Real gross domestic product increased at an annual rate of
1.2 percent in the second quarter of 2016
according to the "advance" estimate released by
the Bureau of Economic Analysis. In the first
quarter, real GDP increased 0.8 percent.
The Bureau emphasized that the second-quarter advance
estimate released today is based on source
data that are incomplete or subject to further revision by
the source. The "second" estimate for the second quarter, based on
more complete data, will be released on August 26, 2016.
READ MORE
Friday, July 29, 2016
Second quarter 2016 GDP rose at 1.2 percent in advance estimate
Employment costs rose 0.6 percent in 2Q 2016 and 2.3 percent year-on-year
Compensation costs for civilian workers increased 0.6
percent, seasonally adjusted, for the 3-month period ending in June 2016. Over the last 12 months, compensation costs
for civilian workers increased 2.3 percent.
Consumer sentiment dips slightly in July to 90.0
Consumers were a bit less optimistic in July than one month
or one year ago, although consumer confidence remains at a reasonable high
level. The recent decline was due to rising concerns about prospects for the economy,
that were mainly expressed by upper income households.
Uncertainties
surrounding global economic prospects and the presidential election have made
consumers more cautious in their expectations for future economic growth as
well as employment growth. Strength in personal finances and low interest rates
will maintain the growth in real consumption at 2.6% through mid 2017.
Wednesday, July 27, 2016
Federal Reserve keeps interest rates at current levels but acknowledges improving economy
Information received since the Federal Open Market Committee
met in June indicates that the labor market strengthened and that economic
activity has been expanding at a moderate rate.
Job gains were strong in June
following weak growth in May. On balance, payrolls and other labor market
indicators point to some increase in labor utilization in recent months.
Household spending has been growing strongly but business fixed investment has
been soft. Inflation has continued to run below the Committee's 2 percent
longer-run objective, partly reflecting earlier declines in energy prices and
in prices of non-energy imports.
Market-based measures of inflation
compensation remain low; most survey-based measures of longer-term inflation
expectations are little changed, on balance, in recent months.
Against this backdrop, the Committee decided to maintain the
target range for the federal funds rate at 1/4 to 1/2 percent.
Pending home sales inched up 0.2 percent in June; up 1.0 percent year-on-year
Pending home sales were mostly unmoved in June, but did
creep slightly higher as supply and affordability constraints prevented a
bigger boost in activity from mortgage rates that lingered near all-time lows
through most of the month,
The Pending Home Sales Index inched 0.2 percent to 111.0 in June from 110.8 in
May and is now 1.0 percent higher than June 2015 (109.9). With last month's
minor improvement, the index is now at its second highest reading over the past
12 months, but is noticeably down from this year's peak level in April (115.0).
Tuesday, July 26, 2016
Consumer confidence mostly unchanged in July after June's rise
Consumer confidence held steady in July, after improving in June. Consumers were slightly more positive about current business and labor market conditions, suggesting the economy will continue to expand at a moderate pace. Expectations regarding business and labor market conditions, as well as personal income prospects, declined slightly as consumers remain cautiously optimistic about growth in the near-term.
READ MORE
May Case-Shiller Index up 1.2 percent from April and 5.0 percent year-on-year
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census
divisions, reported a 5.0% annual gain in May, the same as the prior month. Before seasonal adjustment, the National Index posted a month-over-month gain of 1.2% in May.
READ MORE
June new home sales rise to highest level in nearly 8.5 years
New U.S. single-family home sales rose more than expected in
June, reaching their highest level in nearly 8.5 years. Sales were up 3.5 percent from May and 25.4
percent year-on-year to a seasonally adjusted annual rate of 592,000. With this increase, new home sales in the
second quarter are well above their average for the first three months of the
year.
Monday, July 25, 2016
The State of Infill Development
In addition, as existing land uses and buildings continue to become obsolete, urban infill will certainly be a crucial part of meeting future demand for not just housing, but also offices, services, entertainment and whatever the future is for ‘brick and mortar’ retail outlets.
To be sure, infill projects enjoy
many advantages, including tapping existing infrastructure and transit options,
closer proximity to retail stores and services, and even potential incentives
provided by local government. Yet there
are also serious challenges for even the most seasoned builder, including
increased and unique project costs, longer time frames to receive entitlements,
and the need to appeal not just to residents or tenants, but also to the
surrounding neighbors.
