When: June 6, 2012, 12:00 – 1:30

Where: Phoenix Airport Marriott Hotel
1101 N. 44th Street

Speaker and Panel Moderator: Ben Sage, Director Arizona Region
Panelists:
* Greg Bielli, Newland Communities
* Alan Jones, Lennar Homes
* Howard Weinstein, Pacific Land
* Mike Forsum, Starwood Land

Hosted by the Homebuilders Association of Central Arizona (HBACA), must be a member to attend. See www.hbaca.org to register or contact Ben Sage for more information at 602.793.0777 or bsage@metrostudy.com.

The presentation will be held on May 23, 2012 at the Brentwood Library at 8109 Concord Road, Brentwood, TN 37027.

The meeting is for current subscribing clients of Metrostudy, however you are welcome to contact Jason Brown (615-349-2190) with any questions or if you would like to attend.

This is not to say that everything is rainbows and unicorns.  My estimation is that we are about half-way through the forfeitures, assuming that the next recession will be mild compared to the last one.  The low number of bank REO compared to the number of non-performing loans seems to me a more favorable step in the right direction, if anything.

New jobs in Atlanta through March 2012 increased by 27,400 positions. “Forecasters are predicting net employment gains in Atlanta for 2012 above 30,000,” said Eugene James, director of Metrostudy’s Atlanta Region.

The Atlanta area saw a 38.4% increase in quarterly starts from last year and new home inventory has been depleted in various parts of Atlanta, down 21% year over year and down 83% from four years ago.

Housing inventory is down 16% in North Atlanta year over year, and South Atlanta’s inventory is down 33% year over year. “North Atlanta’s finished vacant housing units continue to decline to new lows (5.2 Months Supply in 1Q12 compared to 6.7 in 1Q11), while South Atlanta’s 6.2 Months Supply in 1Q12 is better than last year’s 7.6, but it’s still very high,” said James.

“Over a year ago, we said last quarter that despite record low mortgage rates, as long as employment numbers remain dreadful many potential homebuyers will remain fearful of buying a home until signs of a stronger economy emerge,” said James. “Now, positive employment figures should make the headlines soon which could boost confidence and help sell more houses in 2012.”

For information contact:
eugene james @ 404.370.9001 x 111
email ejames@metrostudy.com

About Metrostudy
Metrostudy is the leading provider of primary and secondary market information to the housing industry and related industries nationwide. In addition to providing its own primary housing data for approximately 70% of the United States housing market, the company is recognized for its consulting expertise regarding real estate development, marketing and economic issues, and is a key source of research studies evaluating the marketability of residential and commercial real estate projects. Services are offered through an extensive network of offices located in major metropolitan areas throughout the U.S. For more information, visit www.metrostudy.com.

1,458 new homes began construction in the Triangle in 1Q12, up 10.7% from 1Q11. Closings were also up. According to Metrostudy 1,395 new homes were closed pm in 1Q12, up 11.7% from 1Q11. “Closings continue to outpace new home starts, and thus inventory has continued to be reduced across the region,” said Jay Colvin, Director for Metrostudy’s Triangle Region.

Total inventory of homes in all stages of construction – Models, Under Construction, and Finished Vacant – was reduced to 4,053 homes on the ground as of 1Q12, or 8.6% lower than the same time a year ago. At the current closings pace, these units represent an 8.1-month supply of homes, which is the Triangle’s 13 year average. Finished Vacant homes are at a 13 year low with 1,795 homes on the ground. “The reduction in inventory is critical for buyers and sellers. Fewer homes available for purchase means prices are starting to stabilize, and in a few instances, this is enabling builders to increase the base asking price for new homes,” said Colvin.

“The majority of new homes under construction today, are pre-sold, meaning that homes are being built for a specific buyer who has already made the decision to buy that home. So the actual number of ‘for sale’ new homes is very low,” comments Colvin. “The sense of urgency created by lower supplies, and in some cases higher prices, is something that the housing market has been waiting a long time for, and is a really good sign that the market is getting back on solid footing.”

