The reports of California's death have been greatly exaggerated

Given the recent spate of articles which (again) are predicting the demise of California, Time magazine has a pretty impressive counter-attack in the Nov. 2nd issue. From the article:

Ignore the California whinery. It's still a dream state. In fact, the pioneering megastate that gave us microchips, freeways, blue jeans, tax revolts, extreme sports, energy efficiency, health clubs, Google searches, Craigslist, iPhones and the Hollywood vision of success is still the cutting edge of the American future — economically, environmentally, demographically, culturally and maybe politically.

It's the greenest and most diverse state, the most globalized in general and most Asia-oriented in particular at a time when the world is heading in all those directions. It's also an unparalleled engine of innovation, the mecca of high tech, biotech and now clean tech.

In 2008, California's wipeout economy attracted more venture capital than the rest of the nation combined. Somehow its supposedly hostile business climate has nurtured Google, Apple, Hewlett-Packard, Facebook, Twitter, Disney, Cisco, Intel, eBay, YouTube, MySpace, the Gap and countless other companies that drive the way we live...

Take that, The Guardian! Read the entire article here.

Southern California Building Industry Show coming up

Today in the mail I received the brochure for the 2009 edition of the "Building Industry Show" produced by the Building Industry Association of Southern California. It will be held on November 19th and 20th (with some pre-show activities on the 18th) at the Long Beach Convention Center.

There are some new features at this year's show, including the following:

Town Square - a new venue, right on the show floor, boasting its own line-up of education, networking and business prospects. I will be speaking at the Town Square as well as moderating the panel "Design-Plan-Build" on Thursday, November 19th from 1:30-3pm.

BIS Roundtable - engage in lively conversations that are relevant to your business, share ideas and brainstorm solutions to today's most pressing issues; topics include building, development/high density, green, land acquisition/finance, sales & marketing/social media.

"REO Expo" - BIS has partnered with REOMAC and other REO-related groups to offer a "show within a show" to create new partnerships, collaborate with those working in the REO market, and to diversify existing businesses. Also included in the show will be an REO track of educational seminars.

I will be speaking on Friday, November 20th from 9-10:30am on "Residential, Commercial & REO Forecasts."

Regional Realtor Palooza - a one-stop co-op where builders and real estate agents can network to sell homes including co-op programs, builder financing & incentives and selling standing inventory (Friday 8-9am).

REO Property Auction - the first live auction BIS has ever held on the show floor of foreclosed homes for those looking to invest (Thursday and Friday from 4-6pm).

Center Stage - sponsored by Wells Fargo Home Mortgage, real estate coach Mike Ferry will discuss how new home agents and co-op brokers can work together. In addition, a series of workshops and networking events will be offered.

For more information and to register, visit www.buildingindustry show.com. See you there!

How reduced mobility is reshaping communities

Joel Kotkin, urban scholar and a presidential fellow in urban futures at Chapman University, has written an interesting article in the current issue of Newsweek. In "There's No Place Like Home," Kotkin argues that a generational shift from Americans regularly moving in order to take advantage of job opportunities is giving way to a new settledness.

Given that by 2015 more people will be tethered electronically and working from home than taking mass transit, this shift could be good for families, communities and the environment. Having had established a pretty decent home office in 2000 even when I had other offices in which to work, the extra time allowed me to establish this blog and has had a marked impact on my (reduced) stress levels. So could that be a trend? From the article:

As recently as the 1970s as many as one in five people moved annually; by 2006, long before the current recession took hold, that number was 14 percent, the lowest rate since the census starting following movement in 1940. Since then tougher times have accelerated these trends, in large part because opportunities to sell houses and find new employment have dried up. In 2008, the total number of people changing residences was less than those who did so in 1962, when the country had 120 million fewer people. The stay-at-home trend appears particularly strong among aging boomers, who are largely eschewing Sunbelt retirement condos to stay tethered to their suburban homes—close to family, friends, clubs, churches, and familiar surroundings...

