BuilderBytes' MetroIntelligence Economic Update for 12/29/11

Please click here to see the edition of BuilderBytes for 12/29/11 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Case-Shiller Indices show broad-based declines in October
• Consumer confidence index rebounds to levels last seen in April 2011
  

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BuilderBytes' MetroIntelligence Economic Update for 12/26/11

Please click here to see the edition of BuilderBytes for 12/26/11 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• New home sales rise to 7-month high as inventory falls to 5.5-month low in November
  
• Third quarter GDP revised to 1.8% in third estimate from the BEA
  
• FHFA Housing Price Index Down by 2.8% YOY in October, Nearly Matching February 2004 Levels
  
• Initial unemployment claims fall again in latest survey
  
• Leading Economic Index rises by 0.5% in November
• Univ. of Michigan report shows improving consumer sentiment but political deadlock hurts consumer spending
• Personal income and consumer spending post modest gains in November
• Durable goods orders rise in November, but core demand remains weak
  

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Happy Holidays from MetroIntelligence and Housing Chronicles

Whether you celebrate Christmas, Hanukkah, Kwaanza, the Yule or simply enjoy the music and lights which characterize this time of year, at MetroIntelligence and Housing Chronicles we’d like to wish you Happy Holidays and hope you have a great 2012! Following are some tips we found on how to best enjoy this time of year from the folks at the American Council 0n Exercise (ACE):

The holidays can be a joyous time of year shared with family and friends, but they can also bring stress and anxiety as we struggle to keep up with often-unrealistic demands and expectations.

That’s why it is so important for all of us to relax and take good care of ourselves.

ACE’s top tips for surviving the holidays are great for increasing your energy and reducing your stress, this season and all year long.

1. Take time for yourself. Although spending time with friends and family is essential, it’s also important to have at least five minutes to yourself to relax. Try practicing deep breathing exercise when you feel stressed out.
2. Don’t set unrealistic exercise goals. Aim to exercise 20 minutes a day instead of an hour. You’ll be sure to get at least 20 minutes of exercise per day without feeling disappointed if you do not complete an hour.
3. Enlist a friend or family member to exercise with you. Walking and talking with a friend can be a great way to burn extra calories and reduce your stress level.
4. Create new, more active traditions. Instead of throwing a dessert or cocktail party, try snowshoeing or ice-skating as an alternate holiday event. Play powder puff football or build a snowman.
5. Don’t try to lose weight or stick to a restrictive diet this holiday season. If you enjoy your favorite foods in small portions, you’ll feel more satisfied. Trying to stay away from certain foods may leave you feeling deprived, which may cause you to eat more than you intended to.
6. Drink plenty of water. Although the cold weather may make you less inclined to grab a glass of water, it is just as important in the winter as it is during the summer. Water helps counter the dehydrating effects of travel or drinking alcoholic beverages, and it may also help satiate your appetite since thirst is often mistaken for hunger.
7. Spread out meals. Don’t feel like you have to eat everything at once. Try eating dinner early and then taking a walk before sitting down for dessert.
8. Don’t overdo it with alcohol or caffeine. These stimulants will only cause you more grief in the end by adding to your feelings of stress. Try drinking hot herbal tea instead of coffee, and keep the number of alcoholic drinks to a minimum.
9. Don’t aim for perfection, and enjoy the imperfections. There is no such thing as the perfect party or the perfect decorations or the perfect way to spend the holidays. Don’t set yourself up for disappointment by placing unrealistic demands on yourself.
10. Laugh. Laughing is a great tension reliever. It burns calories, reduces stress and usually means that you’re enjoying yourself.

New home sales rise in November but 2011 still probably the worst year on record

Although new home sales rose slightly in November, according to an AP story the year 2011 will likely rank as the worst year for sales since records were first kept in 1963:

Americans bought slightly more new homes in November, but 2011 will likely end up as the worst year for sales in history.

The Commerce Department says new-home sales rose 1.6 percent last month to a seasonally adjusted annual rate of 315,000. That's less than half the 700,000 new homes that economists say should be sold to sustain a healthy housing market.

It's also below the 323,000 homes sold last year - the worst year for sales on records dating back to 1963...

Economists note that housing is a long way from fully recovering and that many people are opting to rent because they can't afford to buy or don't feel a home is a wise investment right now.

Home construction has begun a gradual comeback and should add to economic growth in 2011. But the main reason for that increase is that the rate of apartment construction is nearly twice as fast as it was two years ago. Single-family-home construction remains depressed...

Click here for entire story.

