BuilderBytes' MetroIntelligence Economic Update for 11/12/15

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

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

• Wholesale inventories rose by 0.5 percent in September, for the largest gain in three months

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 11/10/15

Please click here to see the edition of BuilderBytes for 11/10/15 on the Web.

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

• Job growth rebounded strongly to 271,000 in October as employment fell to 5.0 percent
• Consumer credit use soared in September to all-time high, signaling confidence in the economy

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

Job growth bounced back strongly in October

Some great news on the U.S. economy today!

The Bureau of Labor Statistics is reporting that the U.S. added 271,000 jobs in October, far better than the 181,000 expected by economists. The overall unemployment rate inched lower to 5.0%, which is the lowest it’s been since February 2008, nearly eight years ago.

 
This, coupled with improvement in wages, makes today’s jobs report the best of 2015.

Click here to read the the entire report.

BuilderBytes' MetroIntelligence Economic Update for 11/06/15

Please click here to see the edition of BuilderBytes for 11/06/15 on the Web.

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

• Planned job cuts dropped by 14 percent in October but still up 31 percent vs. 2014
• Productivity rose at 1.6 percent in third quarter of 2015, with hours worked falling for first time since 2009
• Mortgage applications dip 0.8 percent in latest survey as rates rise slowly
• Initial unemployment claims rise by 16,000 in latest report

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 11/5/15

Please click here to see the edition of BuilderBytes for 11/5/15 on the Web.

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

• Private sector jobs grew by 182,000 in October
• Manufacturing sector index remained mostly flat in October
• Service sector economy growth rose to 2.2 percent for October
• Factory orders dipped by one percent in September

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 11/3/15

Please click here to see the edition of BuilderBytes for 11/3/15 on the Web.

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

• Consumer sentiment rebounded in October, YTD 2015 levels highest since 2004
• Personal income and spending both inched up in September
• Chicago Business Barometer bounced back strongly in September
• Construction spending rose 0.6 percent in September to highest level since March 2008

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 10/30/15

Please click here to see the edition of BuilderBytes for 10/30/15 on the Web.

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

• Pending home sales dipped in September but still up 3.0 percent year-over-year
• Third quarter 2015 GDP growth fell to 1.5 percent in advance estimate
• Mortgage applications fall 3.5 percent in latest survey as rates inched back up
• Initial unemployment claims rise by 1,000 but 4-week average still at lowest level since Dec. 1973
• Federal Reserve leaves interest rates unchanged for now

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 10/29/15

Please click here to see the edition of BuilderBytes for 10/29/15 on the Web.

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

• Case-Shiller National Index rose 0.3 percent in August and 4.7 percent year-over-year
• Durable goods orders fell 1.2 percent in September, but core capital goods orders still rose 0.5 percent
• Consumer confidence dipped in October after modest gain in September

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

Generational Shifts in Home Buying: A 2015 NAR Report Reveals Interesting Insights

Recently, the National Association of Realtors® released their 2015 Home Buyer and Seller Generational Trends report, which analyses the differences between recent home buyers and sellers of various age groups. The report is chock full of interesting insights, such as the continued importance of partnering up with a real estate agent for younger buyers even after having done considerable research online.

Moreover, as the housing market continues to emerge from the Great Recession, one trend has been made abundantly clear:  Despite the considerable headwinds facing Generation Y as they came of age often saddled with student debts, car loans, stagnant wages and tighter mortgage standards, they have continued to persevere, and in 2015 accounted for the nearly one-third of home buyers.

At the same time, Baby Boomers accounted for almost as many sales (split among 16 percent younger Boomers and 15 percent older Boomers), while Generation Xers followed behind at 27 percent.  The Silent Generation accounted for just 10 percent of recent sales activity.

Lawrence Yun, NAR’s chief economist, believes that the survey once again underscores the still-untapped demand for owning homes among young adults, reporting that over 80 percent of both Gen X and Gen Y buyers view their home purchase as solid investment.  As opposed to renting in today’s market -- in which tenants can expect to see annual increases of three to five percent -- they’re counting on the predictable, fixed payments made available by a traditional mortgage.

Of course selling to these different generations also requires a more customized approach than we might have seen in years past, in which the same traditional sales office, model home complex, well-crafted brochure and robust Web site could market just as effectively to distinct age groups.

For example, although 65 percent of married couples buy today’s homes (with another 8 percent of unmarried couples making the plunge), single women are almost as twice as likely to buy a home than their male counterparts.  However, given that 65 percent of all buyers do not have children, forcing them to choose among resale homes in suburbs originally designed mostly for families can often be a marketing challenge.

