Park City Real Estate Market Conditions
I recently attended a seminar , hosted by the developers of The Silver Strike Lodge, on the Real Estate Market conditions. The seminar speaker was Criag Thomas, an economist with CitiGroup (had also worked for Moody). He provided a lot of insight on the overall ecomomy and the future trends in Real Estate. He and a number of other economists see housing prices stablizing in 2009 and price increases starting in 2010. Following is a synopsis provided by the host of the seminar :
Uncertainty that individuals feel over their current wealth status following the economic shocks of the past year have created a near paralysis in real estate buying activity.
As elements of uncertainty evolve to a state of greater clarity, prospective buyers will begin to consider buying opportunities.
Craig Thomas, an economist with CitiGroup, gave a lecture last week that was sponsored by The Developers of The Silver Strike Lodge and it helped many who attended gain perspective into the economy and our current real estate dilemma. The following is a partial summary of many of his talking points and some of my own thinking that you might find useful as you begin to interact with your clients this winter.
The Elements of Uncertainty
Element Status
The New President Obama won the election and he has nearly finished appointing his new cabinet and the majority of our population is pleased with his appointments. A smooth transition from Bush to Obama is occurring.
The Congress Democrats have a majority in the House and the Senate but not a super majority in the Senate. This means that while change will come it will likely be well considered first.
The Bailouts Some large financial institutions have been allowed to
(Financial Institutions) fail while others have been saved. The worst is probably over and stability appears to be returning.
The Bailouts Bush has committed funds for a loan that will provide a
(Auto Industry) bridge allowing the industry to restructure and has prevented its collapse, at least temporarily. Obama will most likely prevent a collapse.
Mortgage Rates The Government has taken measures to cause rates to lower which will have the effect of stimulating many capable buyers to buy.
The housing bubble has burst in markets such as Florida, southern California, Las Vegas
and Phoenix. The bubble actually began to burst in 2006. After 3 years of agony we are
well past the mid point of the real estate crash. Many variables that must occur in order
for a recovery to occur have begun to adjust positively.
Variables that Must Adjust
Variable Status
Credit Availability Is beginning to loosen
Mortgage Rates Are coming down
Housing Prices Are adjusting downward and that creates affordability which stimulates sales.
New Housing Housing starts are down significantly which will cut supply
Construction of housing and that should accelerate existing home absorption rates.
Recession It is acknowledged by the Government that we have been in a recession since the end of 2007. Many economists believe that positive growth will occur by the end of the 3rd quarter of 2009.
Personal Savings From the early 1990’s until the 4th quarter of 2006
Rates individual savings rates declined. Since the 1st quarter of 2007 individual savings rates have accelerated and are quickly approaching 1990 levels. People with cash can afford to borrow with the more stringent borrowing guidelines now in place.
Population Growth Growing populations in a Country translate to growing
Rates economies. The U.S. growth rate is healthy compared to much of the rest of the world. Growing populations are consumers of real estate.
Portfolio With the recent Stocks and Bond price declines many
Re-Allocations investors are adjusting their portfolios of investments to include more real estate in order to have a more balanced and safer portfolio.
Regional The Rocky Mountain region of the U.S. is the healthiest
Economics economic region in the Country. Salt Lake City and Park City are among the healthiest cities in the region.
In the past weekend’s addition of the Wall Street Journal, Columnist Peggy Noonan wrote an opinion piece about our Country and its long term prospects.
“This is a good time to remember who we are. We are the largest and most technologically powerful economy in the world, the leading industrial power of the world, and the wealthiest nation in the world.” There’s a lot of ruin in a nation,” said Adam Smith. There’s a lot of ruin in a great economy, too. We are the oldest continuing democracy in the world, operating, since March 4, 1789, under a vibrant and enduring constitution that was formed by geniuses and is revered, still, coast to coast. We don’t make refugees, we admit them. When the rich of the world get sick, they come here to be treated, and when their children come of age, they send them here to our universities. We have a supple political system open to reform, and a wildly diverse culture that has moments of stress but plenty of give.”
“The point is not to say rah-rah, paint our faces blue and bray “We’re No. 1.” The point is that while terrible challenges face us – improving a sick public education system, ending the easy-money culture, rebuilding the economy – we are building from an extraordinary, brilliant and enduring base.”
We still have a long way to go but there is light at the end of the tunnel. Uncertainty is diminishing and the variables that will manifest in a recovery are beginning to take shape. Those with vision and fortitude will begin to explore opportunities sooner rather than later and when they identify an opportunity, they will buy.