Housing Development

The housing market continues to capture a number of headlines. Especially with reports today of the sharpest decline in home sales in 18 years (here). Overall the housing market in Utah still appears strong, but when the market continues to fall in Vegas and Phoenix it makes you wonder what is in store for the Salt Lake metro area in the next year or two.

I also found these two recent articles regarding housing development interesting.

• New York Times article on housing development along the TRAX lines in Murray City.
  
• Article in Slate about how a cornfield became a town.
  

March HOA Forum Reviewed

Around thirty staff members from a number of cities attended our recent March homeowner associations forum at South Jordan City. Here are a couple of questions discussed at the forum:

• Why is communication between the city and HOA important? There are a couple of reasons. First, improved communication can improve emergency response at a time of crisis. Some larger HOAs may have a emergency response plan that can be coordinated with the city.
• What is the best way to improve communication with HOAs in your city? This is a difficult task, especially since part of the challenge is just identifying the individual HOAs that exist. South Jordan City literally has gone door to door to identify HOAs and COAs. In addition, now they ask HOAs to record contact information with the city.
• What can cities do to help prevent HOA failure? Unfortunately there really isn’t a lot cities can do. However, one key maybe is to closely review the proposed financial plan of a new HOA. Often HOA failure is due to inadequate reserve funds for emergency situations, the city can help review and approve this plan prior to development.
• What does HOA failure mean? Really there are two kinds of failure. One kind is complete failure that results in absolving the HOA entirely, this failure is very rare. The other kind of failure relates to a specific private service (private road in the HOA , sewer or water, etc) this is more common. Often the frequency of service failure is directly related to the fiscal strength of the HOA.

Thanks to John Janson(West Valley City) and Chip Dawson (South Jordan City) for participating in the panel discussion and offering their experience/insight.

Check here is you are interested in my presentation. March HOA Forum

Growth of Homeowner Associations

Question: How many Americans live in homeowner associations or condominium associations?
A. 2.1 million
B. 9.6 million
C. 29.6 million
D. 57 million

The correct answer is 57 million Americans (1 in 5 Americans) live in HOAs or COAs. If you answered 2.1 million you were correct in 1970. Since then the growth has exploded.

What is causing the HOA growth? What are the implications of HOAs for local government? There are a number of other related policy questions...who will retain the responsibility for maintenance or upkeep? Is there a perception of double taxation to HOA residents?

If you are interested in this issue please attend the ULCT forum: Homeowner Associations: the Good, the Bad, and the Unknown
Date: Thursday, March 29th
Time: 2:30 to 4:00 pm
Place: South Jordan City Hall, Council Chamber -- 1600 W. Town Center Drive (10600 South)

Panelists: John Janson (West Valley City Community & Economic Development and President Utah APA Chapter), Chip Dawson (South Jordan City Neighborhood Services Coordinator), and Neil Abercrombie (ULCT policy analyst)

Email me if you have questions.

Is Greenspan to Blame for Housing Bubble?

What should be the role of the Federal Reserve? Should the Reserve be more transparent to the general public? Will there be a policy shift from Alan Greenspan to Benjamin Bernanke? And is Greenspan to blame for the latest housing bubbles that seem to be emerging nationwide?

I found this recent article in Reason extremely interesting, exploring these questions and more. Reason asked five key Fed watchers to assess these Federal Reserve issues.

• Milton Friedman is a Nobel Prize–winning economist.
• Rep. Ron Paul is a libertarian Republican representing the 14th District of Texas.
• James Grant is a columnist for Forbes.
• Bryan Caplan, an associate professor of economics at George Mason University, was a student of Bernanke's at Princeton.
• Jeff Saut is chief investment strategist for the investment firm Raymond James Financial. He fears that Greenspan's seemingly excellent record built hazards into the economy of which investors need to be wary.

Check here for the full article: Can We Bank on the Federal Reserve?

How much is the economy slowing?

Did anyone see this article in the recent Economist? Third quarter GDP indicate the economy grew at a 1.6% annualized rate. Which is much less than most predicted and a full point lower than the previous three months. Decline in homebuilding accounts for a large portion of this GDP decline, with residential homebuilding declining by 17% this most recent quarter. According to The Economist the declines in house building accounted for two-fifths of the quarterly fall in GDP growth. See the full article here.

So what does this mean? According to the FDIC (Federal Deposit Insurance Corporation) Utah is experiencing some slowing housing growth, but not at the rate of the rest of the nation. In addition, FDIC reports that while some western states have recently experienced slowing job growth Utah's employment growth has increased by 3.6% from last year. Largely this growth is in construction related occupations. However, FDIC also concludes, "Recent declines in permit and sales activity point to slower residential construction activity in the months ahead, with possible adverse implications for overall job growth and the demand for construction financing." Something for analysts to keep a close eye for the next quarter.