If you’ve never been to St. George, Utah, you haven’t experienced all that the state has to offer. When you hear about Utah, you probably picture beautiful mountains and home to “the greatest snow on earth,” and while you are correct, down south in St. George the climate is the opposite. The St. George market is strategically located in southern Utah and is a gateway to well-known landmarks such as Zion National Park, Bryce Canyon National Park, Sand Hollow State Park, and many more. While the St. George market experiences high temperatures during the summer months of July and August, the remaining 10 months out of the year are exceptional, especially when looking to get away from the snow during the winter. As the St. George market has so much to offer, both the economy and housing market continue to grow and remain just as hot as the summer months.
The St. George economy has been experiencing significant growth over the past decade and has added a combined total of more than 32,000 jobs over this time. Most recently, the Bureau of Labor Statistics reported an annual net increase of 5,200 new jobs created in the St. George market as of August 2021. As the economy continues to grow and more people return to work, the unemployment rate has remained well below the level considered to be fully employed at 2.7%.
The St. George market has been able to transform from a recreational and retiree market to a more full-time livable market. The work-from-anywhere concept has been growing and is providing many people the ability to live full time in a market like St. George. In addition, more companies are expanding operations into St. George, creating more local jobs and spurring economic expansion. The new Tech Ridge employment center that is planned for the old airport site could help launch the local economy to the next level. As a result of the growing economy, the St. George housing market has grown exponentially over the past few years, and it continues to attract buyers from across the country.
The housing market, which has gone somewhat unnoticed because of the size of the market, is essentially as strong as it’s ever been. There are numerous buyers coming in from out of state with cash in hand, ready to capitalize on homes that provide a strong standard of living and value proposition. However, with the surge in housing activity along with material and labor shortages, new-home prices have also increased at a rapid pace.
Currently, the median price for a new detached single-family home in the St. George market is $460,000, which is a 12% increase compared with this time last year and up 17% over the past two years. However, one of the strengths within the housing market is the number of homes purchased with cash. Based on deed record closings, currently 40% of all mortgage transactions in the St. George market have been with cash, therefore mitigating some of the risk in the rising home prices.
Over the past 12 months, builders have started a total of 3,448 new homes in the St. George market, which is a 45% increase compared with last year, and up from 2,497 annual starts in 2019 (up 38%). Annual new-home closings are up 23% to 2,804, but they have not increased at the same pace as starts because of the shortage in materials and labor. While a gap in starts and closings usually results in an increase in home inventory, that is not necessarily the case in St. George. Total new-home inventory in the St. George market currently sits at nine months, which is a combined total of model homes, under construction homes, and finished vacant homes. While this supply has increased from 7.7 months recorded the same time last year, a mere 11% of the total home inventory is finished and vacant homes (otherwise known as spec homes), which translates to a record low of one-month supply. The total number of homes currently under construction has increased 93% compared with the same time last year and is at a 7.7 month supply. However, due to labor and material shortages that continue to plague the market, the average time to build a home continues to lengthen. As a result, homes will stay in under-construction status for a longer period of time.
While St. George is not immune to market cycles and will certainly have some hurdles in the future, fundamentals for the market remain strong and it should continue to experience steady demand for the foreseeable future. If you have not had the opportunity to experience all the St. George market has to offer, don’t delay—there’s no better time to visit.