Part II of my radio interview regarding Lennar's NextGen homes

Last week, I was interviewed by correspondent Sarah Gardner for the "Marketplace" program, which runs on public radio stations nationwide, for the "NextGen" series of homes now being built by Lennar. This second part of this program was aired this morning. Although other builders such as Standard Pacific and Taylor Morrison have also built homes with multiple generations in mind, Lennar's been getting most of the press regarding this trend lately (including a story in the L.A. Times).

You can listen to this segment via podcast or read a transcript by clicking here. So is this the beginning of a big trend for the industry? Way too early to say, but it certainly merits watching.

It's also not a product that would work just anywhere: you'd need enough of a customer base which thinks intergenerational housing is a good thing. Want to get a handle of the demographics of specific areas you're considering? Contact us at MetroIntelligence!

NAR revises home sales estimates for 2007 through 2010

As if the National Association of Realtors didn't need another question about its data collecting competence, it has recently admitted that it has seriously undercounted home sales for 2007 through 2010, which means the housing downturn was even worse than expected. From a story in the L.A. Times:

The National Assn. of Realtors has revised sharply downward the number of homes it calculated were sold from 2007 to 2010, revealing a much weaker housing market than it had estimated.

For 2010 alone, the trade group revised its estimate of home sales 14.6% lower than what it had previously reported — to about 4.2 million homes.Overall, sales and inventory reported by the group were reduced by 14.3% for 2007 through 2010, the association said Wednesday. The group gave several reasons for the revisions, including some sales that had been counted multiple times. Roughly half the revisions, the group said, resulted from a decrease in people selling their own homes; these people turned to real estate agents to sell those properties for them as the housing market turned bleak in 2007.

Homes sold by owners are typically not counted by the local listing services tracked by the national real estate group, Lawrence Yun, chief economist for the group, said in a statement...

The revisions underscored a lack of data on the housing market. There is no government tally of home sales nationally. Instead, officials rely on private real estate groups to provide sales numbers. The government does publish an estimate of new-home sales and starts...

BuilderBytes' MetroIntelligence Economic Update for 12/22/11

Please click here to see the edition of BuilderBytes for 12/22/11 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Both housing starts and permits rise sharply in November, largely on the strength of multi-family units
• Sales of existing homes in November rise to ten-month high
• Home builder confidence climbs to highest level since May 2010
• Mortgage applications decline by 2.6% even as rates drop to new 2011 low
• MBA study shows potential buyers ready to commit but seller sentiment remains negative

Want to advertise in the newsletter and reach over 100,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

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Quoted on public radio's "Marketplace" regarding Lennar's NextGen homes

Last week, I was interviewed by correspondent Sarah Gardner for the "Marketplace" program, which runs on public radio stations nationwide, for the "NextGen" series of homes now being built by Lennar. This program was aired this afternoon nationwide. Although other builders such as Standard Pacific and Taylor Morrison have also built homes with multiple generations in mind, Lennar's been getting most of the press regarding this trend lately (including a story in the L.A. Times).

You can listen to this segment via podcast or read a transcript by clicking here. On Friday morning the rest of my interview will run along with the latest stats on new home sales.

So is this the beginning of a big trend for the industry? Way too early to say, but it certainly merits watching.

It's also not a product that would work just anywhere: you'd need enough of a customer base which thinks intergenerational housing is a good thing. Want to get a handle of the demographics of specific areas you're considering? Contact us at MetroIntelligence!

Housing starts jump far more than forecast

Housing starts, led mostly by the multi-family sector, rose to their highest level in 19 months to 685,000 units, or far better than the annual rate of 630,000 projected by surveyed economists. From a story in the Wall Street Journal:

Home construction last month increased 9.3% to a seasonally adjusted annual rate of 685,000 from October, the Commerce Department said Tuesday. The results were better than forecast. Economists surveyed by Dow Jones Newswires expected housing starts would rise by 0.3% to an annual rate of 630,000.

The increase in November was driven by a 25.3% increase in multi-family homes with at least two units, a volatile part of the market. Construction of single-family homes, which made up about 65% percent of the market, rose only 2.3%

Compared with the same month a year earlier, overall new-home starts in November were up 24.3%. They were still well below healthy levels, considered to be a pace of around 1 million to 1.5 million.

The Commerce data showed newly issued building permits, a gauge of future construction, rose 5.7% from a month earlier to an annual rate of 681,000, the highest since March 2010. Permits in November had been projected to fall 1.7% to an annual rate of 633,000.

Click here for entire story.

