{"id":712,"date":"2015-03-05T09:51:12","date_gmt":"2015-03-05T09:51:12","guid":{"rendered":"http:\/\/team.simplyfreedom.ws\/?p=712"},"modified":"2016-05-05T07:54:50","modified_gmt":"2016-05-05T07:54:50","slug":"zillow-new-homes-have-plenty-of-runway-in-2015","status":"publish","type":"post","link":"http:\/\/team.simplyfreedom.ws\/index.php\/zillow-new-homes-have-plenty-of-runway-in-2015\/","title":{"rendered":"Zillow – new homes have \u2018plenty of runway\u2019 in 2015"},"content":{"rendered":"

Published on: Mar 5, 2015 @ 09:51<\/b><\/span> am<\/p>\n

A proliferation of data and new data analysis methods
\nare changing the way builders buy, sell and develop
\nvacant land, according to experts, and builders are<\/h3>\n

cautiously optimistic that easier credit and more
\nflexibility will help the new homes market rebound in
\n2015. Several groups of real estate experts,
\nexecutives of large residential builders and land
\nadvisors spoke this week at a building and building
\nproducts symposium held at Barclay\u2019s New York City
\nheadquarters. The state of the land market \u2013 a key
\nfactor in determining what kinds of housing gets built,
\nwhere and at what price \u2013 was a common theme throughout
\nthe various discussions. \u201cThe real opportunity of land
\ngoes beyond the land itself,\u201d said Steve Benson, CEO of
\nPhoenix-based land-banking and advisory firm Community
\nDevelopment Capital Group. \u201cBuilders are looking at
\nland as much more than a piece of dirt now.\u201d
\nLandowners and buyers alike are using multiple data
\nsources to examine what is being built in other areas,
\nwhich designs work best for certain parcels and which
\nbuilders are best suited to maximize certain features
\nof a given piece of land, Benson said. Rather than
\nplowing ahead and building a certain set of homes on a
\ngiven piece of land, developers today may be more apt
\nto sell their land to a different type of developer
\nrather than undergo a project themselves, or choose to
\nbuild a different type of home than they normally
\nwould, based on data. \u201cReal estate has always been
\nabout location, location, location,\u201d Benson said. \u201cBut
\nwith land especially, it\u2019s future location, future
\nlocation, future location. Today, data helps inform
\nthat equation for builders much more than in the past.\u201d<\/p>\n

High land costs, and perhaps unrealistic value
\nassessments by landowners, are a big reason why
\ndevelopers are having difficulty developing more
\nentry-level, lower-cost communities and homes, said
\nGreg Vogel, CEO and founder of Land Advisors
\nOrganization, a Scottsdale, Ariz.-based land brokerage.
\nDevelopable tracts of land appreciated very quickly in
\nvalue during 2012 and 2013 in anticipation of a
\nbuilding boom in 2014 that largely has yet to
\nmaterialize, Vogel said, calling 2014 \u201ca dud\u201d compared
\nto expectations for new development. But strong recent
\nyears have convinced today\u2019s landowners \u2013 tomorrow\u2019s
\nland sellers \u2013 that their land may be worth more than
\nit is. \u201c[Land] sellers are very sticky on the up,\u201d
\nVogel said, in reference to land price appreciation.
\n\u201cWe\u2019ll offer a price, and they\u2019ll tell us, \u2018See you
\nnext year.\u2019\u201d As a result, builders are increasingly
\nforced to put higher-priced homes on the developable
\nlots they do control, in order to recoup their higher
\nland-acquisition costs. This will create challenges for
\nlarger builders looking to cater to lower-end and
\nfirst-time buyers, who are expected to enter the market
\nin higher numbers in coming years as younger buyers, in
\nparticular, get married and start families. Most
\nobservers agreed that it\u2019s just a question of time
\nuntil we see millennial demand pick up. \u201cIf the
\nentry-level buyer does come back, I\u2019m not sure there
\nwill be a lot of opportunities to develop those kinds
\nof communities right away,\u201d Vogel said.<\/p>\n