In addition, the rising importance of multi-generational homes -- accounting for 13 percent of recent sales -- has seemingly risen in lockstep with a higher share of foreign-born buyers, especially to middle-aged heads of households born in the 1970s.  However, given that 70 percent of buyers continue to choose suburban locations, it seems that many want to leave their options open, whether that means future children, a grown child moving back into the home, or aging parents and in-laws who may need additional supervision from family members.

Today’s buyers also rely much more on the Internet to conduct their own research, ranging from about one-third for older buyers to just over half for those under age 35.  What this means is that by the time a potential buyer visits an open house or a model complex, they’re probably not looking for information they already know -- they’re seeing if the photos and marketing verbiage matches the reality of seeing it in person, as well as how knowledgeable and trustworthy the sales agent seems.

Moreover, given that more than half of both Generation X and Y buyers started their home search on smartphone devices (with about 25 percent ultimately finding that new home in the same way), it is critical for builders and agents to optimize their Web sites for mobile users.

For younger buyers under age 35, they bring their own unique wish list, such as a premium on convenience to their jobs, a desire to avoid renovation headaches (which bodes well for newer homes if they can afford it) and a need for low down payments.   Yet because of that affordability issue, it’s often those same younger buyers opting more for older homes out of necessity.

For older buyers such as Baby Boomers, when they move it’s often to a smaller home, even if they’re not ready for retirement, and if they’re looking for a freer lifestyle with less home maintenance, new homes with community amenities continue to be quite popular, especially if they plan to stay there for 15 to 20 years.

Finally -- and not surprisingly -- the older the buyer, the less they’re willing to compromise in terms of price, size and condition of the home.  And who can blame them?  After a lifetime of catering to family needs and wants, a low-maintenance home with a view seems like a pretty nice reward for a life well lived.

BuilderBytes' MetroIntelligence Economic Update for 10/27/15

Please click here to see the edition of BuilderBytes for 10/27/15 on the Web.

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

• Leading Economic Index declined 0.2 percent in September after two months of no changes
• September new home sales fall 11.5 percent from August but still up 2.0 percent year-over-year

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 10/23/15

Please click here to see the edition of BuilderBytes for 10/23/15 on the Web.

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

• Existing home sales rebounded in September, up 8.8 percent year-over-year
• FHFA House Price Index rose just 0.3 percent in August but up 5.5 percent year-over-year
• Initial unemployment claims rise by 3,000 in latest report but 4-week average still lowest since Dec. 1973

 Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 10/20/15

Please click here to see the edition of BuilderBytes for 10/20/15 on the Web.

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

• September housing starts rise to nearly an 8-year high, due largely to apartments
• September building permits fall 5.0 percent form August but still up 4.7 percent year-over-year
• Mortgage applications rise 11.8 percent in latest survey, mostly due to purchase loans

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

October column for Builder & Developer magazine now online

My column for the October 2015 issue of Builder and Developer magazine is now posted online.  This marks the 25th year anniversary of the magazine!

For this issue, entitled "A Look Back Over 25 Years of Market Strategy," I and other columnists were asked to provide an overview of the changes we've seen in the building industry over the last 25 years.

An excerpt:

Another big change has been the shift from large builders focusing on specific niches -- such as entry-level, move-up or luxury homes -- to broadening their scope depending on local conditions. As a result, the importance of valid, verifiable quantitative market research -- coupled with qualitative local expertise -- has never been more crucial to avoid product, pricing and marketing blunders. 

Having once worked for a builder which went bankrupt trying to grow too fast in new, unfamiliar markets while failing to appropriately address higher marketing and merchandising costs, I can attest that following gut instinct simply doesn’t work as well in a much more complicated world.

To read the entire column, click here.

To read the entire October 2015 issue in digital format, click here.

BuilderBytes' MetroIntelligence Economic Update for 10/20/15

Please click here to see the edition of BuilderBytes for 10/20/15 on the Web.

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

• Builder confidence rises three points to 64, or to levels not seen since late 2005
• Job openings fell about five percent to 5.4 million in August as both hiring and separations remained stable
• Both industrial production and capacity utilization dipped slightly in September
• Consumer sentiment rebounds strongly in preliminary October reading

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 10/16/15

Please click here to see the edition of BuilderBytes for 10/16/15 on the Web.

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

• CPI fell 0.2 percent in September and essentially flat over previous 12-month period
• Empire State Manufacturing Index declines for third straight month
• Philadelphia Fed's Business Outlook Survey weakened again in October
• Mortgage applications plummet 27.6 percent as new disclosure rules implemented
• Initial unemployment claims fall by 7,000 in latest report; 4-week moving average lowest since Dec. 1973

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 10/15/15

Please click here to see the edition of BuilderBytes for 10/15/15 on the Web.

