Results 1–50 of 68 found.
Western Drought to Hurt or Help Housing?
While the drought throughout the Western US has created a lot of concern, it turns out that a number of companies and water districts were prepared, having invested in all sorts of technologies and water recycling programs. In fact, new homes and new home communities are far more water efficient than existing communities.
Housing Booming, Busting and Muddling Along
Housing is local again! Our consultants and clients see vastly different housing markets all across the country. I categorize them into three groups (booming, busting, and muddling) in this article and provide anecdotes from our team members---- but it is really more complicated than that.
Chicago Housing Outlook an A Plus after Falling 91%
Watch out for a housing renaissance in the Chicago metro area. The region massively overcorrected in this last downturn and just recently joined the recovery. New home revenue fell 91% from 2005 to 2010, and most private builders went out of business.
A Picture: More Misleading than a Thousand Words
If you believe mortgage rates will return to 8.3%, backend debt to income ratios will fall to 38%, and that significant down payments and savings will be required going forward, then you should be concluding that housing appears overvalued today. I am not ready to make those assumptions.
Housing Bargains Harder to Find
While mortgage rates remain near historical lows, home prices have come back strong.Thanks to strong price appreciation, the ratio of Median Home Price / Median Household Income now exceeds historical averages (since 1981) in 20 of the top 21 housing markets.
Front Running the Fed
We are very bullish on housing, and already thinking through the impact that 3.5% mortgage rates can have if prices rise substantially due to the interest rate stimulus. The Fed has put 34% more purchasing power into the pockets of homeowners, and investors are taking advantage.
A Strategy to Navigate the Housing Cycle
The memories of 2007 through 2011 are clouding too many people's vision. There are plenty of legacy problems from the housing boom that have yet to clear, and plenty of risk to the downside, but the demand, supply and affordability measures are in place to help us put the housing downturn behind us and move forward. We are leaving stage one of the recovery and moving into stage two. Don't miss the ride.
Rental Housing Boom Set to Explode
Rental households comprise 34% of the housing stock, and are growing at the incredible rate of 1.6 million per year, while owned households are actually declining in number. This is an incredible surge in demand. In our summary of the U.S. housing market only 20% of renters live in large buildings and the remaining 80% of renters live in alternative types of housing. Approximately 55% of new renters are renting single-family homes, while 45% are renting apartments. The single-family rental business, which is already larger than the institutional quality apartment business, is booming.
Housing in One Graphic
The following graphic summarizes the U.S. housing market. The red boxes are a small percentage of the total, yet are receiving all the media and political attention. Americans make astute financial decisions, at least in the short-term (debt will hurt us in the long-term). We will bailout very few homeowners. We will increase construction by building in the ever-increasing number of areas that need homes and builders can make a profit. We will figure out how to make portfolio investments in the massive single-family rental market. We will buy homes if it makes financial sense for us to do so.
Defending Our Optimism
Since our client webinar last January, we have been defending our realism, which was viewed as optimism by most of our clients, whether they are builders, developers, product manufacturers, private equity investors or public markets investors. We called for home prices to fall slightly, a tough three years selling homes, and a construction recovery that is exactly the time for patient money (5-10 year money) to invest wisely. Most money is not that patient, so the challenge for each of our clients continues to be when to increase their investments.
Renting REO to Stabilize Housing
After extensive research, we believe that selling REO homes (homes that are owned by the lender after foreclosure) to investors makes the most economic sense for the banks, Fannie Mae, Freddie Mac, HUD, and the American taxpayers. Current regulatory and political pressures that prohibit or discourage these institutions from adopting this sound economic decision should be relaxed. Selling REO to investment groups who will professionally manage the homes, can help stabilize home prices, improve REO asset recoveries and prevent rents from rising too quickly.