Our less mobile nature is already reshaping the corporate world. The kind of corporate nomadism described in Peter Kilborn's recent book, Next Stop, Reloville: Life Inside America’s Rootless Professional Class, in which families relocate every couple of years so the breadwinner can reach the next rung on the managerial ladder, will become less common in years ahead. A smaller cadre of corporate executives may still move from place to place, but surveys reveal many executives are now unwilling to move even for a good promotion. Why? Family and technology are two key factors working against nomadism, in the workplace and elsewhere.

Family, as one Pew researcher notes, "trumps money when people make decisions about where to live." Interdependence is replacing independence. More parents are helping their children financially well into their 30s and 40s; the numbers of "boomerang kids" moving back home with their parents, has also been growing as job options and the ability to buy houses has decreased for the young. Recent surveys of the emerging millennial generation suggest this family-centric focus will last well into the coming decades...

In the San Francisco Bay Area and Los Angeles, almost one in 10 workers is a part-time telecommuter. Some studies indicate that more than one quarter of the U.S. workforce could eventually participate in this new work pattern. Even IBM, whose initials were once jokingly said to stand for "I've Been Moved," has changed its approach. Roughly 40 percent of the company's workers now labor at home or remotely from a client's location.

These home-based workers become critical to the localist economy. They will eat in local restaurants, attend fairs and festivals, take their kids to soccer practices, ballet lessons, or religious youth-group meetings. This is not merely a suburban phenomenon; localism also means a stronger sense of identity for urban neighborhoods as well as smaller towns...

My interview with 'LA Business Today' wins national award

I'm very pleased to announce that the segment on the real estate market which I shot for the show "L.A. Business Today" on the city-sponsored Channel 35 has won second place for its category at the 24th annual Government Programming Awards in New Orleans. The show was among 16 other entrants for 'TV/Talk Show with Operating Budgets over $400,000' and beat out the third-place winner, "L.A. Roundtable: The Future of the U.S. Supreme Court," also appearing on Channel 35.

The awards, given out each year by the National Association of Telecommunications Officers and Advisors, recognizes television programming in various categories. From the press release:

The National Association of Telecommunications Officers and Advisors (NATOA) recognized the winners of the 24th Annual Government Programming Awards (GPA) during a gala event at The Sheraton New Orleans Hotel in Louisiana. The awards program honors excellence in broadcast, cable, multimedia and electronic programming produced by local government agencies. This year, NATOA received more than 810 entries submitted by local governments in more than 21 states across the country and Canada.

“This year’s GPA winners demonstrate excellence in local government programming and we are thrilled to honor and celebrate their achievements,” commented NATOA President Mary Beth Henry. “We congratulate these members for recognizing and actively supporting government access programming’s role in building stronger, more connected communities.

Entries in the 65 categories cover a variety of programming including, among others, community events, documentary, public affairs and public service, interview/talk show, performing arts, sports, election coverage and children’ s issues.

You can watch that interview here (requires Windows MediaPlayer, my segment starts about 16 minutes into the show). Thanks again to Bob and Sharon Jimenez, co-hosts of "L.A. Business Today" for inviting me to speak on their show and submitting the segment for the GPA Awards.

New home sales up, inventory down in LA/Ventura counties

Hot off the press from the BIA of Greater LA/Ventura:

Owing in large part to a combination of FHA financing, low interest rates and the federal tax credit expiring at the end of November, during August new home sales in Los Angeles County were up by 20% over July and by nearly 110% from August of 2008, the Los Angeles/Ventura Chapter of the Building Industry Association (BIA/LAV) reported today.

The monthly BIA-LAV/Hanley Wood Market Intelligence (HWMI) report, analyzed by MetroIntelligence Real Estate Advisors, showed that net sales in Los Angeles County (not including the Antelope Valley) rose to 356 homes in new-home communities of 10 units or more. For the entire state, however, new home sales fell by 13% from a year earlier, pointing to continuing, relative strength in Los Angeles County.

