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October 22nd Membership Luncheon
Our special guest speaker at this luncheon will be NAR President, Richard Gaylord. Luncheon starts at noon at Utah Valley University. Please contact UCAR to register for this event as seating will be limited. Only those registered will be able to attend. A poster to hang in your office is located at: http://www.ucaor.com/pdf/OctoberLuncheon.pdf
October 31 Last Day to Purchase Tiles
Reserve today a reception area floor tile and become a permanent part of the UCAR office.
You will be able to create your own message or add a company logo for your tile(s). Everyone is invited to buy these specially engraved, decorative tiles, either for you or for someone else, to commemorate special occasions, or to honor a special loved one. What a great way to be remembered and to acknowledge your business!
Just $250 for a basic 16” x 16” tile with your name or company name; $350 to include your logo or a personal message. There are a limited number of tiles available. Please ask for details. Please see the flyer here.
News of Note
President Signs $700 Billion Rescue Bill
President George W. Bush signed a historic economic rescue bill on Friday, which sets out to revive the U.S. financial system by allowing the federal government to buy up to $700 billion in failed mortgaged from banks and other financial institutions.
The president signed the bill shortly after the U.S. House of Representatives voted 263-171 today to pass the far-reaching legislation.
"This legislation is critical to stopping the economic turmoil that millions of Americans are facing," NAR President Dick Gaylord said in a statement. "Today's action will go a long way toward ending the current economic crisis crippling the housing and financial markets."
The legislation will help restore liquidity to the mortgage market, which will stabilize the housing market and protect home owners, Gaylord said.
President George Bush, along with congressional members, had lobbied throughout the week for the support of spending billions of dollars to buy bad mortgage-related securities from troubled financial institutions, as a way to ease the credit crisis.
The bill was tossed a setback earlier in the week after the House voted it down, which sent stocks plunging 777 points, the biggest single-day drop in U.S. history.
The Senate revived the bill on Wednesday by making changes to the $700 billion measure, which was aimed at garnering more bipartisan support. The revised bill extended bank deposit insurance and expired tax breaks. The Senate passed its version of the bill in a 74-25 vote on Oct. 1. (see NAR Applauds Senate Stabilization Action).
Earlier in the week, NAR had called on its members to contact Congress to support the bill. NAR also teamed up with eight other business organizations to run an ad in major newspapers across the country that urged Congress to pass the recovery plan.
Source: REALTOR Magazine Online (10/3/08)
Congress Divided on $700 Billion Bailout Plan
Congressional negotiators resumed meetings on Friday to revive or rework the proposed $700 billion financial bailout plan.On Thursday, the word was that the group of lawmakers were near “fundamental” agreement on the bailout of the U.S. financial sector.
But that consensus fell apart Thursday night, with Democrats blaming the House Republicans for the apparent stalemate. Conservatives, however, have complained that the plan would be too costly for taxpayers and would be an unacceptable federal intrusion into private business.
President Bush is urging lawmakers to work through their disagreements and reach a consensus on the plan so the U.S. can avert an economic meltdown.
"There are disagreements over aspects of the rescue plan, but there is no disagreement that something substantial must be done," Bush said in a statement.
In other news, the Chicago Tribune reports that Sen. John McCain has agreed to participate in Friday night's presidential debate even though Congress doesn't have a bailout deal. He had previously been pushing for a delay in the debate until the financial crises had been addressed.
Source: Dow Jones International News (09/25/2008), Chicago Tribune (09/26/2008)
Some Lawmakers Seek To Broaden Rescue Bill
by David WelnaBush administration officials want Congress to approve a $700 billion aid package for Wall Street, and they want it to happen within days. Democrats say they're willing to help shore up the financial markets, but they want a bill that includes relief for homeowners and taxpayers as well.
Treasury Secretary Henry Paulson went from one Sunday TV talk show to another trying to explain why a deficit-ridden nation should go hundreds of billions of dollars deeper in debt — all to cover the bad bets made by some of the nation's wealthiest private firms.
Paulson's argument was simple: Things could get far worse should the U.S. not ride to the rescue.
"I have every confidence that Congress will go along with this ... that doesn't mean everyone in Congress will agree, it doesn't mean there won't be a healthy debate. But I am highly confident that we will get the authorities we need this week," he said on CBS' Face the Nation.