Price Vs. Pace Vs. Margin<\/h2>\n

Beyond the kinds of large, multi-acre tracts on the
\nedge of cities and towns favored by big, publicly
\ntraded homebuilding companies, smaller in-fill lots
\nlocated in downtowns and established communities also
\nrepresent opportunities for builders, particularly
\nsmaller, private developers. Private developers can
\nbuild higher-density projects with a smaller overall
\nnumber of units on infill sites, Vogel said, though
\nthese homes cannot compete on price with those built by
\nlarger firms. But what they lack in price strength,
\nthese developments can make up for in design
\nflexibility. \u201cPrivate firms excel at being able to
\nsimply hire an architect and ask, \u2018What can you do with
\nthis site?\u2019\u201d Vogel said. \u201cAnd with those kinds of
\nprojects, they don\u2019t have to worry about competing with
\nthe bigger builder down the street or on the other side
\nof town.\u201d In recent years, data indicate that builders
\nseem content to trade high sales volumes in exchange
\nfor lower volumes, but higher sales prices. Vogel said
\nthe way to get higher sales volume is simply to have
\nmore speculatively built homes completed and available
\nfor sale in the first place. \u201cIf you have a house
\nready to go, you\u2019ll get a higher pace of sales,\u201d Vogel
\nsaid. But the key question builders ask is not monthly
\nsales pace versus final sales prices, Benson said, but
\ninstead is sales price versus profit margin at a given
\npace. If a builder is selling three homes per month,
\nthen that builder knows that overhead costs will total
\na certain amount at that pace. If they wanted to adjust
\nthe pace of sales to six homes per month, they need to
\nadjust their overhead costs and maximize their
\nefficiencies accordingly, which many may be unwilling
\nto do if they\u2019re comfortable at a given margin.<\/p>\n

\u201cPlenty of Runway\u201d<\/h3>\n

In order to begin building more homes, the one thing
\nbuilders would like to see more than anything else \u2013
\nmore than lower land costs and higher wages among
\nbuyers \u2013 is simply more economic confidence among
\npotential buyers, said John Burns, CEO of John Burns
\nReal Estate Consulting. According to a recent Burns
\nsurvey, roughly one-third of builders said more
\nconfidence topped their 2015 wish list. That bodes
\nwell for 2015 and beyond, as recent Zillow research
\nindicates housing confidence, in particular, is on its
\nway up, especially among younger renters who may be
\nlooking to buy in the next few years. But not all
\ndemand for new homes is expected to come from younger,
\nentry-level and first-time homebuyers in coming months
\nand years. Douglas Yearley, CEO of Pennsylvania-based
\nresidential construction firm Toll Brothers, said there
\nare plenty of existing homeowners looking to move up
\ninto a larger or nicer home. The typical home built by
\nToll Brothers sells for roughly $700,000, Yearley said,
\ncertainly on the higher end of the price spectrum but
\nnot outrageously so. \u201cThere\u2019s plenty of runway left in
\nwhat we do,\u201d Yearley said. Builders were also hopeful
\nthat slowly easing access to mortgage credit would
\nconvince more would-be buyers to enter the market.
\nSteve Hilton, CEO of Scottsdale-based homebuilder
\nMeritage Homes Corp., said there is currently more
\ndemand for new homes than his company is able to
\nqualify, an indication that if credit conditions were
\nlooser more homes could be sold. Hilton also indicated
\nthere could be a kind of chicken or egg problem
\npreventing the credit market from easing further, as
\nborrowers with lower credit sometimes don\u2019t apply in
\nthe first place. \u201cThere\u2019s a kind of perception gap
\nwe\u2019re seeing,\u201d Hilton said. \u201cWe see a lot of people
\nwith a 680 credit score, which is historically pretty
\ngood, thinking that they can\u2019t get a loan. So they
\ndon\u2019t apply in the first place. There\u2019s a lot of good
\nloans out there that aren\u2019t getting made.\u201d<\/p>\n

US consumer spending falls, inflation pressures muted<\/h2>\n

US consumer spending fell for a second straight month
\nin January, likely as lower gasoline prices continued
\nto weigh on receipts at service stations. The Commerce
\nDepartment said on Monday consumer spending slipped
\n0.2% after falling 0.3% in December. Economists polled
\nby Reuters had forecast consumer spending, which
\naccounts for more than two-thirds of US economic
\nactivity, dipping 0.1% in January. When adjusted for
\ninflation, consumer spending increased 0.3% after
\nDecember’s 0.1% dip. Income increased 0.3% after a
\nsimilar rise in December. Income at the disposal of
\nhouseholds after accounting for inflation advanced
\n0.9%, the largest increase since December 2012. The
\nsaving rate increased to 5.5%, the highest since
\nDecember 2012. Lower gasoline prices continued to put
\ndownward pressure on inflation, with key consumer price
\ngauges slipping further below the Federal Reserve’s 2%
\ntarget. A price index for consumer spending braked to
\nshow a 0.2% rise in the 12 months through January, the
\nweakest reading since October 2009. The personal
\nconsumption expenditures (PCE) price index had
\nincreased 0.8% in December. Excluding food and energy,
\nthe so-called core PCE price index increased 1.3% in
\nthe 12 months through January.<\/p>\n