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

• Producer Price Index fell 0.5 percent in September and 1.1 percent over previous 12 months
• Retail sales edged up 0.1 percent in September
• Business inventories flat in August

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 10/13/15

Please click here to see the edition of BuilderBytes for 10/13/15 on the Web.

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

• Wholesale inventories rose by 0.1 percent in August
• Federal Reserve meeting minutes reveal continued optimism about economy

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 10/9/15

Please click here to see the edition of BuilderBytes for 10/9/15 on the Web.

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

• Initial employment claims fall by 13,000 in latest report

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 10/8/15

Please click here to see the edition of BuilderBytes for 10/8/15 on the Web.

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

• Mortgage applications soar in latest survey due to rate volatility and changes in disclosure regulations

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 10/6/15

Please click here to see the edition of BuilderBytes for 10/6/15 on the Web.

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

• Job growth dipped to 142,000 in September as unemployment rate remained unchanged at 5.1 percent
• Factory orders fall 1.7 percent in August following slight gain in July
• Service sector index dropped in September but still well within positive territory

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 10/2/15

Please click here to see the edition of BuilderBytes for 10/2/15 on the Web.

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

• Construction spending climbed to highest level since 2008 in August
• Job cuts rose 43 percent in September and up 93 percent year-over-year
• Initial employment claims rise by 10,000 in latest report
• Mortgage applications dip 6.7 percent in latest survey as rates remain mostly flat

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 10/1/15

Please click here to see the edition of BuilderBytes for 10/1/15 on the Web.

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

• Case-Shiller Home Price Index up 4.7 percent year-over-year in July, up 0.7 percent from previous month
• Consumer confidence improved modestly in September
• Chicago Business Barometer declined sharply in September
• Private sector jobs grew by 200,000 in September, up from 186,000 in August

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 9/29/15

Please click here to see the edition of BuilderBytes for 9/29/15 on the Web.

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

• Pending home sales dip 1.4 percent in August but up 6.1 percent year-over-year
• Second quarter 2015 GDP increase rose to 3.9 percent in third and final estimate
• Both personal income and spending rose in August
• Consumer sentiment decline narrows in September

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

25 Years of Builder and Developer Magazine: A Look Back

This year marks the 25th anniversary of Builder & Developer magazine, marking a time of more than one real estate cycle, and a time of great change in the building industry.

I still remember the nascent publisher Nick Slevin making the rounds at PCBC in the early 1990s, and as both his influence and readership grew, I knew this was a magazine for which I wanted to write.  Having first entered the building industry in 1986, I’ve seen big changes in everything from product design and quality to how we market and finance new homes.

To be sure, this is a much different industry today than it was in 1990:  Back then the top 10 largest builders in the country reported a collective market share of under 10 percent of the housing market versus 17 percent in 2014 (down from 20 percent in 2008).  Back then new housing starts totaled 1.19 million for a population of 250 million (a ratio of .477 percent) versus 1.003 million in 2014 for a population of 319 million (a ratio of .314 percent).

Back then 75 percent of housing starts were for single-family homes, whereas in 2014 that share had fallen to 65 percent.  In fact, more multifamily units were started in 2014 than in any year since 1989. And yet, despite surpassing the one-million unit level in 2014, residential construction for the year still lagged below any level posted from 1959 through 2007.

Without a doubt, the housing recovery did lose some of its steam in 2014, with homeownership rates falling to a 48-year low by the second quarter of this year.  But that’s been somewhat balanced by strong growth in rental households, encouraging traditional for-sale builders such as Lennar and Toll Brothers to build rental communities in order to provide more predictable cash flow.

Another big change has been the shift from large builders focusing on specific niches -- such as entry-level, move-up or luxury homes -- to broadening their scope depending on local conditions. As a result, the importance of valid, verifiable quantitative market research -- coupled with qualitative local expertise -- has never been more crucial to avoid product, pricing and marketing blunders.

Having once worked for a builder which went bankrupt trying to grow too fast in new, unfamiliar markets while failing to appropriately address higher marketing and merchandising costs, I can attest that following gut instinct simply doesn’t work as well in a much more complicated world.

However, even given the bright spot for rental housing, with rents rising faster than incomes can keep up, affordable housing remains an elusive goal for both producer and consumer.  Over the 10-year period between 2005 and 2015, the share of renters aged 25 to 34 paying more than 30 percent of their incomes for housing rose from 40 to 46 percent. Now, more than ever, there is a rallying cry for more affordable housing, which also continues to evolve in order to fit in more seamlessly with existing neighborhoods.