Rep. Frank Wants Economic Boost
Paulson said he not only wants congressional approval to be quick; he wants it clean — not to be loaded up with items he didn't request. Barney Frank, the Massachusetts Democrat who chairs the House Financial Services Committee, followed Paulson on CBS:
"Secretary Paulson and I have a lot of agreement, but we have a difference on what's clean," Frank said. "We don't think that trying to stimulate the economy given the 6-plus-percent unemployment — let's not forget other problems as we focus on this one — I don't think that dirties up the bill."
Frank wants the bill to limit executives' compensation at the financial firms getting bailed out. He also wants a special tax on those making over $1 million a year to help offset the cost of the bailout.
Another leading Democrat, New York Sen. Charles Schumer, seemed to throw cold water on Frank's wish list during an appearance on Fox News Sunday.
"We will not Christmas-tree this bill," Schumer said. "The times are too urgent. Everyone has their own desires and needs. It's going to have to wait."
But then Schumer pulled out his own wish list for a bailout bill.
"When I and others have talked to Secretary Paulson, he has said he is open to changes, and I would call changes necessary in three areas. I call them THO: taxpayers — they have to come first; homeowners — we have to do something about the mortgage crisis, not just foreclosures but the price of housing, which is affecting everyone on Main Street; and oversight — we need some accountability here."
'The Mother Of All Bailouts'
And it wasn't just Democrats saying Congress should take a closer look at what's in the bailout.
"This is the mother of all bailouts, and we don't see the end in it yet," said Richard Shelby of Alabama, the top Republican on the Senate Banking Committee. He told CBS that he expected the bailout would actually cost more than $1 trillion.
"We don't know the endgame in this, and I'll tell you, what bothers me about this is that I believe that the chairman of the Fed and the Treasury secretary, Paulson, with all due respect to them, they've been staggering from crisis to crisis, and they haven't even said today that this will end the crisis."
Other congressional Republicans are closing ranks with the Bush administration. House Minority Leader John Boehner told ABC's This Week it's time Congress rose above partisan politics, even on the eve of a fiercely fought election:
"We don't need 535 members of Congress adding their best idea to this bill," Boehner said. "We need to keep it clean, simple, move it through the House and Senate, and get it on the president's desk."
Jon Kyl of Arizona, the Senate's No. 2 Republican, told Fox he's optimistic the bailout plan will move through Congress in time for lawmakers' planned adjournment.
"I think the chances are better than 50-50 that we'll get it done by the end of the week, and hopefully it won't be bogged down with too many extraneous and costly provisions," Kyl said.
That was before House Speaker Nancy Pelosi (D-CA) issued a defiant statement Sunday night. "We will not simply hand over a $700 billion blank check to Wall Street and hope for a better outcome," she said.
Source: NPR (09/22/08)30-Year Mortgage Rates Reach 7-Month Low
Freddie Mac reports a decline in the 30-year fixed mortgage rate to 5.78 percent during the week ended Sept. 18 from 5.93 percent the prior week, marking the lowest level in seven months.During the same period, the 15-year mortgage rate dropped to 5.35 percent from 5.54 percent.
Meanwhile, interest on five-year adjustable mortgages slipped to 5.67 percent from 5.87 percent; and the one-year ARM slid to 5.03 percent from 5.21 percent.
Source: San Diego Union-Tribune (09/19/08)
Mortgage Rates Drop Below 6%
For the first time since early spring, mortgage rates have fallen below the 6-percent threshold.Freddie Mac reports that 30-year fixed loans came in at an average of 5.93 percent this week, down from 6.35 percent a week ago and 6.31 percent at the same time last year.
A borrower taking out a $200,000 mortgage at 5.93 percent would pay $1,190 for monthly principal and interest payments, which is $54 less than the payments on last week's rate.
"Consumers see a five in front of mortgages, and they get excited," says Keith Gumbinger, a vice president at research firm HSH Associates.
Source: The Washington Post, Dina ElBoghdady (09/12/08)Utah County Roundtable
by Utah Business Staff05 September 2008— Economic Outlook: Utah County
We’d like to thank Noah’s in Lindon for hosting the event and Jeff Edwards, CEO of the Economic Development Corporation of Utah, for leading the discussion.