As Doyle explains, there are three reasons for this over the past two years: Higher direct site improvement costs, steeper development fees and a more restrictive and time-consuming regulatory process, especially for greenfield sites. The result has been lower residual land values than what sellers would have hoped. Moreover, he adds that because those providing equity and debt all prefer core areas, it’s become an extremely competitive market for builders in search of decent volume.
Infill development also presents a
different challenge for builders accustomed to creating traditional
subdivisions. Justin Esayian, a broker
with The Hoffman Company of Irvine, cautions that simply selling a project in
an infill location doesn’t guarantee success.
“Builders have had mixed results in infill markets, and that has given
them pause,” he explains. “Their unit count
is generally lower and the projects are more complicated to construct or not
familiar to them, and costs can escalate out of control.”
That’s also why due diligence and
market research is so important for infill sites, especially at the earliest
stages. According to Doyle, it’s crucial for builders to do their community
outreach and with the cities, noting that some are simply not being diligent
enough with the cities and other jurisdictions.
Esayian agrees, adding that when builders try to entitle with only residential
volume in mind, they often get their hand slapped, and that even adding in some
token retail fronting the street can help them obtain approvals.
So what’s popular today for infill
communities? Doyle finds that small-lot,
single-family detached product can often yield the highest residual values,
although a lot depends on the allowable densities per city code. Even denser attached homes above 20 to the
acre are still attractive, although he adds that podium-style product is
difficult unless it’s along the coast or higher-priced areas such as West Los
Angeles.
From his experience, Esayian
suggests that builders take a second look at three-story detached homes
selectively, because they often “live far better than two-story designs; while
you have that extra staircase, you’ve got much more room to move around, and
the livability increases.” Even so, even
the best three-story plans perform well in certain urban submarkets, but less
so in more suburban ones. In addition,
he’s seeing a ‘proliferation of roof decks’ commanding premiums, but don’t put
them everywhere, as they’re often more appropriate for more contemporary
architecture.
As for non-residential infill uses,
Doyle points to The Anaheim Packing House, where developer Lab Holdings
repurposed a former 42,000-square-foot Sunkist facility dating from 1919 into a
wildly popular collection of more than 20 small restaurants under a single
roof.
Started by former fashion industry
executive Shaheen Sadeghi in 1991, Lab Holdings become famous for its
‘Anti-Mall’ redevelopment of an abandoned factory two years later, and has
become a favored partner with Orange County cities in need of creative solutions.
 |
| Anaheim Packing House |
Meanwhile, over in nearby Costa
Mesa, Esayian was instrumental in finding a joint venture partner for the
redevelopment of the former L.A. Times printing press site in Costa Mesa. To be
known as The Press, about 300,000 square feet of creative office space will be
repurposed and developed on a roomy 25-acre site along with amenities like
volleyball courts, grills and outdoor seating now popular even with law firms
as well as advertising agencies.
 |
| The Press |
Friday, July 22, 2016
Philadelphia Fed's Business Outlook Survey falls slightly in July
Manufacturing activity in the region
fell slightly in July, according to firms responding to this month’s
Manufacturing Business Outlook Survey. Although the indicator for current
general activity turned negative, indicators for new orders and shipments were
positive. The survey’s index of future activity improved slightly, and firms
expect growth in new orders and shipments over the next six months.
Leading Economic Index rebounded in June
The U.S. LEI picked up in June,
reversing its May decline. Improvements in initial claims
for unemployment insurance, building permits, and financial indicators were the
primary drivers. While the LEI continues to point to moderating economic growth
in the U.S. through the end of 2016, the expansion still appears resilient
enough to weather volatility in financial markets and a moderating outlook in
labor markets.
BuilderBytes' MetroIntelligence Economic Update for 7/22/16
In this issue of the MetroIntelligence Economic Update, I covered the following indicator
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- Existing home sales rose for the fourth straight month in June
- FHFA: Home prices up 0.2 percent in May and 5.6 percent year-on-year
- Mortgage applications dip 1.3 percent in latest survey
- Initial unemployment claims fall 1,000 in latest report
Thursday, July 21, 2016
BuilderBytes' MetroIntelligence Economic Update for 7/21/16
Please click here to see the edition of BuilderBytes for 7/21/16 on the Web.
In this issue of the MetroIntelligence Economic Update, we covered the following indicators:
- June building permits up 1.5 percent from May but down 13.6 percent year-on-year
- June housing starts up 4.8 percent from May but down 2.0 percent year-on-year
Wednesday, July 20, 2016
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Please join MetroIntelligence, Beacon Economics and UC Riverside for the 7th annual Inland Empire Economic Forecast Conference on September 29, 2016 in Riverside.