U.S. Building Market Intelligence
With elected and appointed officials debating the future of housing, those who make real estate decisions today have to have a view (or at least a risk/reward tradeoff) on the key issues being debated in DC these days. Officials are seriously considering substantial changes to the mortgage industry, from changing the deductibility of mortgage interest to the rules and leadership on government-supported mortgages, which account for more than 90% of all mortgages underwritten today. Will they make and implement changes? What will those changes do to the market in the short-term and long-term?
The Math Behind the Mortgage Interest Deduction
In February, we handicapped a 75% chance that Congress would reduce the mortgage interest deduction, when consensus among our clients was only a 32% likelihood. Since Congress is getting closer to acting, we are publishing a free copy of our February 2011 report and circulating it around D.C. so we can help officials make an informed decision. The most likely scenario, a reduction in the principal balance of deductible mortgage debt to $500,000, raises only $5 billion per year for the IRS, with most of the pain being felt in a few high-priced markets.
Housing Outlook: Where Do We Go From Here?
by John Burns,
The housing market will struggle over the next several years, but longer term there is plenty of upside. That was John Burns' message when he recently spoke to a housing industry trade group. Burns is a leading expert on the housing industry, and he shared with us his presentation.
February New Home Sales Improving, Still -9% Year-Over-Year
Net new home sales remain 9% lower than Feb 2010, despite improvement from Jan, according to results of the John Burns monthly survey of public and private homebuilding executives across the country. Net sales jumped by 26% in Feb 2011 compared to a normal rise of 12% from Jan. "We told our clients that a 9% decline is actually better than it seems, because we are comparing year-over-year to sales which were boosted by the federal tax credit," says CEO John Burns. "If we can get through the spring coming that close to last year, I would say we are seeing stability in the housing market."
Capital Allocation and Its Ramifications
?Which markets are going to stabilize first?? I want to talk about the ramifications of the answer to that question. The answer to this question is very important to home builders and land developers, both big and small, for reasons that are far more than just the answer to ?where can I make the most money?? When a consensus view develops, such as the current consensus that Washington D.C. will stabilize first, there are a number of ramifications. Here are a few: oversupply of capital, blindsided local builders, stock price envy.
Nuances Begin to Distinguish the Markets
We are seeing nuances emerge that will separate the economic health and recovery of the individual markets. Washington DC, the big Texas metros, Phoenix and Orlando lead the way in job growth. Chicago, Las Vegas and Riverside-San Bernardino continue to shed jobs. More than one-third of all sales are going to investors in former bubble markets. The number of homes on the market generally improves the further West you go.
U.S. Building Market Intelligence
Those of you who have been following this e-mail for a while are noticing that many of the grades below have shifted from D?s and F?s to B?s and C?s. That is because the economy is starting to reach its long-term average outlook. Housing, however, is clearly going to lag the recovery rather than lead it. In the meantime, how do you make money in housing?
Where Are the All the Bad Bank Loans?
To kickstart construction, banks need to see nonperforming construction loans and REO at a price that makes development feasible. It is very clear to us that the regulators and auditors have allowed many banks to defer taking losses, which is probably the right decision for the FDIC, bank shareholders, and taxpayers. When the banks start selling these loans and REO, construction will increase.
Dissecting Price Correction Market by Market
The biggest bubble markets like Phoenix, Las Vegas and Stockton have corrected back to 2000 to 2001 median prices. But many of those metros late to the downturn such as Seattle and Houston are still at 2006 prices and are likely to see more price erosion before stability returns. We are showing resale prices above. New home prices, net of incentives, have corrected more, and we have found that they serve as a great leading indicator because home builders react quickly to market conditions.
U.S. Building Market Intelligence
The most likely scenario is that government intervention will make homes slightly harder to sell over the next few years. There is plenty of short-term risk ahead. Focus on good locations where people want to live, and plan for having to sell homes to higher credit quality buyers. Stay more informed than ever because surprise announcements could impact consumer confidence and sales positively or negatively. In turn, that could dramatically affect home buying sales, volume and pricing.