Participants: (1) Dennis Astill, Anderson Geneva Development; (2) David Dyches, Employer Solutions Group; (3) Russ Fotheringham, Economic Development Corporation of Utah; (4) Joe Brown, G Code Ventures/Utah Flash; (5) Matt Packard, Central Bank; (6) Mike Washburn, Thanksgiving Point Institute; (7) John Garfield, Provo Marriott; (8) Glen Jensen, Agel Enterprises; (9) Steve Densley, Provo/Orem Chamber; (10) Dave Nazare, UDOT; (11) Chad Linebaugh, Sundance Resort; (12) Reed Price, Utah Lake Commission; (13) Brad Whittaker, CEDO; (14) Charlene Christensen, Utah Valley Convention and Visitors Bureau; (15) Mike Alder, Brigham Young University; (16) Jeremy Hanks, Doba; (17) Jeff Edwards, Economic Development Corporation of Utah; (18) Brian Thompson, Bank of American Fork; (19) Heber Thompson, American Fork City; (20) Martin Lewis, Utah Business.
As the construction and real estate sectors slow, local business leaders find the positives in a growing county – new transportation options, revamped educational offerings and a healthy dose of entrepreneurial spirit.
What is the current overall economy in the valley? Recently, Utah reported a 1.4 percent job growth, which was 14 times the national average. How is that reflected here?
DYCHES: We are still seeing a lot of entrepreneurs who are starting new businesses, and some are viewing this as a chance to go out on their own. Microsoft was founded during a recession, and I think we’ll see lots of mini Microsofts founded during this economic downtown. It always creates an opportunity for the best to rise.
PACKARD: In Utah Valley, the real estate market has been on jet fuel. You cannot get the kind of acceleration and appreciated values that happened over the past three or four years; it’s just not sustainable. That always precipitates a very big fall, which is what we’re going through. There are some major adjustments and vibrations that are going on in the residential market. But if you look at the long term, it’s actually very good for the economy because it builds a base and allows things to start moving again in two or three years.
MAYOR THOMPSON: In support of that, we have a significant reduction in building permits in the city over the last year, which impacts our revenue. There is a very strong indication that has bottomed out as far as American Fork is concerned but there was a great decrease, something like 45 percent.
B. THOMPSON: On a positive note, the net migration here is high. So, we’ll work through the inventory we have out there. That’s one thing we have going for us that other states don’t.
DENSLEY: We totally anticipated in-migration continuing quite heavily in Utah County. I met with the Board of Realtors, and they are monitoring what’s happening with gas prices because it seems to have an impact on how far away people are living. They are starting to reevaluate living closer to where they work.
FOTHERINGHAM: A lot of companies outside the state are looking to come into the state. They are looking for large parcels and large sites, and those are easily found in Eagle Mountain and some of the cities in the south end of the valley.
ASTill: On the residential side, we have a companion development in Vineyard Town called the Homesteads. And for about six months, we saw absolutely no activity. And then in the last month and a half, we’ve seen some of the major builders ready to come back and stick their toe in the water, but they are doing it cautiously. On the economic side, I think there is a tremendous amount of confidence in investors and business owners in the valley, which we’ve seen in the sales of industrial property. You don’t spend millions of dollars buying land and building unless you believe there is going to be something there.
PACKARD: From a banking standpoint, because of what’s going on at Wall Street, there is a tremendous illiquidity and that pipeline of residential mortgages has changed dramatically. So as the markets start to get back on track, those things will start to loosen up again and will make it possible for a lot of the residential mortgages to be funded and pushed through the system.
DENSLEY: The realtors projected 80,000 new people in Utah this year, and that would translate to 30,000 new homes or residents.
HANKS: Speaking about whether we build offices all over the place or disperse them, from my viewpoint that doesn’t help or hurt me really because we have a very highly skilled labor force. Wherever my business is located, there is not enough population density in Utah that I can get the skilled labor I need without somebody having to drive. I’ve got employees from south Payson. Ten percent of my workforce lives north of the Point of the Mountain. And everybody is feeling the pinch, whether they are driving 10 or 40 miles to work for Doba. What is happening with mass transit?