Use our special discount code to save $25 to register!
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Tuesday, July 19, 2016
What was the impact of Brexit on Britain's property market?
Now that American stock markets have more than regained the losses sustained after the pro-Brexit vote, another question remaining is the impact on the property market.
What’s in store for the property market post Brexit?
In the weeks leading up to the EU referendum, there was much
speculation about the potential impact of a leave vote. George Osborne, chancellor of the Exchequer and effectively the No. 2 official
in the British government, warned
that house prices could fall by as much as 18% by 2018 - a forecast branded as 'scaremongery' by leave campaigners. The International Monetary Fund also agreed
that Brexit would trigger sharp drops in house prices.
Now that the result is known and the dust has started to
settle, everyone is wondering how Britain leaving the Union will affect them.
The only thing that’s certain in the current climate is uncertainty.
Homeowners and Landlords
In the Bank of England’s bi-annual Financial Stability Report
released recently, economist and bank Governor Mark Carney warned that “conditions will be difficult” for
future mortgage borrowers due to the economic volatility in the past week.
For existing homeowners and landlords, the predicted drop in
house prices is worrying. Falling house prices and inflated interest rates
could cause fluctuation in loan to value ratios, resulting in negative equity.
Landlord insurance provider HomeLet reported in its most recent Rental Index that rents have continued to rise in the first half of
the year, although they have slightly slowed during the past last year in the wake of the UK
deciding to leave the EU.
The average rent (excluding Greater London) has risen
to £773 (US$1,031) per month, which is 3.5 per cent higher than last year, according to
the report. Average rent in London has risen to £1,575 (US$2101) per month, up 3.9 per
cent over the last year.
Housing crisis
One prediction made by the Leave Campaign was that the housing
crisis would be resolved by leaving the EU. This prediction was made on the
assumption that the demand for housing would be decreased by reduced
immigration. However, sharp drops in share prices caused by the leave vote may
mean that house builders will not be able to secure funding for new developments,
resulting in housing targets not being met. Berkeley and Barratt Developments both experienced a significant drop, followed by a slight rise, in share
prices.
Commercial property
June building permits up 1.5 percent from May but down 13.6 percent year-on-year
Privately-owned housing units authorized by building permits in June were at a seasonally adjusted annual rate of 1,153,000. This is 1.5
percent above the revised May rate of 1,136,000, but is 13.6 percent below the June 2015 estimate of 1,334,000.
READ MORE
June housing starts up 4.8 percent from May but down 2.0 percent year-on-year
Privately-owned housing starts in June were at a seasonally adjusted annual rate of 1,189,000. This is 4.8 percent above the
revised May estimate of 1,135,000, but is 2.0 percent below the June 2015 rate of 1,213,000.
READ MORE
BuilderBytes' MetroIntelligence Economic Update for 7/19/16
In this issue of the MetroIntelligence Economic Update, we covered the following indicators:
- Builder confidence dips one point to 59 in July
- CPI rose 0.2 percent in June and 1.0 percent over previous 12 months
- Retail sales up 0.6 percent in June and 2.7 percent year-on-year
- Consumer sentiment declines in mid-July after Brexit vote
Monday, July 18, 2016
Consumer sentiment declines in mid-July after Brexit vote
The early July decline in consumer sentiment was due to
increased concerns about prospects for the national economy that were mainly
voiced by high income households. Importantly, the least affected components
have been personal finances and buying plans.
Builder confidence dips one point to 59 in July
Builder confidence in the market for newly built,
single-family homes in July fell one point to 59 from a June reading of 60 The
components measuring current sales expectations and buyer traffic each fell one
point to 63 and 45, respectively. The index measuring sales expectations in the
next six months posted a three-point decline to 66.
Retail sales up 0.6 percent in June and 2.7 percent year-on-year
Retail sales rose 0.6 percent last month after gaining 0.2
percent in May. It was the third consecutive month of increases, and it lifted
sales 2.7 percent from a year ago.
CPI rose 0.2 percent in June and 1.0 percent over previous 12 months
The Consumer Price Index for All Urban Consumers (CPI-U)
increased 0.2 percent in June. Over the
last 12 months, the all items index rose 1.0 percent while the index minus food
and energy rose 2.3 percent.
Friday, July 15, 2016
BuilderBytes' MetroIntelligence Economic Update for 7/15/16
Please click here to see the edition of BuilderBytes for 7/15/16 on the Web.