Households Re-Think the Meaning of Home

At the 2011 ULI Fall Meeting in Los Angeles, a new publication entitled “What’s Next: Real Estate in the New Economy” summarizes what builders and developers can expect in the years ahead through 2020. Due to a combination of increasing globalization, changing demographics and evolving technologies, the correct mix of strategic analysis and advice has never been more important.

In the short term, one thing is becoming clear: the smorgasbord of low-hanging fruit which largely powered the home building industry’s success since the end of World War II is now gone. But that’s not necessarily a bad thing. In its place is emerging a collection of specific opportunities targeting value-conscious Baby Boomers, hyper-connected Gen Y members, immigrants often in need of multi-generational housing and lifelong renters -- some of whom need affordable housing and others who still crave those services and amenities commonly found in luxury condominium buildings.

However, these groups will still demand some common traits related to design and function. One major trend discussed at the 2011 Building Industry Show in Southern California is casual living, which is now evident in all facets of American life and has been building for the last two decades. Casual living means combining room flexibility into ‘great rooms’ so individual households can make it their own with the fewest structural impediments as possible. At the same time, today’s households don’t want to sacrifice style and design, so matching supply to demand at a competitive price will be critical.

It also means providing a clear relationship between indoor and outdoor spaces, so that even downsizing Boomers or transit-oriented Gen Yers can host family and friends in a yard or on a patio or balcony. In addition, given the continued rise of telecommuting marching in lockstep with improving technology, most buyers want to feel just as connected with the outside world whether they’re living in a downtown loft or a multi-generational home in a far-flung suburb. And, although today’s buyers and renters won’t necessarily pay more for sustainable living, they’re much more likely to opt for a green home if the cost is the same, thus helping both absorption and occupancy levels.

The demographic changes impacting the industry will continue to accelerate in the years ahead, which will mean building for single-person households (expected to account for 27% of the total by 2020), ‘minority majority’ Asian, Hispanic and African American communities in many urban areas, extended employment years for Baby Boomers expected to live longer lives than ever, and small groups such as families, friends and roommates opting to cohabitate in large homes as opposed to living alone.

Layered on top of these demographic changes will be the realities of living a balanced life. With costs for transportation in the form of fuel, time and tolls continuing to rise, households are already beginning to factor in the total cost of commuting and maintaining a home into their total monthly budget. However, since infill urban locations are by nature limited in scope, look for more mixed-use corridors to crop up around suburban nodes with freeway interchanges and transit stops as the center piece.

Still, beyond the statistics lie the real reasons people choose the communities in which they live, and some of these may surprise. According to the third annual Knight Soul of the Community survey conducted by Gallup, there are three main qualities which attach people to a place: social offerings in the form of venues and places to meet, openness to diversity and newcomers, and aesthetics in both physical beauty and green spaces. Perhaps Confucius had it right all along when he predicted, “The strength of a nation derives from the integrity of the home.”

BuilderBytes' MetroIntelligence Economic Update for 12/19/11

Please click here to see the edition of BuilderBytes for 12/19/11 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Philadelphia Federal Reserve's Business Outlook Survey Continued to Improve in December
• Consumer prices remain flat in November as lower energy prices counter higher food prices
• Initial unemployment claims fall to 366,000
• Producer Price Index increases moderating
• Industrial production falls unexpectedly in November

Want to advertise in the newsletter and reach over 100,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

Want to make sure your company or event is included in the events calendar? Contact editor Dani Smith at dsmith@penpubinc.com.

December column for Builder & Developer magazine now online

My column for the December 2011 issue of Builder & Developer magazine is now posted online.

For this issue, entitled "2011 in Review: Unemployment and Low Consumer Confidence Postpone the Recovery" I reviewed the reasons why the long-awaited recovery in the housing market has been postponed.

An excerpt:

Whether due to poor consumer confidence, tighter credit standards, high unemployment, delayed foreclosures or some combination of the above, it’s become clear that millions of potential households have delayed the move to their own, private abodes until the economy -- and their aspirations -- improve...

...However, aside from continued troubling signs from Europe, the economic news is gradually beginning to improve. For example, U.S. GDP, which squeaked along at 0.4% and 1.3% in the first and second quarters of 2011, respectively, accelerated to 2.5% by the third quarter. Retail sales are up, led mostly by gains in cars and electronics. Both business sales and industrial production are rising, and the consumer price index recently declined, suggesting that inflation is being kept in check...

To read the entire column, click here.

To read the entire December 2011 issue in digital format, click here.