Indeed, since August of 2008, new home sales rose sharply in the San Fernando Valley (838%), the San Gabriel Valley (268%) and in West Los Angeles (121%), but fell moderately in the South Bay/South Central (-33%) and in the Santa Clarita Valley (-20%). Between July and August of 2009, sales rose in all submarkets except for West Los Angeles, where they fell by less than 6%. In neighboring Ventura County, sales remained mostly unchanged between July and August of 2008 at just over 40 homes, although sales have risen by 67% from August of 2008.

“While we’re not out of the woods yet, the market is definitely showing some signs of strength,” said Holly Schroeder, CEO of the BIA chapter. “As long as interest rates stay low and buyers feel confident about their investment in a new home, we hope to continue building on this rebound.”

Another sign of improving fortunes for the homebuilding industry is a sharp reduction in speculative inventory, which declined by over 50% since last August to 1,742 homes in Los Angeles County, or a supply of under five months. In Ventura County, speculative inventory has fallen by an even sharper 62% to 78 homes, which could be gone in just under two months.

“The big story this time is the huge reduction in inventory levels,” said Greg Doyle, Regional Director for Hanley Wood. “Within a few months, we could see builders running out of new inventory for buyers, so those looking for new homes in the region should move quickly.”

The report also shows continuing pricing stability in both counties, with the median asking price in Los Angeles County ranging from $522,000 to $529,000 between June and August of 2009. In Ventura County, the median asking price has ranged from $452,000 to $454,000 during July and August of 2009 but is down from a reported $500,000 in June.

Building for the Future of the Automobile

Ask any architect of a high-density development what the biggest challenge is to make the overall design work, and he (or she) will probably answer “parking.” Whether we’re talking about condominiums, apartments or a project which mixes residential with retail and office uses, if the parking is confusing, inconvenient, expensive or offers too many compact spaces, the entire project can suffer.

What’s more, given the rise of transit-oriented developments in multiple cities throughout the U.S., introducing new ways to address the parking conundrum and getting people out of their cars is becoming one of the most important issues in the Green building movement.

Given the growing importance of the multi-family sector to the building industry, this is a problem that will only become more prevalent: over the last 20 years, the number of multi-family permits has regularly captured from 22% to 30% of the national total.

And, according to the Census Bureau, although 2009 will likely end up with less than 150,000 multi-family permits, near the height of the building boom in 2004, nearly 460,000 permits were issued. Fortunately, there are three major trends that will vastly improve not only how developers address parking, but can also increase building densities – and therefore potential revenues.

The first trend, in place for a decade, is the simplest: get people out of their cars. In late 2007, Zipcar merged with Flexcar to form the largest car-sharing service in the world, with 6,500 cars serving nearly 300,000 members in 49 cities. Reportedly capturing half of the current car-sharing market, the premise is to charge people by the hour (generally close to or under $10) and get them hooked enough on the idea to get rid of their cars.

Those who do claim to save an average of $600 per month, and studies in Europe show CO2 emissions reduced by up to 50% per user, in large part because members without their own cars simply drive less. Multiply that savings by the estimated 20 cars abandoned for each Zipcar, and it’s easy to see why the idea has helped the company sign up 8,500 companies, 120 colleges and universities and multiple governments. Not to be outdone, car rental companies including Hertz, Enterprise and even U-Haul are looking to leverage their existing infrastructure to the car-sharing market.

More recently, both new condominium projects and existing apartment owners such as Equity Residential and Prometheus Real Estate Group have began partnering with Zipcar to offer this new amenity to their residents – made even easier by the recently announced Zipcar App available for free on Apple’s popular iPhone.