In this issue of the MetroIntelligence Economic Update, I covered the following indicators:
- Producer Price Index rose 0.5 percent in June, up 0.3 percent over previous 12 months
- Federal Reserve Beige Book shows modest expansion from mid-May through late June
- Job openings slid nearly six percent in May
- Wholesale inventories rose just 0.1 percent in May as car dealers held off on new inventory
- Mortgage applications rise 7.2 percent in latest survey as rates dip further
- Initial unemployment claims largely unchanged in most recent report
Thursday, July 14, 2016
Initial unemployment claims largely unchanged in most recent report
In the week ending July 9,initial unemployment claims were
254,000, unchanged from the previous
week's unrevised level of 254,000. The 4-week moving average
was 259,000, a decrease of 5,750 from the previous week's unrevised average of 264,750.
Mortgage applications rise 7.2 percent in latest survey as rates dip further
The Market Composite Index increased 7.2 percent on a
seasonally adjusted basis from one week earlier, with purchase loans unchanged
but refinances up 11 percent. Last year,
the Fourth of July fell on the prior week. The average contract interest rate
for 30-year fixed-rate mortgages decreased to its lowest level since May 2013,
3.60 percent.
Federal Reserve Beige Book shows modest expansion from mid-May through late June
Reports from the twelve Federal Reserve Districts indicate
that economic activity continued to expand at a modest pace across most regions
from mid-May through the end of June.
Producer Price Index rose 0.5 percent in June, up 0.3 percent over previous 12 months
The Producer Price Index for final demand increased 0.5
percent in June. The final demand index advanced 0.3 percent for the 12 months
ended in June, the largest 12-month increase since moving up 0.9 percent in December
2014.
Wednesday, July 13, 2016
Mortgage applications rise 7.2 percent in latest survey as rates dip again
The Market Composite Index increased 7.2 percent on a
seasonally adjusted basis from one week earlier. The Refinance Index increased
11 percent from the previous week. The seasonally adjusted Purchase Index was
unchanged from one week earlier. Last year, the Fourth of July fell on the
prior week.
The average contract interest rate for conforming 30-year
fixed-rate mortgages decreased to its lowest level since May 2013, 3.60
percent, from 3.66 percent.
Tuesday, July 12, 2016
Job openings slid nearly six percent in May
Job openings slid to 5.5 million in May, the fewest since December and down nearly 6 percent from a record 5.8 million in April. Employers hired 5 million people in May, down slightly from April. The number of people quitting their jobs, which can reflect workers' confidence in their job prospects, also ticked down in May.
READ MORE
BuilderBytes' MetroIntelligence Economic Update for 7/12/16
Please click here to see the edition of BuilderBytes for 7/12/16 on the Web.
In this issue of the MetroIntelligence Economic Update, we covered the following indicators:
- Planned job cuts rose 28 percent in June but still 26 percent lower than the 12-month average
- Federal Reserve opts to leave interest rates steady in wake of Brexit vote
- Initial unemployment claims fell by 16,000 in latest report
- Mortgage applications rose 14.2 percent in latest survey as rates dip to lowest level since May 2013
- 287,000 jobs created in June as unemployment rate rebounded to 4.9 percent
- Consumer credit rose more than 6 percent in May due largely to more car loans
Friday, July 8, 2016
287,000 jobs created in June as unemployment rate rebounds to 4.9 percent
Some key takeaways:
- Total nonfarm payroll employment increased by 287,000 in June, and the unemployment rate rose to 4.9 percent. Job growth occurred in leisure and hospitality, health care and social assistance, and financial activities. Employment also increased in information, mostly reflecting of workers from a strike.
- Both the labor force participation rate, at 62.7 percent, and the employment-population ratio, at 59.6 percent, changed little in June.
- The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) decreased by 587,000 to 5.8 million in June, offsetting an increase in May.
- In June, 1.8 million persons were marginally attached to the labor force, about unchanged from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey
- Among the marginally attached, there were 502,000 discouraged workers in June, down by 151,000 from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.3 million persons marginally attached to the labor force in June had not searched for work for reasons such as school attendance or family responsibilities.
BuilderBytes' MetroIntelligence Economic Update for 7/8/16
Please click here to see the edition of BuilderBytes for 7/8/16 on the Web.