Quoted in today's Ventura County Star about foreclosures

Today I was quoted in a story by the Ventura County Star about why rising foreclosures in the state and in Ventura County are bucking the national trend of falling foreclosures -- at least for now. So why the contrast? In part because foreclosures as much easier to process in California than in many other states, which require a court process. In addition, a combination of our high unemployment and the fact that many parts of the state were ground zero for the housing bust would mean we could be on the leading edge of higher foreclosures nationally after the start of 2012.

From the story:

Ventura County and California may be ahead of the nation in foreclosure activity for other reasons, said Patrick Duffy, a principal with MetroIntelligence Real Estate and Economics Advisors in Los Angeles.

Foreclosures in the state move faster through the system because they don't need to go through the courts, he said. Also, California was a hot spot for many subprime and other troubled mortgages that triggered the cascade in foreclosure filings.

"In the long run, it will be better because it gets them (the foreclosed homes) into the pipeline sooner," and therefore they will get sold sooner, Duffy said.

Click here to read the entire story.

BuilderBytes' MetroIntelligence Economic Update for 12/15/11

Please click here to see the edition of BuilderBytes for 12/15/11 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Federal Reserve leaves interest rates alone, more upbeat about economy
• Retail sales rise for sixth straight month
• Both sales and business inventories rise in October
• Federal budget gap narrows from a year ago
• Both import and export prices less than expected in November
• Mortgage applications rise by 4.1% from previous week
  

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BuilderBytes' MetroIntelligence Economic Update for 12/12/11

Please click here to see the edition of BuilderBytes for 12/12/11 on the Web.

In this issue of theMetroIntelligence Economic Update, I covered the following indicators:

• Consumer sentiment rises to highest level in six months
• Consumer credit rises to highest level since October 2009
• Initial unemployment claims dip sharply in latest report
• Wholesalers increase stockpiles at highest level in five months after cutting back over the summer
• Trade deficit narrows to lowest level since December 2010

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BuilderBytes' MetroIntelligence Economic Update for 12/08/11

Please click here to see the edition of BuilderBytes for 12/08/11 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Purchasing & supply management executives expect continued recovery in 2012
• Mortgage applications rise by 12.8% during week after Thanksgiving
• Factory orders decline for second consecutive month in October
• Non-Manufacturing Activity Increases for 24th Consecutive Month in November
  

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BuilderBytes' MetroIntelligence Economic Update for 12/05/11

Please click here to see the edition of BuilderBytes for 12/05/11 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Unemployment rate falls to 8.6%, Due in Part to Reduction in Labor Force
  
• Latest Federal Reserve Survey Shows Slow to Moderate Growth
• Construction Spending in October Rises for Third Consecutive Month
• Unemployment Claims Rise to 402,000 in Most Recent Report
• November Manufacturing Activity in November Expands for 28th Consecutive Month
• Chicago PMI Rebounds to 7-Month High in November
  

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BuilderBytes' MetroIntelligence Economic Update for 12/01/11

Please click here to see the edition of BuilderBytes for 12/01/11 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• New home sales rise in October as prices decline
• S&P Case-Shiller Index falls in September after five months of gains
• FHFA shows housing prices up by 0.2% in 3Q2011 but down by 3.7% over the past year
• Pending home sales jump in October
• Consumer confidence improves in November, matching levels last seen in July 2011
• 3rd Quarter 2011 Productivity Revised to 2.3%
• Private-sector employment rises by 206,000 jobs in November
• Planned layoffs in November remains mostly unchanged from previous month but down by 13% YOY
• Mortgage applications decline in latest survey

Want to advertise in the newsletter and reach over 100,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

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BuilderBytes' MetroIntelligence Economic Update for 11/28/2011

Please click here to see the edition of BuilderBytes for 11/28/2011 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Consumer confidence rises to highest level in five months
• Durable good orders decrease for the second consecutive month, largely from fewer commercial aircraft orders
• Personal income rises less than expected as savings rates increase
• Initial unemployment claims rise slightly more than expected
• Mortgage applications dip by 1.2% in latest survey
  

Want to advertise in the newsletter and reach over 100,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

Want to make sure your company or event is included in the events calendar? Contact editor Dani Smith at dsmith@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 11/23/2011

Please click here to see the edition of BuilderBytes for 11/23/2011 on the Web. Because of the Thanksgiving holiday, for this issue it's being published on Wednesday instead of Thursday.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• October sales of existing homes rise, unsold inventory continues to decline
• Third quarter 2011 GDP revised from 2.5% to 2.05%
• Additional easing discussed at last federal reserve meeting
  

