News reports paint a grim picture of the national economy and the availability of credit needed by small businesses to keep going, and several reports indicate that some, if not all, of the country is in a recession. The credit crunch brought on by the collapse of the financial market means that only people with outstanding credit ratings and substantial down payments can buy houses these days.

A surplus of housing and difficult credit means that construction of new homes has fallen dramatically in the nation. Housing starts are down by 31 percent while new permits have dropped by 38 percent in the last 12 months, according to a U.S. Census Bureau news release issued Friday.

Last week, The Salt Lake Tribune reported that building permits for eight Wasatch Front counties dropped by half from Sept. 2007 to Sept. 2008. Construction employment in Utah dropped by 12.5 percent in that period, according to the Governor’s Office of Planning and Budget.

The effects on Grand County

Grand County has begun to feel effects from the country’s economic meltdown. But the indicators are not nearly as bad. Opinions vary on how hard the financial crisis will hit the local economy and how long it will last, but so far very few properties have been lost to foreclosures.

Building permits are being issued and construction employment remains strong, according to Grand County building department officials. Home prices have not started to fall, except for the price of condominiums. There are few reports of defaults on home loans and home loans are available to individuals with good credit and a good down payment, area banking officials said.

The manager for the state Department of Workforce Services’ Moab Employment Center, Katie Hanway, said there have been fewer construction workers this summer. “But we can’t pin it down now because this is the time [of year] for a typical downturn,” she said.

Workforce Services does not yet have the third-quarter data for Grand County compiled, but information for the first six months of 2008 shows that construction employment at the end of June – 738 jobs – actually was four workers more than for June 2007.

Developers building housing for speculation are having trouble getting building loans. Realtors must work harder to make sales because it is harder for buyers to qualify for credit, and housing sales are slowing down.

“We’re seeing that even when we have willing buyers they’re having an interesting time getting mortgages,” Moab mortgage broker Suzanne Lewis said.

General building contractor Craig Haren said he just lost a big job because a client pulled out – after construction had begun.

“In some cases the people actually have the money, but in these unclear economic times they’re not going ahead with plans to build,” he said, adding that he hopes a new national administration will turn things around sooner or later.

Moab realtor Tom Shellenberger said he knows of at least one big development project that will not happen because of financing problems.

“Development loans are almost impossible to get right now unless half the units are pre-sold,” he said. Schellengerger said he hopes a new Grand County Council will promote development, instead of restricting it.

Credit is available

for people with good credit scores

Martha McGraw, Zions Bank loan officer, said Zions is making construction loans to people for building their own homes in Grand County, but not for speculation. Home loans are available to individuals with good credit and a good down payment, she said.

But borrowers must prove they have the resources, and the bank requires that the appraised value of the property must be verified by comparable sales, McGraw said. “The days of stated income are over,” McGraw said, referring to the “sub-prime” mortgages made to buyers without proof of ability to repay.

Regarding foreclosures on properties, McGraw said county residents are fiscally conservative. “I don’t see a lot of people overextended,” she said. The very few foreclosures she has seen have involved second home buyers, she said.

The executive director of the Housing Authority of Southeast Utah, Karena Gholson, said that nobody has come into her office with concerns about foreclosure. Gholson said her organization can advise people on how to deal with their lenders should trouble arise.

Single-family home

construction and

remodeling keep

building inspector busy

County building inspector Bill Hulse said the county is still issuing about 20 building permits each month. But the type of building has changed, he said. Many of the new permits now are for new single-family homes and remodeling of existing homes.

Hulse said he is currently not receiving requests for permits for condominiums and homes built for speculation. “They’re not able to get financing. A lot of deals have fallen through, so I’ve heard,” Hulse said. Because of that, he said, he believes the recent uptick in land prices will stabilize until all developments are finished and sold.

The slowdown in speculative houses and condos lagged the Wasatch Front by four or five months, Hulse said. Because the Grand County area still maintains its allure for retirees and second-home buyers, he said he thinks it will lead the state when the recovery begins.

“There’s a lot of people who want to be here, and still a lot of people with a lot of money,” he said.

Regarding construction employment, Hulse said there have not been many layoffs because most big projects were started before the economic slowdown. Fewer jobs are available for concrete and other starting work, but the people who put the finishing touches on housing are still much in demand, he said.

“In the short term in Moab, sales volumes are down because qualified buyers are waiting on the sidelines and sellers are reluctant to reduce prices,” said Mark Oligschlaeger, a principal spokesperson for the Cloudrock Development, and vice president of Leucadia Financial Corporation. “Over the long term, the real estate market will remain strong because the Moab area has limited private land for development, and we expect demand to exceed supply.”

“Work on your credit score,” is the advice from Lewis. The basic need for housing remains, she said, and residents should work with lending institutions to get pre-approved or seek out sellers who are willing to self-finance for a year or so while the financial markets stabilize.