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The Washington County Board of REALTORS ® Presents Trends in Real Estate

The Washington County Board of REALTORS ® Presents Trends in Real Estate. LEADERSHIP DIXIE Thursday, November 11, 2008. 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

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The Washington County Board of REALTORS ® Presents Trends in Real Estate

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  1. The Washington County Board of REALTORS®PresentsTrends in Real Estate LEADERSHIP DIXIE Thursday, November 11, 2008

  2. 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 RealtyTrac’s 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 MBA’s latest data, nearly 99 percent of Utah’s 435,000 serviced mortgage loans are not in the process of foreclosure. Salt Lake REALTOR® Magazine / September 2008

  3. 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. Trustee’s 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 July’s 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

  4. EXPERTS: “Housing needs to improve” NEW YORK – Washington’s 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 it’s 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

  5. 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 it’s going to be critical for a sustained recovery in this cycle, too,” said Gary Thayer, senior economist at Wachovia Securities. Associated Press / October 2008

  6. 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 they’ll 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

  7. 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

  8. 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

  9. 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 “Utah’s 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

  10. ACCRA Cost of Living IndexSecond Quarter 2008 Metro / Micro * 100% 12.49% 29.84% 9.94% 4.07% Area & StateCompositeGroceryHousingUtilitiesHealth Care St.George, UT97.3100.7105.072.397.5 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

  11. 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, today’s generation also has a keen appreciation for that reality. Scott Hirschi – WCEDC Executive Director The Pipeline – Spring / Summer 2008

  12. 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. Today’s water development projects will meet tomorrow’s 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

  13. Lending The number of recorded trust deeds (loans) continue to decrease, reaching a several year low of 577, down from this year’s previous low in July of 619. Wells Fargo, Zion’s 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

  14. House Price AppreciationMetropolitan Statistical Areas MSANational Ranking1-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

  15. OFHEO MSA-LevelHouse Price Indexes YEARQUARTERST.GEORGELAS 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

  16. 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 doesn’t 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 wannabe’s 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

  17. 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

  18. 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

  19. 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 nation’s premier Communities. Developer Services – August 2008

  20. 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 Governor’s 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

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