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BuilderBytes' MetroIntelligence Economic Update for 11/21/2011

Please click here to see the edition of BuilderBytes for 11/21/2011 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Both Building Permits and Housing Starts Showing Signs of Life in October
• Leading Indicator Index Rebound Suggests Lower Risk of Economic Downturn
• Initial Unemployment Claims Continue to Fall
• Philadelphia Federal Reserve Survey for November Shows Slowing Growth for its Region
  

Want to advertise in the newsletter and reach over 100,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

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BuilderBytes' MetroIntelligence Economic Update for 11/17/2011

Please click here to see the edition of BuilderBytes for 11/17/2011 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Builder confidence rises to highest level since May of 2010
• October retail sales rise more than expected based on strength in sales of cars & electronics
• Producer price index falls more than expected in October
• Empire State Manufacturing Survey rebounds after five months of consecutive losses
• Business inventories for September remain flat as sales rise
• Consumer price index falls unexpectedly in October
• Industrial production rises more than forecast
• Mortgage applications decline, led by fewer refinancings
  

Want to advertise in the newsletter and reach over 100,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

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2011 in Review: A Rebound Delayed is Not a Rebound Denied

In 2011, a not-so-funny thing happened on the way to the rebound: it was delayed. Whether due to poor consumer confidence, tighter credit standards, high unemployment, delayed foreclosures or some combination of the above, it’s become clear that millions of potential households have delayed the move to their own, private abodes until the economy -- and their aspirations -- improve. But both things are actually getting better – albeit very slowly.

About a year ago, I wrote about how this doubling up with friends or relatives had actually meant that the country was technically under-housed to the tune of well over 3 million households. Given continued population growth, that is even more true now, but with the unusually slow rebound from the Great Recession, builders and developers have had to exercise yet more patience while shepherding future projects along.

However, aside from continued troubling signs from Europe, the economic news is gradually beginning to improve. For example, U.S. GDP, which squeaked along at 0.4% and 1.3% in the first and second quarters of 2011, respectively, accelerated to 2.0% by the third quarter. Retail sales are up, led mostly by gains in cars and electronics. Both business sales and industrial production are rising, and the consumer price index recently declined, suggesting that inflation is being kept in check.

From the point of view of the building community, sentiment is beginning to improve after multiple months of treading water, with the NAHB/Wells Fargo Housing Market Index rising to 20 in November, or the highest level noted since May of 2010. In addition, the national Housing Opportunity Index (which measures housing affordability) has been consistently rating above the 70% mark since the beginning of 2009. According to the Improving Market Index, 30 metro areas made the list for November as the homeownership rate reversed months of decline to rebound slightly to 66.1%, and housing prices seem to have stabilized in most places.

Even building permits, which had struggled throughout most of 2011 to match 2010 levels, are finally rising, although that’s mostly due to the year-to-date performance of the multi-family sector (+32%) versus declines for single-family permits (-8.4%). Still, October’s permits were the highest since December 2010 for single-family homes and October 2008 for multi-family units.

Nonetheless, there remain considerable headwinds weighing on the nation’s housing market. The economy is simply not where it should be at this stage of the business cycle, which has meant continued weakness in the job market. Both pending home sales and the remodeling market continue to struggle, and annualized new home sales remain stuck at about 300,000 units with an inventory timeline of just over six months. Annualized sales of existing homes continue to hover close to the five-million-unit level with an inventory timeline of about 8.5 months

Moreover, looking towards the long term, there is a concern that the weakness in the housing market over the past few years will have a larger impact on household formations, due mostly to both marriages and new births being delayed by those in their 20s and 30s. Indeed, up to two million such households which would otherwise be looking for their own homes have had to postpone those plans due to economic or social duress.

And of course a lower birth rate could certainly put additional pressure on long-term safety nets such as Social Security and Medicare, which require a robust tax base to meet promised obligations. But hopefully that’s a problem which will be more than reversed as the nation’s builders eventually gear up to address the pent-up demand silently but steadily building up nationwide.

BuilderBytes' MetroIntelligence Economic Update for 11/10/2011

Please click here to see the edition of BuilderBytes for 11/10/2011 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Mortgage applications rise by 10.3% over previous week; Purchase Index rises to highest level since August 2011
• Consumer credit increased b $7.5 billion in September
• Monthly wholesale sales in September up by 15% year-over-year as inventories slowly decline
  

Want to advertise in the newsletter and reach over 100,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

Want to make sure your company or event is included in the events calendar? Contact editor Dani Smith at dsmith@penpubinc.com.

