money. Prices are about 8% higher over this time last year. My guess is, this is an indicator that builders may consider an approximate 4-6% price reduction if they’d like to continue to ride the recovery train with the force it was traveling last year. Higher prices, coupled with interest rate increases have made buyers less likely to pay these higher prices, thereby slowing the number of sales. I’ve talked a lot about “builders” in this article as opposed to referring to resale homes or traditional sellers; this is because new construction seems to be dominating the market. There were so few homes available that were turnkey and updated, buyers turned to new construction where they often had time to choose their finishings and colors for about the same price as resale homes that were in need of repairs or updating. Unfortunately buyers will realize that the price advertised, as appealing as it seems, is not the final price. Keep in mind with new construction, you’ll have to add for any upgrades, walls, window treatments, backyard landscape, and other features resale homes have included already. These upgrades and add-ons can add 6-15% to the price.
In conclusion, I believe the St George real estate market is currently in an adjustment period. I believe listed prices on homes will come down a bit but that the overall sold price average will remain higher in comparison to the past few years as we stabilize. I believe construction prices will come back down to prices more in line with what we had in Fall of 2013 and once that happens, sales will begin to progress as the margin of inventory vs. sold homes once again narrows. It’s a good time in the market for both buyers and sellers. If you’re ready to jump in, give me a call and I’ll put my aggressive approach to work to you.