For information contact:
Jay Colvin @ 919.461.9618
jcolvin@metrostudy.com
Metrostudy Director Triangle Region

About Metrostudy
Metrostudy is the leading provider of primary and secondary market information to the housing industry and related industries nationwide. In addition to providing its own primary housing data collected by a staff of 650, the company is recognized for its consulting expertise on development, marketing and economic issues, and is a key source of research studies evaluating the marketability of residential and commercial real estate projects. Services are offered through an extensive network of offices located in major metropolitan areas throughout the U.S. For more information, visit www.metrostudy.com.

During the course of any day the average American drives 34 miles per day.  Most of those miles tend to be to and from work, getting around town, picking up the kids, etc.  I would be willing to bet that most of those same drivers don’t think twice about the lakes, rivers, creeks, or tributaries that wind near those same roads and places to which they are traveling.  Today however, if you were to ask residents of Nashville and the surrounding areas, I’d be willing to bet that they DO think about those waterways; especially those who lived here 2 years ago.

On the night of April 30th, 2010 I was attending a fundraiser for the Autism Society of Middle TN (ASMT) in downtown Nashville on 3^rd Avenue.  We were wrapping up the evening around 11:00 pm and it was just beginning to rain.  After clearing out the venue, one of the other volunteers helping clean up made the statement, “Boy we’re lucky, we just beat the rain!”  We wouldn’t fully understand the magnitude of that statement until 3 days later.

It started raining that Friday night and didn’t stop until late Sunday evening.  The storm dumped 17 inches of rain, 13 inches coming in a span of only 36 hours.  Total rainfall was the highest amount in more than 140 years of recorded history.  Areas in and around Nashville were devastated.  Metro Nashville Planning and Codes department estimates that private property damages exceeded $2 Billion.  More tragic was the loss of 11 lives.

You may be reading about this tragedy for the first time if you live outside of Nashville. Like many natural disasters it is very often the energy of the local community that rises to the occasion. Hands on Nashville, a local volunteer organization, was instrumental in organizing almost 30,000 volunteers who donated more than 375,000 hours to recover and rebuild Nashville.

Living through that experience has made a profound impact on many lives here in our city.  Some people lost their homes, some lost their belongings, and some people lost their business.  But all learned some valuable lessons.  Let’s talk about a few that pertain to the housing industry.

#1 – Flood Insurance

Most people don’t think they need it unless their mortgage requires it or they live in a flood prone area – False.  According to federal flood policy claims, history shows that 20 percent of the claims are in areas outside the 100-year flood zones.  Think about that fact as you are assessing your risk and your insurance policy.  Most residents around town had no idea that an area could flood – until it did.  People have taken notice and flood insurance policies are up 83% in Davidson County since 2010, but compared to the damages, even more policies probably should have been expected.  FEMA started a modernization of their flood maps in 2003, prior to that more than 50% of the maps across the country were more than 10 years old.  So, it is important to check your surroundings, you might not have been in a flood plain a few years ago and may be in one today.  FEMA doesn’t notify or require home owners to be notified when the maps are updated.   If you are looking into flood policies, the National Flood Insurance Program has a $250,000 limit for a structure and $100,000 for contents.  There are also policies for renters and businesses.  More information can be found at http://www.floodsmart.gov/floodsmart/

#2 – Zoning Requirements and Developments

Many municipalities are struggling with the dilemma of how to zone property in and near the flood plain.  Some, such as the City of Franklin in Williamson County, had issued zoning permits in areas deemed “flood fringe overlay” areas.  Existing businesses in the overlay areas were grandfathered in and after the floods have only been permitted to reopen a business similar to what was there before the flood.  That decision has made it difficult for most of them to reopen and only a few have chosen to do so.  The city is working on a solution that will provide a framework for development and an awareness of the river according to local officials.  Realizing how a City has handled zoning in the past will help understand how they might handle your development in the future.  Look at their past, both the positives and negatives and it will provide insight for both parties.