Shadow Inventory Stepping Into the Light
There are now approximately 2.5 million foreclosures in process, and another 2.5 million mortgages that are 90 or more days delinquent. These numbers will trend down, while real estate owned (currently 562,000 bank-owned homes) and short sales will trend up. The greatest levels of distress will be in the markets already hit hard, such as Stockton and Orlando. Because there is more than a one-year supply of homes on the market, bank servicing arms and REO managers will drop prices in order to get the loans and homes off their books.
GSEs to Lose Tens of Millions Tomorrow
While officials are gearing up for the August 17 meeting on government-sponsored enterprise reform, the GSEs are losing millions of dollars every hour. Why? Because home prices are falling again. John Burns has a solution to boost housing demand, limit supply, and help GSEs navigate through the remainder of the crisis.
Sixty-two Percent Homeownership on the Horizon
Eight million homeowners are currently not paying their mortgages, and 6 million of these owners will probably lose their homes to the bank in the next two years. This will reduce the homeownership rate to 62 percent. According to a recent study, another 5 percent of all households have no equity in their homes. This suggests that only 57 percent of U.S. households own a home with equity value. If many of these owners strategically default, this will push homeownership even lower. John Burns traces variables that will affect homeownership over the coming years.
The Beginning of the Recovery
John Burns provides an update for a video originally released in March 2008. The video discusses three factors that need to be in place for a housing recovery: demand, supply and investment. Job growth is coming back slowly, and renters are slowly figuring out that this is the best home buying opportunity of a lifetime. Meanwhile, new construction is at an all-time low, and will likely stay low until the bank REO selling subsides and private builders can find capital. Finally, mortgage rates and home prices have fallen dramatically, to create the best consumer affordability in 30 years.
Home Price Data is Very Misleading
Executive decision makers want to know whether prices are trending up or down, and that question has never been harder to answer. Burns suggests that merely looking at headlines as a basis for research or information is a surefire way to get misinformed. When forced to answer the question, John Burns Real Estate says that most home prices are reverting to 2003 prices ? some areas have overcorrected and some have not fully corrected. That covers them on a national scale, yet they know the truth is much different depending on what submarket or pool of homes you are talking about.
The New Liar Loan
The housing recovery being touted by elected officials is far from assured. There will be fewer homeowners thrown out on the street this month than would have occurred otherwise, but they will be tossed out later. The modification programs have helped stabilize home prices around the country, mostly because they have created so much confusion that people can live in their home for free for one year or more, and are buying time for thousands of banks to continue improving their balance sheets with earnings from good loans, while deferring write-offs of bad loans.
Don't Be Fooled, But It is OK to be Optimistic
Positive job growth may soon be here. Recent job loss figures have been only slightly negative, and big companies that downsized significantly, as well as small businesses returning to growth mode may soon drive job creation. The length of unemployment in the labor force is still hovering near 30 weeks, however, and so job-focused government stimulus is likely to continue. The Census Bureau will hire nearly 1.2 million temporary workers over the next 3 months, but it will be important not to overreact to the news this generates.
DC's Economy Went South, Despite Government Hiring
Contrary to industry buzz, the Washington, D.C. economy is not on the mend. Local job markets posted solid losses as 2009 progressed. D.C. could be one of the first housing markets to stabilize, however, due to improved affordability, a lack of new home construction and relatively few foreclosures.
Builders Expect FHA's New Guidelines to Cost Them 10-15% of Sales, Three Regions Report Pricing is I
Builders in Southern California, Texas and the Northeast report climbing prices, either due to reduced incentives or outright increases to base pricing. Eighty-seven percent of builders expect to lose sales due to new Federal Housing Administration guidelines, however, while 50 percent expect to lose 10 percent or more of sales.
Affordability is a 'C-': Are We Nuts?
John Burns Real Estate president John Burns says in his monthly email that affordability has rarely been better for the entry-level home buyer, but affordability has rarely been worse for buyers who bought or refinanced their homes in the past decade and are considering a move up or down. He also explores several other statistics in his U.S. housing forecast.
Results 1–50 of 68 found.