NAZARE: There was a bill passed by Representative Sumsion that gave the Department [of Transportation] $3 million to look into building a causeway across the lake. However, as we look at the environmental document, it needs to be broader than that. And we will be studying a way to address east/west transportation within Utah County and how we make some type of transportation corridor work for that location over to Provo/Orem.
PRICE: The [Utah Lake] Commission recognizes that Utah Lake is an obstacle to efficient east/west transportation. There are over 55 east/west lanes in Salt Lake County for people on the west side to get to the east and the east to the west. And in Utah County, Highway 6 and Lehi Main Street are the only ways we can get east to west. The population is not as great on the west side of Utah Lake, however, it’s growing and the numbers show that it will rival that of Salt Lake in 20 or 30 years from now. We refer to it as a transportation corridor, and often a bridge structure, that would allow water to flow through. The Utah Lake Commission is not a proponent or an opponent of such a structure at this time, but we want to be involved in the study process to make sure that the lake is looked after and that appropriate studies are done to help us understand what structure, if recommended, will do.
NAZARE: UTA has awarded a contract for putting in a commuter rail from Salt Lake City down to the University viaduct in Provo. They are going to be spending upwards of $9 million on that facility and are scheduled to complete it in 2012. Additionally, the legislature, has put up almost a billion dollars worth of other capacity projects in northern Utah County. And all this will happen just prior to the I-15 project, which includes widening of SR 92 from I-15 to Highland, a new facility that would be the frontage roads for the future expressway along 2100 North in Lehi from I-15 over to Redwood Road. That’s funded. We have what’s called Pioneer Crossing now, which is a new five lane facility that would go from Redwood Road south of the Crossroads and over to American Fork Main Street and probably be a five lane facility. Dennis alluded to the Vineyard Connector, and that is another funded project, which will be a five lane facility that parallels I-15 to the west from 8th North up to AF Main and tie into Pioneer Crossing. And then, of course, we’ve awarded a design/build contract for about $70 million to construct 4th South in Springville to make that a five lane facility where it is currently two, put in a new railroad structure across the presently at grade crossing, and then reconstruct the interchange with I-15. All those projects are going to be going in 2009 and 2010. If you count that plus the commuter rail, that’s pushing a billion dollars, and that’s before we even get to I-15. Where is commercial development and real estate going?
GARFIELD: I think with the Zions Bank announcement, there will be a revitalization in downtown Provo. One thing that’s great about this community is we tend to be more positive. The headlines don’t help us, but generally speaking, most people are positive by nature. And so even if there is a downturn, we tend to think through the muck and see a light at the end of the tunnel.
MAYOR THOMPSON: We have a couple of business parks that show no sign of slowing down. So it’s a strong environment still for industrial/commercial.
FOTHERINGHAM: The number of businesses that are showing an interest from outside the state to come into the state has never been greater. And then on the other hand, a lot of the people who have been looking to come into the state for some time have said they may put it off a little bit.
BROWN: As the commercial side continues to be strong and we have interest from outside employers and people continue to move to Utah County, I think we are going to start to see the residential side of the market start to slowly turn up with the continued growth and interest. One of the real trademarks of Utah County is the entrepreneurial spirit. Do we have what we need to keep that alive and to keep those companies here?
ALDER: I really do believe that we’ve taken for granted the good technology-based business development that’s occurred here. We are known in the Salt Lake community for having had some unusual events in technology development but nothing that can be sustained. I’ve probably had visits from 10 venture capital companies to BYU and they never come back. And resident capital is critical. A place for companies to go is critical. BYU is a global university, so we don’t mind where the companies locate. But from my own perspective, I think it would be marvelous to see these companies grow up locally. And if I were to tell you about the three or four greatest opportunities that have recently emerged from BYU, you’d really want them to stay here.
JENSEN: To start a business as an entrepreneur and grow up here is not an easy task. We’ve grown fairly rapidly in the three years that we’ve been in business, but it is hard to attract the talent and the capital to get it started.
HANKS: We probably got more lucky than anything, but we’ve grown our business with no outside capital. We figured out a way to sell something that didn’t exist for a long enough time to fund the business, but it’s extremely difficult. I’m not surprised to hear that some of the best opportunities that we have are leaving. We’ve had serious conversations about whether we need to do that.
