Archive for the ‘News’ Category

Amongst all the controversial discussions amongst local and national economists, there have been several debates on when things will turn in the economy. There has been a glimpse of good news as home sales are slightly up this year over last year in St. George, the stock market has been inching up, but consumers are still timid in spending money.

Locally there is some positive news- According to CNBC, Utah is rated the 5th Best State for Doing Business in 2009. Utah’s national unemployment rate is 6.1% whereas the national average is 9.7%.

In a recent survey distributed by Loopnet.com, they questioned three key groups in commercial real estate (the broker, the investor, and current property owners). The survey was to determine the confidence these groups have in when the Commercial Market will begin to turn around. Main points of interest were:

• Timing of Recovery in Transaction Volume (when will the transaction numbers begin to increase relative to 2009.)
• How much further will prices decline?
• When will pricing hit bottom?
• How much further will the prices decline?
• What is the best investment opportunity?

TRANSACTION VOLUME

According to Loopnet, the confidence of Investors have slipped since last quarter. Only 10% feel that there will be a recovery in 2009 and 33% of the investors feel that it will be in 2011.

Although this isn’t great news, 56% of the investors feel that mid-year 2010 we should see the transaction number start to increase.

Breakdown by Quarter and Role

PRICING

Although there is some consistency in the opinions regarding the transaction volume increasing, there is a pretty vast difference in how much further prices will decline. Of those surveyed, most believe that there is still an 11-20% drop ahead of us.

Current owners are a little more optomistic than are investors. 28% of the owners believe that pricing has bottomed out already, or will only decline 5% or less.

WHERE IS THE BOTTOM?

The consensus was not clear on when the pricing will completely reach the bottom, but the majority surveyed (60%) expects it to happen between Q4 of ’09 and Q3 of 2010. 17% surveyed expect that the declines will continue through 2011.

BEST INVESTMENT OPPORTUNITY

Of those surveyed, 48% felt that Multifamily was the best opportunity when considering a long term investment.

The Commercial Sector in St. George, Utah that are currently being professionally marketed in St. George Utah, there are:

• 11 Multifamily properties available for sale
• 29 Office buildings/Office condo’s for sale
• 25 Retail buildings/Retail condo’s for sale

Contact me if you are interested in viewing a list of available properties for Sale or Lease anywhere in St. George, Hurricane, Washington, or Cedar City.

If you were to speak to someone in Utah about the current Utah Economic conditions they would probably have several complaints about how bad things are. In almost every aspect… they are right. However, if you compare our economy to the rest of the country, we are doing much better. According to the Utah Department of Workforce Services, the Unemployment rate across the country is 9.4% and Utah is at 5.4%.

A year and a half ago, several economists called Utah a Recession Proof economy because of the diversity of our states revenue sources. However, a year and a half ago, economists didn’t anticipate how bad things would get.

Where are we now?

Utah CEO Magazine reported the following statistics:

• As of June 18, 2009, the average interest rate for a 15-year fixed-rate mortgage as of June 18, 2009. The average interest rate for a 30-year fixed-rate mortgage is 5.38%.
• Gasoline prices in the western U.S. were down 37.8% from May 2008-2009.
• An average of 88 residential building permits per month were pulled in Washington County from March’09-May’09. Salt Lake county only averaged 287, and has nearly seven times the population of Washington County.
• An average of 16 commercial permits were pulled per month in Washington County. Salt Lake County was around 60 commercial permits per month.

The filing for Bankruptcy increased 59% in Utah this year over last.

The number of non-agricultural jobs lost from April 2008 to April 2009 was 39,800 in the state of Utah.

Although these numbers are astounding, our local economies are doing substantially better than national averages.

In Deloitte’s mid-year Economic Update, there is promise in a soon-to-be upturn in our economic positioning. They feel confident that the economy should start to turn around the second half of this year (and so do an increasing number of analysts).

THE BAD NEWS

In the retail sector, April sales were disappointing. Except for the gas and automobile industries, sales have been on a two month decline. This following a previous two consecutive months of growth. Even with the slight increase in auto sales, they still have seen a decline in 14 of the last 17 months.

The travel and tourism sector declined for the ninth consecutive months, and according to Chain Store Guide’s annual census of the restaurant industry, in 2008 4.1% of all the restaurants in America closed their doors.

THE GOOD NEWS

Although Deloitte expects that GDP will still remain slightly negative in this quarter, they feel that the worst of the downturn is behind us. The Economic Cycle Research Institute reported that in every previous downturn of the last 75 years, the economy has started to grow no more than four months after its pace of deterioration has slowed. If that is the case, we should be in the positive by Labor Day.

We are not out of the storm yet, but similar to starting a garden we are seeing little sprouts that give us home of bigger and better things to come.