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Slump for New Home
Building Continues Into 2011
After a disasterous year for new home building over 2010, we're starting 2011 in much the same condition.
2010 ended with new home permits down by -35% from 2009. There were 238 less homes initiated than one year earlier.
2011 has begun with a deficit of 12 home compared to January 2009. The resulting shortfall is a -38% drop in permits, slightly worse than 2010's overall performance.
For reference, new home permits were down by -11% nationally for this same January-to-January comparison. This number was released yesterday by the Economics and Statistics Administration.
As for individual jurisdictions, only unincorporated Yuma county and Wellton reported positive numbers. While nice to hear, the combined net increase over last year was only three more homes.
The city of Yuma had 5 less permits than last year while Somerton and San Luis combined for 12 less starts. In fact, Somerton had zero permits for January, the second "no growth" month in a row. They also had no new permits issued during December.
Building surged last year over March and April as new home buyers responded to government tax incentives. This period also coincided with historically low interest rates.
We're entering 2011 with neither of these favorable conditions although interest rates are still relatively low, but rising. Despite some regional improvement in the commercial sector, prospects for increased new home buying simply isn't there.
December Retail Sales Improve!
Regional sales figures are among our most importance indicators for measuring economic conditions. Unfortunately, these data are among the most delayed because of the one-month offset between actual purchases and sales tax collection. It then take yet more time to collate collections and produce reports.
With recent receipt of January's tax collection data, we may only now see what actually happened during December.
December is by far our most active buying month followed by March each year. Holiday spending begins in late November peaking sales through Christmas. About 75% of the eventual total visitor presence is also already on hand to help sales volume increase even more.
March sales volume benefits from tax refunds that quickly progress into local spending. By then, visitors have begun to leave but still add somewhat to local spending.
Continued Next Column
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Total taxable sales over December 2010 for Yuma County were up by 7%. Sales were still well below December 2008 and 2009's but the first clear same-month improvement over the entire three-year period.
Technically, higher total sales were seen during September and October 2010 but were caused by delayed payments as the collection system adjusted for the 1% state sales tax increase. Sales totals from June through August were less than reality, delayed until September and October for payment. This skewed the data.
December was the only recent comparison month unaffected by the state's restructure for collection categories.
Of total county sales during December, 64% were in the retail sector. Retail sales were also up by 7% when compared to December 2009. Restaurant and bar trade improved by 3% with hotel revenue in negative territory by only the smallest of margins,... - 0.03%.
Retail improvement actually began during November, with local reports of higher, post- black Friday spending. The impact wasn't enough to place November 2010 in plus territory but the shortfall narrowed considerably.
In deeper analysis accounting for increased holiday spending, it looks like retailers paid less for goods as wholesale costs remained much as they were for 2009. Therefore, retailers were able to discount products without additional inflationary pressure accumulated over 2010.
The City of Yuma accounted for about 82% of December retail sales with the remaining sales volume produced in our other sales jurisdictions.
Yuma remains our primary source for goods and services with this December outcome about 10% higher than comparison enterprise. This simply means that for this sales month, Yuma's share was 10% greater than the normal distribution in terms of economic activity.
As for what caused this increase, is may simply be that consumers have less buying hesitation when compared to 2009 and early 2010. We've written in several past compenaries that Yuma's core economy remained sound over the recession with some reductions in economic volume simply a reflection of fear.
While our forecast for 2011 is for overall improvement in small steps, this successful January collection may be the start we've been waiting for!
Next time? The CPI, of course!
- Paul
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