In this issue of the MetroIntelligence Economic Update, I covered the following indicators:
- ADP: Private sector jobs grew by 172,000 in June
- Planned job cuts rose 28 percent in June but still 26 percent lower than the 12-month average
- Federal Reserve opts to leave interest rates steady in wake of Brexit vote
- Initial unemployment claims fell by 16,000 in latest report
- Mortgage applications rose 14.2 percent in latest survey as rates dip to lowest level since May 2013
Thursday, July 7, 2016
Mortgage applications rose 14.2 percent in latest survey as rates dip to lowest level since May 2013
The Market Composite Index increased 14.2 percent from one
week earlier, with refinances up 21 percent and purchase loans rising by 4
percent. The average contract interest rate for 30-year fixed-rate mortgages
decreased to its lowest level since May 2013, 3.66 percent.
Initial unemployment claims fell by 16,000 in latest report
In the week ending July 2, initial unemployment claims were
254,000, a decrease of 16,000 from the previous week's revised level. The
4-week moving average was 264,750, a decrease of 2,500 from the previous week's
revised average.
Planned job cuts rose 28 percent in June but still 26 percent lower than the 12-month average
Job cut announcements were up 28 percent last month to
38,536, but they increased from the lowest total of the year to the second
lowest of the year. The June total is still 26 percent lower than the 53,049
monthly job cuts averaged over the past year.
ADP: Private sector jobs grew by 172,000 in June
Private-sector employment increased by 172,000 from May to June, on a seasonally adjusted basis. Job growth remains healthy except in the energy and trade-sensitive manufacturing sectors.
READ MORE
BuilderBytes' MetroIntelligence Economic Update for 7/7/16
Please click here to see the edition of BuilderBytes for 7/7/16 on the Web.
In this issue of the MetroIntelligence Economic Update, we covered the following indicators:
- Construction spending unexpectedly fell 0.8 percent in May
- Manufacturing sector index registered growth in May for fourth straight month
- Service sector economy index rebounded strongly in June
- Factory orders declined one percent in May, but order backlogs grew
- Corelogic HPI shows May home prices rose 5.9 percent year-on-year and 1.3 percent from April
Want to advertise in this three-times-per-week newsletter and reach over 130,000 readers? Contact the editor at nslevin@penpubinc.com.
Wednesday, July 6, 2016
Federal Reserve delays future interest rate hike due largely to Brexit fall-out
Federal Reserve officials, already worried about surprisingly weak U.S.
job growth, expressed concerns at their most recent meeting last month over the potential economic and financial market consequences of a British
vote to leave the European Union. Consequently, they decided on June 15 to hold their benchmark interest rate steady at between
0.25% and 0.5%.
They also said they wanted to see more data to determine if May's
low job growth of 38,000 was an exception or a sign of a more pronounced labor market
slowdown.
Factory orders declined one percent in May, but order backlogs grew
New orders for U.S. factory goods fell by one percent in May, but growing order backlogs and lean inventories suggested the worst of the manufacturing downturn was probably over.
READ MORE
Service sector economy index rebounded strongly in June
The NMI registered 56.5 percent in June, 3.6 percentage points higher than the May reading of 52.9 percent. Overall, the report reflects a strong rebound from the 'cooling-off' of the previous month for the non-manufacturing sector.
READ MORE
Tuesday, July 5, 2016
Corelogic HPI shows May home prices rose 5.9 percent year-on-year and 1.3 percent from April
Home prices nationwide, including distressed sales, increased year over year by 5.9 percent in May 2016 compared with May 2015 and increased month over month by 1.3 percent in May 2016 compared with April according to the Corelogic HPI.
READ MORE
Friday, July 1, 2016
BuilderBytes' MetroIntelligence Economic Update for 7/1/16
Please click here to see the edition of BuilderBytes for 7/1/16 on the Web.
In this issue of the MetroIntelligence Economic Update, I covered the following indicators:
- Pending home sales dipped in May year-on-year for the first time in almost two years
- Conference Board: Consumer confidence rebounds in June after May decline
- Personal income, consumer spending and prices all rose in May while savings rate dipped slightly
- Chicago PMI rose in June to highest level since January 2016
- Mortgage applications dip 2.6 percent even as rates edge down to lowest level since May 2013
- Initial unemployment claims rise 10,000 in latest report
Manufacturing sector index registered growth in May for fourth straight month
The June PMI registered 53.2 percent, an increase of 1.9 percentage points from the May reading of 51.3 percent. Manufacturing registered growth in June for the fourth consecutive month.
READ MORE
Construction spending unexpectedly fell 0.8 percent in May
Construction spending in the U.S. unexpectedly decreased in the month of May, falling 0.8 percent to an annual rate of $1.143 trillion.
READ MORE
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