Housing has cooled off in St. George

Not all that long ago, St. George had been one of the hottest housing areas in the West, but it has definitely cooled, according to figures released by housing market research firm, Metrostudy.

"Last year was when things started to turn around (for St. George)," said Eric Allen, director of Metrostudy's Utah/Idaho region. "St. George is going through the same struggles that the rest of the nation is."

Metrostudy reports annual starts of new homes in St. George declined 16 percent from the third quarter of 2006 to the current quarter with quarterly new home closings falling 32 percent compared to the third quarter of 2006. Annual new home closings were down 33 percent from the third quarter of last year.

Allen said the number of new homes sitting unoccupied in St. George and in nearby Mesquite, Nev., remains a concern. In St. George, finished vacant homes comprised 37 percent of the total new construction inventory, while in Mesquite, finished vacant homes comprised 38 percent of the total newly built inventory, the report states.

"A healthy number is between 25-30 percent for those markets," Allen said.

He added that finished vacant inventory in St. George increased 19 percent from the third quarter of 2006 to the same period this year. Metrostudy uses finished vacant inventory trends as an indicator of the health of the new home market, said Allen.

Yet despite the drop in housing starts and sales, prices remain steady, he said.

"The average (third-quarter) price in St. George for detached homes was about $360,000. The previous quarter it was $345,000, he said.

Allen attributes the price increases to the high cost of land in the area.

"The price the developers paid for the (land) has made the price they are delivering new homes more expensive," said Allen. "They're paying 20-40 percent more for the land than they did four years ago."

But, Allen said, developers are sweetening the pot for prospective buyers. "Builders are giving away a lot of concessions, using a lot of incentives," he said. "It's a great time to buy."

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E-mail: jlee@desnews.com