Blog Post

By: James Wood

The recently completed annual St. George Area Parade of Homes had the second highest attendance in its 26-year history.  Only the 2007 parade, at the peak of the real estate boom, had more attendees.  Judging from the crowds and the home prices there’s no trace of the Great Recession in the local real estate market.  The 28 homes in this year’s parade included 13 homes priced over $1 million with the highest priced home topping out at $ 4 million. Four years ago, only 3 of the 28 homes in the parade were priced above $1 million.

Obviously the homes in the parade, particularly the million dollar homes, are not representative of the local housing market, but they are fascinating to visit.  The $4 million home is located in the Stone Cliff subdivision and is a 12,000 square foot “spec” home with eight bedrooms, seven bathrooms, a $200,000 entertainment room, and a six car garage.

At least in the rarefied air of the Parade of Homes, housing prices appear to have recovered, but that’s not quite the case for market-wide prices.  The housing bubble in Washington County pushed prices to extraordinarily high levels.  From 2002 to 2006 the median sales price of a home in Washington County doubled from $142,500 to $287,000. The rapid run-up was followed by five years of declines (see Figure 1).  Finally, prices bottomed in 2011 with a median sales price of $175,000, 40 percent below the peak of 2006.  The contraction in prices in Washington County was a year longer than in other major housing markets in the state; an indication of just how unsustainable prices had become due to widespread speculation and “flipping” of land and homes.

Figure 1: Median Sales Price of a Single-Family Home in Washington County

Source: Washington County Board of Realtors.

No other major real estate market in Utah has had to battle back from such high, unsustainable peak prices.  Now, Washington County has the dubious distinction as the only real estate market where home prices have not fully recovered. The median sales price of a home in Washington County in 2015 is 16 percent below the 2006 peak and when measured in inflation adjusted dollars (constant dollars) is still down 30 percent.  Regrettably, the rampant speculation 10 years ago damaged the market and continues to impact those home buyers who purchased homes during the Washington County housing bubble.

Table 1: Pre-Recession Peak Price for Single Family Homes Compared to 2015 Price

(Median Sales Price of Single Family Homes)

James Wood is the Ivory-Boyer Senior Fellow at the Kem C. Gardner Policy Institute.