Urban Institute: the renter next door<\/h3>\n

An unexpected side effect of the mortgage crisis has
\nbeen the replacement in many neighborhoods of
\nsingle-family homeowners with renters. An article from
\nthe Urban Institute, took a closer look at the 14.2
\nmillion single-family rental units in the US and found
\nthat renters are living in smaller, older and slightly
\nless suburban homes than homeowners, and are poorer,
\nmore racially and ethnically diverse and younger than
\nhomeowners. From 2007 on in the aftermath of the
\nmortgage crisis, investors (mostly small) bought many
\nof the 7.5 million owner-occupied homes that were in
\nforeclosure or had experienced a short sale, and
\nconverted them to rental properties. The result was a
\nhuge increase in the number of occupied single-family
\nrental properties in the aftermath of the crisis, from
\n10.5 million units in 2005 to 14.2 million in 2013, a
\n35% increase, according to the American Housing Survey.
\nRental units comprised 61% of the 6.1 million unit net
\nincrease in single-family housing stock from 2005 to
\n2013, with the remainder split between vacant
\nsingle-family units (21%) and owner-occupied
\nsingle-family units (17%).<\/p>\n

US 4Q economic growth rate revised lower<\/h2>\n

US economic growth braked more sharply than initially
\nthought in the fourth quarter amid a slow pace of stock
\naccumulation by businesses and a wider trade deficit,
\nbut the underlying fundamentals remained solid. Gross
\ndomestic product expanded at a 2.2% annual pace,
\nrevised down from the 2.6% pace estimated last month,
\nthe Commerce Department said on Friday. The economy
\ngrew at a 5% rate in the third quarter. The
\nfourth-quarter revision was generally in line with
\nexpectations. With both business and consumer spending
\nexpanding in the fourth quarter, growth in final sales
\nto domestic purchasers was revised to a 3.2% pace from
\nthe previous 2.8% rate. Businesses accumulated $88.4
\nbillion worth of inventory in the fourth quarter, far
\nless than the $113.1 billion the government had
\nestimated last month. That resulted in the GDP growth
\ncontribution from inventories being revised down to
\none-tenth of a percentage point from 0.8 percentage
\npoint previously. Residential construction spending
\nwas revised down, while government spending was not as
\nweak in the fourth quarter as previously reported.<\/p>\n","protected":false},"excerpt":{"rendered":"

Published on: Mar 5, 2015 @ 09:51 am A proliferation of data and new data analysis methods are changing the way builders buy, sell and develop vacant land, according to experts, and builders are cautiously optimistic that easier credit and more flexibility will help the new homes market rebound in 2015. Several groups of real […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[39],"tags":[119,120,122,121,40,124,123,61],"_links":{"self":[{"href":"http:\/\/team.simplyfreedom.ws\/index.php\/wp-json\/wp\/v2\/posts\/712"}],"collection":[{"href":"http:\/\/team.simplyfreedom.ws\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/team.simplyfreedom.ws\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/team.simplyfreedom.ws\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/team.simplyfreedom.ws\/index.php\/wp-json\/wp\/v2\/comments?post=712"}],"version-history":[{"count":2,"href":"http:\/\/team.simplyfreedom.ws\/index.php\/wp-json\/wp\/v2\/posts\/712\/revisions"}],"predecessor-version":[{"id":802,"href":"http:\/\/team.simplyfreedom.ws\/index.php\/wp-json\/wp\/v2\/posts\/712\/revisions\/802"}],"wp:attachment":[{"href":"http:\/\/team.simplyfreedom.ws\/index.php\/wp-json\/wp\/v2\/media?parent=712"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/team.simplyfreedom.ws\/index.php\/wp-json\/wp\/v2\/categories?post=712"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/team.simplyfreedom.ws\/index.php\/wp-json\/wp\/v2\/tags?post=712"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}