If you have access to HBO, I highly recommend watching the six-part mini-series “Show Me a Hero,” which chronicles how civil rights violations in affordable housing impacted the city government of Yonkers, N.Y. at the beginning of the 1980s.

Based on a book by the same name, the series covers the very rocky political transition from the crime magnets of high-rise ghettos to low-income units scattered throughout a community in multiple flat and townhome unit configurations -- much like many affordable housing projects see being built today.

Finally, another big change over the last 25 years relates to the importance of technology in our homes.  Whereas many builders previously left money on the table to post-sale, outside vendors beyond their control (and balance sheets), today the connected home is a critical element in new homes, with over 90 percent equipped with a broadband Internet connection in order to better enable “the Internet of Things.”

Moreover, according to a recent CEA report, about one-third of builders report increased revenue from installing these technologies.  And it’s not just consumers leading the way:  Architects are also playing a key role in this area, incorporating multi-room audio, home theater and security systems into their designs.

Looking ahead, it’s hard to predict where we’ll be in another 25 years, but as the industry -- and its customers -- continue to become increasingly sophisticated, it’s safe to say that we can look forward to many exciting innovations in the way we work, live and play in our communities.

BuilderBytes' MetroIntelligence Economic Update for 9/25/15

Please click here to see the edition of BuilderBytes for 9/25/15 on the Web.

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

• New home sales soared in August, surpassing expectations
• Durable goods orders fell 2.0 percent in August after rising in July
• Mortgage applications dip 13.9 percent in latest survey
• Initial unemployment claims dip by 3,000 in latest report

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 9/24/15

Please click here to see the edition of BuilderBytes for 9/24/15 on the Web.

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

• FHFA House Price Index rose 0.6 percent in July and 5.85 percent year-over-year

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 9/22/15

Please click here to see the edition of BuilderBytes for 9/22/15 on the Web.

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

• Existing home sales dipped in August after three months of gains
• Leading Economic Index rose slightly in August, suggesting moderate growth in the near term
• Federal Reserve opts to keep key interest rate at currently low level

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

September column for Builder & Developer magazine now online

My column for the September 2015 issue of Builder and Developer magazine is now posted online.

For this issue, entitled "More Builders are Becoming Landlords" I wanted to review and discuss the nascent trend of builders such as Lennar and Toll Brothers building rental housing (including single-family homes) in order to broaden their business scope and provide steadier cash flow.

An excerpt:

According to recent U.S. Census data, in 2014 just under 65 percent of new home starts were for the traditional single-family home, with the balance mostly comprised of multi-family projects with five or more units.   And yet as recently as 2009, single-family starts stood at 80 percent versus just under 18 percent for larger multi-family developments, which means that the share of multi-family housing starts nearly doubled in just five years.

So if the share of new, single-family home starts is not returning to normal as originally planned, how are builders coping in this strange, new world?  For some, such as Lennar and Toll Brothers, by joining it.

To read the entire column, click here.

To read the entire September 2015 issue in digital format, click here.

BuilderBytes' MetroIntelligence Economic Update for 9/18/15

Please click here to see the edition of BuilderBytes for 9/18/15 on the Web.

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

• August housing starts dip 3.0 percent from July but still up nearly 17 percent year-over-year
• August building permits up by 3.5 percent from July and 12.5 percent year-over-year
• Empire State Manufacturing Survey dipped for second month
• Philadelphia Fed's Business Outlook Survey mixed in September
• Mortgage applications fell by 7.0 percent in latest survey as rates dipped slightly
• Initial unemployment claims fall by 11,000 in latest report

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 9/17/15

Please click here to see the edition of BuilderBytes for 9/17/15 on the Web.

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

• Builder confidence rises to highest level since October 2005 in September
• CPI dipped 0.1 percent in August but up 0.2 percent over previous 12 months
• Retail sales rose 0.2 percent in August, up 2.2 percent year-over-year

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 9/15/15

Please click here to see the edition of BuilderBytes for 9/15/15 on the Web.

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

• Producer Price Index fell flat in July, down 0.8 percent for previous 12 months
• Consumer sentiment dips in September from August but still up year-over-year

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 9/4/5

Please click here to see the edition of BuilderBytes for 9/4/15 on the Web.

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

• Planned job cuts plunged by 60 percent in August but still 2.9 percent higher year-over-year
• Initial unemployment claims rise by 12,000 in latest report
• Factory orders posted modest 0.4 percent gain in July
• Mortgage applications rise by 11.3 percent in latest survey

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 9/3/15

Please click here to see the edition of BuilderBytes for 9/3/15 on the Web.