November column for Builder & Developer magazine now online

My column for the November 2011 issue of Builder & Developer magazine is now posted online.

For this issue, entitled "Beware the Politics of Economics" I wanted to discuss how the politicization of economics can end up shielding voters from the important issues they should be considering. Since we'll be seeing a lot of politically charged rhetoric over the next year regarding the economy, it's more crucial than ever to recognize what got us to the situation we're in -- and the best ways we can escape it. Hint: neither major party has yet addressed these solutions.

An excerpt:

...What we should demand from our elected government is the truth about our strengths and weaknesses in a global world. Our strengths remain solid, including a younger, less-taxed population versus other developed countries, a more innovative economy and the dollar as the global reserve currency.

But our weaknesses remain formidable, including a two-party system which discourages compromise, self-absorbed seniors who have no problem forcing younger generations to pay for now-outdated retirement plans, income inequality which hinders growth, an education system which can’t seem to churn out globally competitive students and a crumbling infrastructure whose price tag is apparently too high to seriously debate, much less repair...

To read the entire column, click here.

To read the entire November 2011 issue in digital format, click here.

BuilderBytes' MetroIntelligence Economic Update for 11/07/2011

Please click here to see the edition of BuilderBytes for 11/07/2011 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• 80,000 Jobs Added in September as Average Hourly Earnings Rise by 0.2%
• Initial Claims for Unemployment Fall Below 400,000
• Productivity Rises by 3.1% as Unit Labor Costs Fall by 2.4% in 3Q2011
• Factory Orders Rise by 0.3% in September, Led by Big Jump in Business Investment
• Service Sector Economy Still Growing, Albeit Slowly

Want to advertise in the newsletter and reach over 100,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

Want to make sure your company or event is included in the events calendar? Contact editor Dani Smith at dsmith@penpubinc.com.

L.A. Times reviews Lennar's new NextGen series

In today's Los Angeles Times, reporter Alejandro Lazo covered the extended family homes Lennar is building in San Bernardino and in Arizona. He had also called me to comment for the article, and I told him about the casitas that become very popular for larger new homes prior to and during the run-up to the building boom. From the story:

The company has built two San Bernardino County models of its so-called NextGen designs for its master-planned Rosena Ranch community. Like a Russian nesting doll with a smaller doll inside, the new residential design incorporates a smaller home with a separate front entrance, kitchenette, bathroom and bedroom...

For now, it seems to me that there are certain ethnic groups which have a history of inter-generational living (such as Hispanics and Asians), but he didn't delve much into that, preferring instead to focus on the economics of doubling up but with the advantage of private spaces.

I think it definitely shows that some builders are serious about innovating in ways to compete with their recent plans of the past as well as deeply discounted foreclosures:

"Here is a clever way of addressing something that wasn't built during the boom years," said Patrick Duffy, principal for research firm MetroIntelligence Real Estate Advisors. The main question builders are asking themselves, he said, is: "How do you make it special, not only against foreclosures, but a cheaper home that they themselves built only a few years ago?"

Click here to read the entire story.

2011 Riverside-San Bern. Economic Conference Commercial Real Estate Section Now Online

Miss the 2011 Beacon Economics Riverside-San Bernardino Economic Forecast Conference on Thursday, November 3rd at the Riverside Convention Center?

You can still download the section on commercial real estate by clicking here or on the book cover to the left.

As in the past this section was authored by me and MetroIntelligence.

Here are the key points from that chapter:

• Although vacancy increases for office space are now leveling off and little new supply is expected to add to the inventory overhang, the office sector in the Riverside-San Bernardino region will still take time to recover; look for vacancies to range from 19.0% to 19.5% and rent growth to remain under pressure for at least another year.
• As in the office sector, vacancies in the retail sector have peaked and should begin to inch down as the economy recovers and very little supply is added; look for economic vacancies to fall by 20 basis points by the end of 2011; positive rent growth will be delayed until the end of next year.
• After nearly tripling between 2006 and 2009, vacancy rates for the region’s industrial/warehouse sector have fallen for six consecutive quarters to below 8%, largely on the strength of tenants demanding big-box buildings; look for vacancies to continue trending toward 6.0% as rent growth ranges for the most part between 1.5% and 2.0% per quarter.
• Based on commercial building permit values, many building owners are investing in additions or alterations to existing properties; for new development, during the second quarter of 2011, there were declines in building permits for all commercial sectors from the previous quarter.
• With interest rates for 10-year U.S. Treasury bonds recently hovering close to 2%, cap rates during the second quarter of 2011 for all commercial property sectors look quite competitive by comparison, ranging from 7.26% for industrial/warehouse properties to 8.75% for retail space and 9.57% for the office sector.

