WASHINGTON COUNTY – Anyone considering purchasing a home who talked to a mortgage broker or realtor a few months ago would likely hear a warning that might have sounded like this: ¨You better buy now because prices and interest rates are going up.¨
Well, they were right. Interest rates are going up and, like the rest of the country, Washington County, Utah is experiencing a spike in home prices.
According to Freddie Mac, average monthly interest rates have risen from 3.41 percent in March to 4.37 percent in July.
“Interest rates remaining low has encouraged those waiting on the sidelines to enter the market or seriously look,” Keystone Construction and Design President Stephen Sheffield said, “but not until the threat of increasing rates did many get off the fence for fear of being left behind.”
The home sale statistics in Washington County tell that tale.
According to the Washington County Board of Realtors’ Multiple Listing Service, the average home price in the county in 2012 was $193,132. So far this year, the average home price is $226,396, an increase of 17 percent. The total number of home sales has increased dramatically this year. Last year, a total of 1,538 homes sold in the county, while there have already been 1,833 so far this year, a 19 percent increase.
“That is not a bad six-month average,” the Board of Realtors Chief Executive Officer, Vardell Curtis, said.
These statistics bode well for the community because construction workers are going back to work, creating a unique problem for contractors – a struggle to find subcontractors, both Curtis and Carol Sapp, Executive Officer of the Southern Utah Homebuilders Association, said. Sapp said many contractors are working with skeleton crews.
“If it’s a problem you have to have, it’s a good problem,” Curtis said. “Anyone who has a skill, has a job.”
Contrasting Sapp and Curtis’ comments, Charles Horsley of Innovative Builders, a company that specializes in framing houses, said he has managed to keep two framing crews busy for three years, despite the softer housing market of recent years.
“I wish the people that moved away stayed away,” he said, tongue in cheek. “I have been able to stay in the area through the hard times and still made it.”
Bob Raybould, a realtor with Vista Real Estate, warned against the ills of a bettering market.
“The increase of homes being built puts a lot of people back to work but at the same time it raises the ugly face of greed in many,” Raybould explained. “That greed will create an excess of inventory in the market and drive the prices back down. (I am) not certain why we in this industry don’t learn from history.”
Many are optimistic about the county’s housing market, but Curtis warns, “we are not through with short sales and foreclosures.”
For instance, RealtyTrac’s Mid-year 2013 U.S. Foreclosure Market Report ranks Utah 16th highest in the nation in foreclosures. Foreclosures are waning, however. Only one in 194 homes in Utah is in foreclosure according to the report and Washington County’s foreclosure rate has dropped by 55 percent compared to last year. That reduction in foreclosures has helped lead to the rise in construction to keep up with that reduction in inventory.
Curtis said the market has been saturated with investors, who are not “flipping” properties this time around, but renting them. Banks are tightening qualifications for mortgages, making the rental market strong, he said.
But some aspects of the local housing recovery are out of the hands of realtors, builders, and banks.
“We don’t feel like we are in control of our own destiny with everything happening in D.C.,” Sapp said, pointing to changes in government-backed loans and other factors in the housing market controlled by bureaucracy.
Mortgages are harder to come by, causing growth to be a little slower than the last time around.
“The market is improving at lower numbers,” Sheffield said. “Loans are still hard to get due to more strict guidelines, and down payment and verifiable income are still the challenges to overcome, especially for self-employed people.”
He shares the cautious optimism displayed by many builders in the area.
“Our attitude about the market is that housing will continue to improve so long as there is national stability with a bit of a boom to come as people rediscover the tremendous benefits of St. George,” he said.
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