May 2021 St George Market report
Wow…this report leaves me speechless. Check out this graph from April 2019 to April 2021.
The graph below is specific to the Greater St George (residential) area.
Do you see the red line that falls off a cliff? Yeah…that’s our inventory. It did disappear.
The only thing stopping the fall is the rising housing prices—it’s creating more of a hard landing than reversing the course. The black line on the graph below shows average prices over the past two years. There is an almost undetectable grey line, which shows the list price compared to the sale price. If you notice, the line shadow changes course over the past few months. The grey line is showing the sale price typically going OVER the asking price.
We have to take this with a grain of common sense and strategy. Several agents will knowingly place a home priced on the lower side of the expected sale price to generate more offers that bid up higher. Many sellers fear this tactic, but the brave souls partake are ultimately fetching a higher price. It’s a similar concept to an auction. That’s not to say it’s the best option…it’s not always the best option. But right now, it’s popular. So, this technique is somewhat skewing our numbers.
Home sales had a typical December/January dip, but that is quite normal, which is about the only thing that’s maintained normalcy in this post-pandemic housing market.
Our sales numbers are higher than these graphs depict; many new construction homes are not even making it to the MLS. Builders are in an interesting position. Typical build jobs take 6-12 months (or longer). Currently, most are significantly longer. There is a bottleneck in the industry and skyrocketing (and limited) lumber, appliances on backorder for 3-6 months, and subcontractors booked out for months. For each month this continues, the problem increases…as does the cost. Most builders are no longer taking contracts (and many are canceling the contracts). They are opting to finish the home and then list it for sale to the highest bidder. This technique proves unfair to those who had a contract on a home and thought they were moving soon. Builds will take as much as double the time and perhaps double the cost over the past two years.
Are we in a bubble?
Of course we are! What goes up…must come down. While the housing market isn’t necessarily tied to the gravitational pull, it still applies. There is no way we can continue to sustain this course. The fear of another bubble is always on the minds of any investor—it wasn’t that long ago that we saw the housing bubble burst. While it remains to be seen if our current bubble will “burst” or deflate slowly…I do believe it WILL happen. I’ve heard all of the arguments “last time it was because of the loose lending guidelines” yeah yeah, okay…we all have an opinion. This is mine. I don’t think we are set in motion to realize the same fate as our last bubble; lending IS different. But…I DO believe we will change course. Call it what you will…decline, reverse, burst.
My opinion is that interest rates will continue (slowly) to rise; the increased bottlenecking and increasing costs of supplies will, at some point, cause buyers to hold. Coupled with the fact that developers (here and across the country) are working overtime to subdivide and prep lots to build and sell, I think we will realize a similar fate as our not-to-distant bubble memory. Prices will begin to decline, and now all of the sellers who were waiting for the peak will suddenly be ready to sell; right around the same time, all of the subdivided land will begin to flow into the inventory (like a flood). All the builders who are hoarding their inventory until their homes are complete so they can throw it out to the starving buyers…I think it will be a perfect alignment of two trains on the same track traveling toward each other. We may become flooded with inventory from builders who are paying too much (right now) for materials, and it will cause a natural supply and demand decline.
So…is NOW a good time to buy? Well, it’s a better time to SELL. Buying is fine UNLESS you’re going to flip or sell short term. If you’re buying with long-term plans in mind, real estate will be the safest bet. Rents are at a high right now, which will more than offset in the long game. If you’ve sold a home, you likely make a healthy return. Yes, you’re paying more to buy—but really, it’s not any different than if you sold for less and bought for less. If you sold a year or two ago, and now you’re ready to get back into the game, well, that will hurt a little more. Again, real estate is a solid investment. We will likely go down. We will probably come back up. Historically, it’s the nature of the beast.
What are your thoughts on the market? How is the market in your area? I'd love to hear from you.
I am Paula Smith, Associate Broker with RealtyPath of St George. I have been a licensed, full-time real estate agent in Southern Utah since 2006. I have been selling residential real estate during all of the changes in the market, as well as witnessing our St George area grow to become one of the fastest-growing cities in America. I keep my finger on the pulse and not only pay attention to what is going on, and I've accurately predicted future market conditions.
Allow me to be of assistance and earn your business. If you’ve got a home in Southern Utah that you’re thinking of selling and you’d like a property market report, I can send that to you.
If you're ready to buy or sell, I'm prepared to make it happen. 435-773-3751