2011 Riverside-San Bern. Economic Conference Residential Real Estate Section Now Online

Miss the 2011 Beacon Economics Riverside-San Bernardino Economic Forecast Conference on Thursday, November 3rd at the Riverside Convention Center?

Fear not -- you can still download the section on residential real estate by clicking here or on the book cover to the left.

As in the past this section was authored by me and MetroIntelligence.

Here are the key points from that chapter:

• Falling home prices in the Riverside/San Bernardino region have dramatically increased home affordability, with 72% of households able to buy the median-priced home at current interest rates, up from the single digit percentages seen as recently as the fourth quarter of 2007.
• The new home market in the Riverside/San Bernardino region has been decimated, with sales falling by 90% between the first quarter of 2006 and the second quarter of 2011. After falling by 37% between mid-2006 and early 2009, since then prices have ranged mostly between $270,000 and $285,000.
• Although existing single-family home sales did stage a strong rebound after the end of 2007 due to various tax credit programs, since these programs expired, sales fell back to about 14,400 by the second quarter of 2011.Prices, after reaching a trough in the second quarter of 2009, rallied through the second quarter of 2010 but during the second quarter of 2011 fell back down to just under $174,000.
• Sales of condominiums, which started to fall in 2004 as prices began to freeze out traditional first-time buyers, rebounded by 85% between the third quarter of 2007 and the second quarter of 2011 to over 1,600 units. Prices, which fell by 63% from peak to trough by the third quarter of 2009, have since risen by nearly 18% to $142,947.
• Although the combination of a shadow rental supply, a soft economy, and high unemployment will continue to affect the local apartment market, it is gradually returning to health.Vacancy rates have begun to fall, and should dip below 6.0% in 2012. Average asking rents are also rising slowly, averaging $1,064 by the second quarter of 2011 and could rise by 1.0% or more per quarter by the middle of 2012.
• Following a nearly year-long drop in foreclosure activity, a 26% increase in default activity between the second and third quarters of 2011 in the region will likely mean a similar increase in foreclosures over the next nine to twelve months.A new wave of REO homes could certainly have an impact on prices for existing homes.
• Permits for single-family homes remain depressed in the region, totaling just over 1,100 homes for the two-county region by the second quarter of 2011, but should start to slowly rise by the end of 2011 and even climb past 3,000 units by the last quarter of 2015.
• Permits for multi-family homes fell to just 256 units during the second quarter of 2011, but should now start rising gradually as builders re-enter the market to meet pent-up apartment demand.By the end of 2015, multi-family permits could reach 2,000 units per quarter.

2011 Riverside-San Bern. Conference Materials Now Online

Miss the 2011 Beacon Economics Riverside-San Bernardino Economic Forecast Conference on Thursday, November 3rd at the Riverside Convention Center?
Fear not -- you can still download the conference book as a .pdf for free by clicking here.

As in the past, the sections on the residential and commercial real estate markets were authored by me and MetroIntelligence, so I welcome your comments and suggestions!

Also, if you'd like to view the presentation by Beacon founding partner and economist Christopher Thornberg on the state of the national and state economy, click here.

If you'd like to view the presentation by Brad Kemp, Beacon's Director of Regional Research, which focused on the Riverside-San Bernardino area -- including forecasts for employment, building permits and housing prices -- click here.

Notes from the ULI Fall Meeting #4

During the 2011 ULI Fall Meeting in Los Angeles, Mike Milken (yes, that Mike Milken) gave a very well-attended keynote luncheon speech that was being talked about a lot the rest of the day. Milken, who chairs the think tank Milken Institute in Santa Monica, CA, gave a speech entitled, "Where's Sputnik?" which will also be the title of a forthcoming book.

The general idea is that after the USSR launched the Sputnik satellite into orbit in 1957, it sent many Americans into a psychological panic -- not because of the satellite itself, but because the missile which launched it into space could easily be converted into carrying nuclear-tipped weapons aimed at the United States. However, it also ushered into a period of technological innovation and investments in education that helped to send the country's astronauts to the moon. As a new President Kennedy said in his inaugural speech, "We shall pay any price, bear any burden, meet any hardship ... to assure the survival and the success of liberty.”

