A little over a week ago we held the Rocky Mountain Resort Association annual meeting here in Park City. Professionals from Aspen, Vail, Jackson, Winter Park, Steamboat, and Sun Valley just to name a few. The best and most informative part was a 3-hour session put on by NAR chief economist, Dr. Lawrence Yun. Here are the high notes that we covered in the session titled “After the Clean Up”:
-Historically the US foreclosure rate is 1%. In 2008 the rate is 2%, but in the Rocky Mtn states the foreclosure rate is still under 1%.
-Areas with little sub prime exposure (i.e. Park City) are still seeing relatively good markets.
-Utah never saw the huge boom that Las Vegas, Phoenix, Miami, etc…saw. Prices here are still affordable and the job market is still strong.
-Utah is not seeing the drastic decline in prices, just in number of homes sold.
-Additional rate cuts by the Fed would be counter productive.
-Throughout the nation, home sales are at a 10-year low. There is a lot of pent up demand and fence sitters.
-There are buyers, but 80% of buyers must sell a property of theirs first.
-Builders have cut back on building, so obviously new home sales have declined. This cut back will help stabilize the market. 1.6m new homes must be built a year to keep up with the population growth. During the boom, they were building 2.1m & now they are down to 1m per year!
-Back in the early 90s a slow decline in price hurt the economy for a while. However, this bust was a rapid decline, which allows us to reach equilibrium quicker.
-The Case-Schiller price index was misleading by being too positive going into the boom, and now they are probably too negative coming out of it. These are the same valuations that Bear Sterns relied on.
-99% of all markets will see higher home values in the next 5 years.
-The purposed home buyer tax bill would get fence sitters off the fence and back into the market. While this would not have much effect on the Park City market directly, we would see the trickle down effect in the next year or so.
-All Rocky Mtn states are positive in national migration, and the long-term prospect is bright.
-Dr. Yun likes Texas, Utah, and Colorado as top performers in the coming year(s), and predicts that in the next 5 years we (Park City) will see 30% to 50% in appreciation.
Personally I agree with most of what Dr. Yun presented. However, we might not see the bottom as soon as he predicts….but here in Park City I think we will continue to see exactly what is happening now….which is a total mixed bag. Some people do not have to sell at all and they will keep their price where it is, and other need to liquidate now & are willing to take a loss. The number of sales has slowed, but it had too as we could not keep up at the pace of a few years ago. Our market is healthy, especially when compared to the rest of the nation, and the second half of 2008 will be a good time to pick up some property from a distressed speculator, or maybe just some guy that watches the news too much and is fearful…
…”…be fearful when others are greedy, and greedy when others are fearful” -Warren Buffet