Despite the continued snowfall and late spring weather, the Park City real estate market appears to be in bloom. With increases in Utah tax revenue, Park City building permits purchased along with a slight uptick in higher-end residential real estate, the Park City market continues to plow through the stormy national statistics.
Sellers are becoming more realistic in how they are pricing their properties and buyers are beginning to realize that the market has reached bottom and has begun to rebound.
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First Quarter 2011 Market overview
The Park City Real Estate Market
Economic factors, both nationally and locally, remain the driving force in the movement of the housing market. The national economy seems to be moving in a positive direction; the unemployment rate has experienced a drop over the last two months and larger organizations are starting to hire again. Private and public investment is on the rise. Corporate spending on equipment and software was up 15.1 percent in 2010, the largest increase since 1978. Moody’s Analytics is projecting GDP growth of 3.9 percent in 2011 which follows a 2.9 percent increase in 2010. All of this has yet to translate into a significant increase in the real estate market, but should have an impact in the latter part of the year.
Nationally, the upper-end residential real estate market is beginning to rebound at a much quicker pace than the entry-level and mid-level markets. According to the National Association of Realtors sales of homes priced above $1 million were up 3.9 percent in February from a year ago. At the same time homes priced between $100,000 and $250,000 had slipped by
seven percent. Although million dollar homes account for only 2 percent of sales nationally and homes between $100,000 and $250,000 account for 42 percent of sales, those numbers are significantly reversed in the Park City market. The up-tick in high-end property sales is a good sign for the local market.
Utah’s economy continues to outpace the majority of the country. The Utah Revenue Assumption Committee recently released an updated projection for the 2011 major economic indicators. Of the 11 indicators six were revised higher, four remained level and only one, net in-migration, was revised lower. The most impressive increase comes from the tax revenue indicator. From fiscal year 2010 to fiscal year 2011 sales and use tax in Utah increase 12.1 percent to $104.4 million. Corporate tax jumped 35 percent, and most significantly, the individual income tax increased by 9.8 percent to $115 million.
The Park City Real Estate Market
Park City has enjoyed an increase in tax revenue as well. According to City Hall’s Budget Department, in the second half of 2010 the city collected 14.2 percent more sales tax than during the same period of 2010. The city is now expecting more than $1 million in additional tax revenue going to the General Fund. The Budget Department is now projecting a sales tax revenue increase of 21 percent for the entire fiscal year over what was originally forecast. Additionally property tax revenue is expected to be up four percent from earlier estimates.
The Commercial Real Estate market in Park City is beginning to experience a rebound from the downturn in 2007. Retail sector has stabilized, new businesses have moved in and lease rates are starting to move upwards. Lease Rates on Main Street have been secured in the $32- $40 per square foot range. Vacancy rates for the retail market in Summit County are averaging 9.32 percent. The office market, however, continues to struggle. Many small businesses, who were leasing office space during the good times, have either closed their doors or have moved to home offices to save on overhead expenses. Lease rates in the office sector are at their lowest point since prior to the Olympics in 2002. Office vacancy rates are averaging 18.78percent. Commercial leasing activity at Kimball Junction remains relatively flat; however, there is talk of new ownership of New Park and turning the available vacant retail space in to an upscale outlet mall.
The Park City construction industry appears to have turned the corner with a better than expected first quarter. During the first quarter of 2011 the Building Department had received approximately $5.1 million in permits, $1 million more than during the same period last year; this represents a 25 percent increase. March was the best month of the year with the department receiving 55 permits totaling $2.8 million. It is too early to say that this is a significant trend, but it is certainly good news following two years of retreat in the construction industry.
Park City Stats
The total number of active listed units in the Park City area has remained relatively flat since the end of 2010 hovering around 2500 units. At the end of March there were 2508 units listed. Meanwhile, pended listings have increased notably in the first three months of 2011 moving from 185 in December of 2010 to 255 in March 2011. The 12-month rolling percentage of units sold versus the number of units listed has been on a steady rise since it hit bottom in April of 2009. In March, the 12-month number units sold versus units listed reached 36.32 percent, the highest percentage since February of 2008.
The 12-month rolling total number of units sold continues to move upward, although at a slower pace than at the end of 2010. The number of units sold over the past 12 months was 1477 – 15 percent higher than the same period in 2010. Even though we have seen an increase in the total number of units sold the total dollar volume of these units is declining. The total dollar volume of sold units is down 6 percent from the same time last year indicating that less expensive properties are selling more frequently than higher priced properties.
The absorption rate continues to drop following the trend of the past 20 months. Currently there is a 20.38 month supply of properties on the market. This is half the absorption rate that we experienced in August of 2009 when the housing supply reached 41 months. The last time the absorption rate was at this low a level was in May of 2008. With the number of active listings in decline, and the number of total units sold trending upward, the absorption rate is expected to continue to shrink during the next several months.
The listed price versus sales price of properties is maintaining its upward swing. The first quarter ended with a list to sale prices ratio of 95.79 percent, compared to 94.92 percent at the end of the fourth quarter of 2010. Sellers are becoming more realistic in how they are pricing their properties. At the same time buyers are beginning to realize that the market has reached bottom and has begun to rebound. The number of days a property remains on the market is declining with the average home on the market for 166 days at the end of March.
Short sales and foreclosures remain a significant influence on the market. These two classifications account for nearly one third of all transactions. The trend is moving in a positive direction as fewer and fewer homes fall into these categories. As short sales and foreclosures become less frequent we will begin to see a rise in the median sales price of homes, which has been fairly stable over the past several months. The median home price of homes sold in the 12 months ending in March was $515,000.
© 2011 Christine Grenney, ABR, ePro Mobile: 435 640 4238 | Fax: 435 608 6336 PO Box 111 Park City, UT 84060
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