The second major trend is targeted towards those developers who must plan for individual cars but are frustrated by the huge space requirements of traditional parking structures: automated parking systems that can boost building densities by up to 40%. Already used in Europe and Asia with over 12,000 spaces installed, California-Based Simmatec, USA argues that a variety of Green benefits (and capable of adding LEED points) include more open space, smaller building footprints, reduced storm water runoff and energy consumption to light and ventilate a structure, fewer emissions from cars seeking a parking space, and less noise.

For developers, additional benefits include lower expenses related to labor, liability, operating expense and security as well as a potential income boost from more parking stalls as well as from the nascent carbon credit market. Best of all, suddenly a project deemed infeasible due to a small lot can now – with the right parking system in place -- become a reality while simultaneously addressing environmental concerns.

The third trend is related to automobile design itself. With the structures of today’s cars largely regulated by the reliance on the internal combustion engine and its related parts to turn the wheels, a shift to all-electric cars with far better batteries could dramatically change how cars look and function. In the first phase, developers of both single-family and multi-family projects will have to increasingly offer charging stations – an advantage soon to be leveraged by car-sharing services such as Zipcar.

Yet down the road in the second phase, instead of a single engine paired with a drivetrain, each wheel could have its own electric engine, fostering in the most dramatic changes in car design in over a century. It’s quite possible that tomorrow’s cars could look strangely different than they do today, and in the process force us to completely re-invent how we plan for parking to serve projects of all shapes and sizes.

Affordablility continues to improve in most metros

According to economist G.U. Krueger of HousingEcon.com, affordability ratios in the U.S. have reached record highs. Say what? Read more about this good news here.

October column for Builder & Developer now online

My column for the October issue of Builder & Developer magazine is now online. Since this month's issue of the magazine focuses on affordable housing, I addressed the very important role of the public sector in making affordable housing even possible. An excerpt:

The national tax credit program, which for the past 20 years has provided a critical way to finance low-income rental housing, is now under duress because investors such as Fannie Mae and Freddie Mac exited the market last year, thereby taking 40% of the funding off the market. Much of the balance was previously funded by the banking industry, most of which no longer has profits against which to offset taxes.

The result is hundreds of stalled projects waiting for funding to make up for 3 million affordable housing units destroyed, converted to condominiums or upgraded to market-rate rentals since 2003. In some places, the waiting lists for assistance are so long that new applications are being denied.

To address this deteriorating situation, the Treasury Department said in May that it would funnel $5 billion in federal stimulus dollars to buy unsold tax credits for affordable housing projects approved since 2008; developers who wish to redeem unsold credits can also exchange them for government grants, but only at a ratio of 85 cents to the dollar...

Click here for the entire column.

Inland Empire Executive Housing Seminar materials now online

This morning, I gave a presentation on the Inland Empire housing market as part of Hanley Wood Market Intelligence's Executive Housing Seminar series.

Speaking on the national housing market was Boyce Thompson, Editorial Director for magazine titles Builder, Big Builder and Multi-Family Executive.

If you want a .pdf of my presentation, click here. Soon I'll publish a post highlighting the findings from the speech.

If you want a .pdf of Boyce's presentation, click here.

Lenders clamping down on short sales

In a move that strikes me as a bit counter-intuitive (at least on a macroeconomic scale), mortgage lenders are pulling back sharply on allowing short sales, which over the last year have accounted for 12% to 18% of sales activity. From a story in BusinessWeek:

Troubled homeowners may be losing a major lifeline: so-called short sales. To get bad loans off their books and spur home sales, lenders have been forgiving the difference between the outstanding mortgage balance and the purchase price. Banks were never eager participants in short sales, and now financial firms—even those that can offload losses to the government—are balking at such transactions. Some lenders are forcing the sellers to pay extra money at closing. Others want a promissory note for part of the amount due.

The situation could be a setback for the already wobbly housing recovery. A record one-third of borrowers owe more on their mortgage than their properties are worth, notes research firm First American CoreLogic. The number of underwater homeowners will only continue to rise since values are still falling. And if distressed borrowers can't negotiate short sales, more may be forced into foreclosure, further depressing prices...

Click here for full story.