BROWN: Is this more of a cultural problem? Is it a local city problem that we need to address? Do we need legislators to help us solve this issue?
ALDER: I’m not sure. I think that in the past, we’ve been opportunistic. We’ve had some great successes and we’ve had great entrepreneurs that push ahead and determinedly build companies. There are some huge capital sources locally if they would band together and try to do more local investing. Oftentimes it is characteristic that investors are looking where they shouldn’t be looking to try to find a deal. Right here in our backyard there are some really outstanding opportunities.
FOTHERINGHAM: There are people who
do have resources and they are very inter-ested in having those resources used here in Utah Valley. I think it’s an organizational problem that we are trying to address. And I think that we are making progress. The companies that are here are not just interlopers. They can be attracted somewhere else very easily. And we ought to be nurturing them and we ought to be making sure that they have places to be.Workforce touches every business here. Are you able to find people? Are the educational institutions in this valley producing the kinds of workers that you need?
LINEBAUGH: At Sundance, we have about 400 employees year round but up to 650 in the winter season. And we have been surprised at how well we’ve been able to maintain staff levels. Ninety-eight percent of our employees live in Utah County and a high percentage of those are students at BYU or UVU.
DYCHES: I think it’s clear that the valley’s labor supply and demand has reached a better balance than it was two or three years ago. And I think what that’s led to is many would-be employees are seeing that they have to upgrade their skills. I am seeing people who are working harder to differentiate themselves because where there were three or four candidates for a position, now there are 20 or 30 for a position.
DENSLEY: The immigrant workers are absolutely vital to our salvation in Utah County. If we didn’t have them, we would be in serious financial difficulty in Utah County. And as you look to the future, we’ve got to be able to factor that in. We’ve also had the whole machinist issue. We’ve talked about whether they are qualified or if we have enough. We don’t. We have one company we are working with in the aerospace industry that the owner simply has said he was going to move his company to Atlanta because he couldn’t find people.
HANKS: I think one of the challenges of BYU is its students basically come to BYU from all over and then go somewhere else. They don’t stay. Predominantly, it’s “I’m going to go make my way in the world and that world doesn’t include Utah County,” in the mindset. So I think UVU will have a huge impact because I think that would be a little different mindset.
Utah is faring well, Fed official says
Deseret News - Friday, Sept. 5, 2008Economic times are tough, but Utah's doing relatively well, and 2009 is likely to be better, according to Janet L. Yellen, president and chief executive officer of the Federal Reserve Bank of San Francisco.
She was in Salt Lake City on Thursday, speaking at a luncheon for a board of directors meeting of Federal Reserve Bank branches from Salt Lake City, Seattle and Portland.
"I think Utah has fared better than much of the nation" due to stronger underlying economic growth, Yellen told reporters after her speech.
Granted, Utahns are not spared rising food and energy prices, she said. And they can expect "probably rising foreclosures and probably tighter credit terms," and possibly more foreclosures before the slowdown ends.
"But," she said, "I think Utah is poised to get through this as well or better than any state I can think of in the country."
Utah's economy had been among the fastest growing in the country, with a 2007 gross domestic product growth of 5.25 percent, first among all states, she said. Exports are a strong source of growth here, and housing prices have held up better here than other states.
Yellen's comments came after her speech about the U.S. economic situation and monetary policy challenges.
Many factors intertwine in the national picture: Weakened economic growth abroad, the housing boom and bust, subprime loans ending in foreclosures, falling housing prices affecting families' wealth and ability to borrow, the credit crisis, financial institutions' stock plunges, and a major bank failure.
Slowdowns in housing construction alone subtracted a full percentage point from the national gross domestic product growth in 2006, 2007 and the first six months of this year, Yellen said, and slower economic growth has pushed unemployment to 5.7 percent nationwide.
Yellen anticipates real gross domestic product growth in the second half of the year will come in "below the growth of potential output, which implies that the unemployment rate will rise," she said.
Inflation, however, she expects to moderate, reducing the chance for a wage-price spiral.
"My assumption is, the next move will be up rather than down," she said.
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