Today, although the country faces formidable challenges, if recent history is any indication, there has been not any "Sputnik" moment to restore our previous ambitions. According to the report: In 2005, a distinguished committee of leaders from industry, government and higher education produced a disturbing report, Rising Above the Gathering Storm, that spelled out ways to restore America’s competitiveness. Revisiting their report in 2010, the committee concluded that “the outlook for America to compete for quality jobs has further deteriorated over the past five years. The gathering storm increasingly appears to be a Category 5.”

And yet Milken is still an optimist. Offering a comprehensive program for national renewal, Milken's speech (and book) will focus on six challenges – energy, housing, entitlements, education, health and immigration. Milken believes the “American Century” does not have to end, but can be extended long into the future if the public and private sectors, and all of us as individuals, assume greater responsibility for our common destiny.

But you don't have to wait for the book -- you can read his 24-page article on the subject (adapted from his book) by clicking here.

BuilderBytes' MetroIntelligence Economic Update for 11/03/2011

Please click here to see the edition of BuilderBytes for 11/03/2011 on the Web. In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Federal Reserve Holds Rates Steady Amid Improving Economic Outlook
• Construction Spending up Slightly in September
• Economy Continues to Grow, Albeit More Slowly
• Manufacturing Sector Activity Expands for 27th Consecutive Month
• Bank and Military Cutbacks Increase Planned Job Reductions in September
• Private Sector Employment Rises by 110,000 Jobs in September
• Mortgage Applications Tick up by 0.2% From Previous Week
  

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Notes from the ULI Fall Meeting #3

At the 2012 Fall Meeting here in Los Angeles, the Urban Land Institute released a report entitled "Real Estate in the New Economy," which discusses how ongoing changes in globalization, demographics and technologies will impact land use in the years ahead.

You can download the entire report as a .pdf file by clicking here.

From the press release:

The introduction to the 21st century is still unfolding in cities and communities around the world. The complexity of the Great Recession continues to challenge all market players with implications that ripple out across countries, industries, currencies, and communities. From reconstruction dilemmas following natural disasters to civil unrest, political friction, and the heart-stopping ravages of the latest famine, we feel a world getting smaller yet more complicated and interdependent than ever before.

After decades of what felt like infinite resources and vast wealth pools available to fuel the consumption-based U.S. economy, we now face a mindset of shortage. We all know the history—government-supported mortgages and freeways, affordable automobiles, cheap gas, and post–World War II industrial expansion all underwrote the exodus from “cramped” urban neighborhoods to spacious single-family suburban homes.

Car models were a talisman for individual success, and public transit turned into an afterthought in suburban agglomerations. Proximity to anything didn’t matter when you could drive easily to almost everywhere. And exhilarating mobility over long distances enabled more people to own more land—and build larger houses—at the ever-expanding suburban fringe.b Employers sought to build suburban office islands, set apart from housing, retail, and transit.

As we preview the future, three critical forces drive change:

Accelerating Globalization—From energy to food to manufacturing, the metrics of globalization shed light on the rise and fall of global markets on a 24/7 basis as cities around the world ebb and flow with massive capital investments and withdrawals. Burgeoning and shrinking cities mirror investors’ search for lower costs of production and optimum locations for both manufacturing and services. Our social networks and governance structures struggle to keep pace and adapt quickly and creatively to process all of the input that various interests want and need to give. Disparities between rich and poor expand, uncertainty and lack of confidence grow, and prognosticators hyperventilate with fears of the future.

Changing Demographics—The rapidly evolving social composition of communities has a more powerful reach and not only reframes a neighborhood or a state but also triggers new markets, new opportunities, and new products and services. Immigration produces not just a plethora of diverse restaurants in virtually every town and suburb, but also new residents vying for jobs, housing, and a toehold on the ladder of success. The “barbell” population groups of the Boomers and Generation Y challenge the markets, from where and how we live and work, to how we learn, heal, and relax.

Ever-Evolving Technologies—Technology is pushing more information into the marketplace and onto our smartphones at warp speed. We can monitor and manage our activities, our navigation, and every value proposition with ever more accuracy and in real time. The community-building potential of communications technology is on a meteoric catapult across the globe, replacing entire industries along the way. Whether to detect underperforming heating, ventilation, and air-conditioning equipment, monitor the arrival of the next bus, or catalyze political engagement, communities and businesses are exploring the power of instant connectivity for good or ill.

These underlying forces will combine with many others in indeterminate ways over the coming years. In the world of real estate investment, the continual challenge is to understand new trends, capitalize on new market opportunities, and direct investment funds in strategic ways. No time in recent memory has been as complex or as subject to detailed analysis as our current time—or changing as rapidly...

Click here to download the entire report as a .pdf file.