2017 Washington County Economic Summit Highlights
About 1,000 members of the St. George area's business community came together recently for the Washington County Economic Summit to talk about the area's economic prospects for 2017 but also to celebrate what was a historically strong 2016. The county has never had a larger or more diversified economy. And, perhaps most importantly, the business community may have learned some lessons from the experience of the recession.
While there were handshakes and smiles shared at the Summit over the successes of the last year, the tenor of most of the event was about forward-looking, with presenters focused on how to boost entrepreneurism, better utilize technology, modernize infrastructure and branch out into new industries.
Utah has been ranked #1 for economic outlook every year since 2008 and currently has the fourth most diverse economy in the country. Construction crews are raising homes, schools and business out of the desert ground, part of a building surge with more money behind it than at any time in the area's history.
On the Housing Front.....Recently there has been a lot of talk about home prices and if they are accelerating too quickly. In some areas of the country, the supply of homes for sale cannot keep up with the number of buyers out looking for a home, which has caused prices to rise. The great news about rising prices, however, is that the average American household gained over $11,000 in equity over the course of the last year, largely due to home value increases.
Why are Mortgage Rates Increasing?......Simply put, the better the economy, the higher the interest rates will go. People still buy homes when they are ready, and mortgage rates have little to do with it. Interest rates are impacted by many factors, and even though they have increased recently, rates would have to reach 9.1 percent for renting to be cheaper than buying and rates have not been that high since January of 1995.
With a 30-year fixed rate mortgage rate at 4+ percent, plenty of people will buy. And they will buy when mortgage rates hit 5 percent and 6 percent...count on it. Also worth noting...Washington County FHA loan limits have increased from $287,500 to $302,450.
New Construction.....Builder confidence in the Market for newly-built single-family homes jumped seven points to a level of 70 on the NAHB Housing Market Index (HMI). This is the highest reading since July 2005. Builders remain sensitive to rising mortgage rates and continue to deal with shortages of lots and labor.
According to Metrostudy, "Overall the St. George market is experiencing clear signs of new home expansion. The local market should remain healthy and production steady in the near term."
Driving around our area, it appears as though the entire county is under construction. Homes, schools, and commercial structures are being build almost everywhere. Here is a sampling of new construction developments:
•St. George Downtown City View - $30 million mixed-use development-hotel. 100 apartment units and 10,000 sq ft of retail space.
•200 SF lots - Park Side at Grandpa's Pond in Hurricane.
•200 SF Home Sites - Ridge View about 400 N 3700 West in Hurricane.
•New Golf Course at Copper Rock PD Subdivision on 533 acres near Sky Ranch in Hurricane (tentative)
•Jack Fisher Homes entered into a 10-year exclusive land development/home building lease recently with (SITLA); Coral Canyon Town Center (45 town home nightly rental units), The Highlands (20 lots), The Views (40 lots), & Fairway Villas (20 units) at Coral Canyon.
•Sentierre Resort Hotel on 43 acres with 105 luxury guestrooms & suites. 42 Villas with 4 to 5 bedrooms.
•240 SF lots - The Arbors in Little Valley, Development Solutions.
•3-4 new subdivisions in Desert Canyons off Southern Parkway
•132 acres South/West off Hwy 91 in Ivins for a new subdivision
Southern Utah is experiencing astonishing construction for medical and educational facilities. The projects are as follows:
•Rocky Vista University in Ivins
•Dixie Applied Technology College
•Dixie Regional Medical Center Expansion
Hospitality - Hotel construction in the next two years is expected to surpass even that of the past market boom. Southern Utah is expected to add more than 800 rooms in 2017, and perhaps another 700 rooms in 2018. Hotel investment activity is as high as it has ever been. Under construction are the following hotels:
•Courtyard By Marriott / Cedar City
•Wingate by Wyndham / Hurricane
•Sentierre / Ivins
•Springhill Suites, Driftwood Expansion, Best Western Plus and Bumbleberry Inn / Springdale
•Hyatt Place and Comfort Inn & Suites / St George
•La Quinta / Laverkin
2017 Forecast / Top Housing Trends in 2017.......The U.S. economy will continue to grow in 2017 - though at a modest rate.
•The housing market will be in the middle of two massive demographic waves that will power demand for at least the next ten years. Millennials (33%) and Boomers (30%) will comprise the majority of the market.
•Home prices are forecast to slow to 3.9 percent growth year over year.
•New-home buyers will have to spend more as builders will need to cover the cost of rising construction wages, driven even higher by continued labor shortages.
•Interest rates may continue to rise, and the rise is likely to be gradual to keep the economy from hitting another recession.
•The current seller's market in real estate is expected to shift to a buyer's market within three years, according to Zillow. The shift will be fueled by slowing appreciation.
Source: Spectrum / SUHBA / WCBR/Vardell Curtis Residential Review and Preview / NAI