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

• Private sector jobs grow by 190,000 in most recent ADP report
• Labor productivity growth rose sharply to 3.3 percent during second quarter of 2015
• Chicago PMI dipped in July but comments still reflect modest to strong growth
• Construction spending rose in July to over $1 trillion (annualized) for the first time since May 2008

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 9/1/15

Please click here to see the edition of BuilderBytes for 9/1/15 on the Web.

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

• Personal income and spending both continued to rise in July
• Chicago PMI dipped slightly in August but still indicates rebound in purchasing activity
• Consumer confidence takes a minor hit in late August due to stock market volatility

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

More Builders Becoming Landlords to Improve Cash Flow

Over the last few years since the end of the housing boom and bust, the pendulum which used to favor single-family home starts has been swinging towards multi-family ones. Although the reasons for this are varied -- including increased demand in urban markets, tougher mortgage approval guidelines, and Millennials contending with weak wage growth and student loans -- the general idea was that this swing was cyclical, and that demand for the standard single-family home for purchase would eventually rebound.  The problem is that it hasn’t really worked out that way -- at least not in a way that mimics historical norms.

According to recent U.S. Census data, in 2014 just under 65 percent of new home starts were for the traditional single-family home, with the balance mostly comprised of multi-family projects with five or more units. And yet as recently as 2009, single-family starts stood at 80 percent versus just under 18 percent for larger multi-family developments, which means that the share of multi-family housing starts nearly doubled in just five years.

So if the share of new, single-family home starts is not returning to normal as originally planned, how are builders coping in this strange, new world? For some, such as Lennar and Toll Brothers, by joining it.

In March of this year, Lennar introduced an 80-unit pilot program of single-family homes for rent near the city of Reno, Nevada in the community of Sparks. Located in the 640-acre Pioneer Meadows master-planned community complete with biking and hiking trails, the Frontera community offers six plans ranging in size from 1210 to 2182 square feet of living space, two to four bedrooms and attached two-car garages. Other features include stainless steel appliances and granite countertops in the kitchen, full-size washers and dryers, walk-in closets for the master suite, wood-style window blinds and even regular lawn maintenance.

Currently starting from $1,574 to $2,049 per month (or $.93 to $1.30 per square foot) plus premiums ranging up to $150, these homes are intended to provide a middle ground for tenants who don’t want to rent an older single-family home or traditional apartment, yet are unwilling or unable to purchase a similar home. Yet such tenants will certainly pay a premium over traditional apartments, with similarly sized units at The Trails at Pioneer Meadows starting at $1,242 to $1,384 for 1250 to 1321 square feet, or $.98 to $1.08 per square foot.

Still, Lennar is fortunate in that it has a back-up plan for this pilot program: If they can’t rent them out, they can simply sell them the usual way. In addition, given the complexities managing a community of single-family versus multi-family homes, it’s hard to predict how important this business will be to the company’s bottom line, especially when it already has a pipeline of 20,000 apartments worth over $5.5 billion yet to be built.

Luxury home builder Toll Brothers has taken a different route, opting to focus more on providing multi-family “Apartment Living” and “Campus Living” branded rentals in the metro Boston to metro Washington, D.C. corridor. Including a mix of four-story suburban apartments, transit-oriented units as well as a 38-story high-rise building in Jersey City (with more towers planned), what these communities share in common is a heavy emphasis on resort-style amenities, community events and concierge services coupled with the discretionary build quality for which the company is famous. So far the company is managing 1,141 rental apartments and developing another 1,920 units, and is eying further expansion to Boston, Miami and San Francisco.

However, for those builders not yet ready to dip a toe into the rental market, there are other options. Starwood Waypoint, a REIT which as of the second quarter of 2015 owned over 17,500 single-family homes and reported a stabilized occupancy of nearly 97 percent, has reportedly worked with a dozen builders to help them offload their slowest-selling plans or the final few homes in a community.

Finally, other options include the rent-to-own programs offered by companies such as Home Partners of America. Although such homes rent and sell for a premium versus local comps, the plan is to allow tenants to try out a home before locking in a down payment, with the caveat being that the longer they wait to buy, the higher the price will be.

On the flip side, knowing what the price will be even five years in the future can help today’s tenants work towards becoming a buyer tomorrow.

BuilderBytes' MetroIntelligence Economic Update for 8/28/15

Please click here to see the edition of BuilderBytes for 8/28/15 on the Web.

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

• Pending home sales dipped in June but still up 8.2 percent year-over-year
• Initial unemployment claims rise by 4,000 in latest report
• Second quarter GDP incrrease rose sharply to 2.3 percent in second estimate

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.