Utah’s Latest Building Boom
It’s been almost 9 years since the big crash and finally we’re back into an up cycle for building in Utah. Many clients have asked if I think we’re in for another crash similar to the one we experienced in 2007. My understanding from talking with friends and professionals in the business is that the downturn in 2007 was largely due to too much inventory. When things started to go bad in 2007 there was over 5 years of inventory (i.e. unsold new homes) on the market in Utah. That’s a lot of inventory. For several years, as credit tightened, and inventory levels increased due to foreclosure, the prices of homes continued to drop. That’s basic economics and it was a tail spin that took a long time to pull out of. Now, we’re at it again. Everywhere you look there’s a new building project and we’re benefitting from the increased activity like every other contractor. The key to long-term success is to keep unsold inventory at a good place… that’s usually less than a year of inventory unsold. Right now that’s about where we’re at. If we maintain this level things should go smoothly, and hopefully, we’ll avoid another disaster similar to the one we had in 2007.