#3 – Adapting and Being Prepared for anything

It is easy after the fact to look at the damage caused by the floods and think that you would be prepared for such an event.  But are you really prepared?  Whether you are a homeowner, developer, builder, or someone just driving down the road, are you prepared for the next flood?  Maybe it’s not a flood next time, maybe it is a fire, and maybe it is something else entirely.  We can’t be prepared for everything, but the point here is to think outside of the box more often.   I know when I drive in other cities I now think about those rivers and creeks in the distance behind the trees and I wonder how far their reach is.  Are you thinking outside the box in your business, in your life?

The flood of 2010 wasn’t the first and it won’t be the last.  It is a moment that we need to remember and learn from; much like the recent recession and housing market collapse.  There will be another flood and there will be another recession.  In between, it is important to utilize the information at hand to make sound decisions and be prepared for future events.  Even in the midst of pursuing your opportunities, always review your risks…good, accurate information is no different than good insurance.

There are about 16,000 units coming to market over the next 2 years, but that won’t be enough to take the pressure off rising occupancies and rents.  So look for it to get more expensive to live in an apartment.  Is that inflation?

Renters are beginning to leave apartments in favor of home ownership, but with Houston’s job growth apartment owners and operators are filling their units as soon as they leave.

It’s just like when builders sold too many homes with sub-prime mortgages with $0 down payments and no qualifying.  Today, we’re renting too many apartments.  It’s already less expensive to own the median priced Houston home rather than rent a house or Class-A apartment.  And soon even Class-B apartment renters will be paying a premium to rent.

At some point this bubble will burst and the housing market will return to a more normal mix of home buyers and renters.  Renters will realize if they don’t begin paying off a mortgage they’ll never have an inexpensive place to live.

Denver’s current employment estimates indicate that employers have added a whopping 33,700 jobs to their payrolls in the last 12 months. “There are signs of life in the industry this year as new home and apartment permits are reaching their highest levels since the recession began,” said John Covert, director of Metrostudy’s Colorado division. “While renewed optimism is somewhat warranted, the cold reality is permit levels are still far below the peak as well as historical norms.”

A total of 1,049 homes were started in 1Q12, up 44% from last quarter, and up 28% from 1Q11 when 819 homes were started. Builders started 3,795 homes in the last twelve months, a 5% increase from the 3,585 annual starts in 1Q11. Builders closed 1,028 units in 1Q12, an increase of 6% from the 967 closings in 1Q11. “Metrostudy expects that 2011 will be the low point for move-ins or closings and that by the end of the year starts and closings figures will be very close to one another,” said Covert.

At the end of March, there were 4,029 new homes in inventory, down 13% from a year ago and up slightly .6% from last quarter. Of that total, 1,923 are single family detached units that are either under construction, finished and vacant or decorated models. “There is a strong indication that the inventory levels have stabilized, and that builders are meeting current levels of demand,” said Covert.

“Aside from housing demand that remains low and is well under historical norms, most other economic and housing indicators appear to be springing to life. At the top of the list are the numbers of jobs added to payrolls locally this past year. Nothing else will cure the ills of consumer confidence and home buying sentiment than strong job creation,” said Covert. “The resale market is running a close second as tightening inventory is quickly shifting leverage from buyers to sellers, which will help to further stabilize prices in Denver. It’s hard not to be optimistic about the future after what the industry has just come through. However, the most successful companies will have developed a keen sense of risk awareness moving forward which will serve them well during periods of growth,” said Covert.

For information contact:
john covert @ 720.493.2020 x 201
email jcovert@metrostudy.com

About Metrostudy
Metrostudy is the leading provider of primary and secondary market information to the housing industry and related industries nationwide. In addition to providing its own primary housing data collected by a staff of 650, the company is recognized for its consulting expertise on development, marketing and economic issues, and is a key source of research studies evaluating the marketability of residential and commercial real estate projects. Services are offered through an extensive network of offices located in major metropolitan areas throughout the U.S. For more information, visit www.metrostudy.com.

According to the New Mexico Department of Labor, employers shed 100 jobs in the last twelve months as of February. This is certainly a marked improvement over the past 4 years with nearly 30,000 jobs removed from payrolls. “The worst of the layoffs appear to be in the past, but businesses across all sectors have yet to find the confidence to begin hiring again,” said John Covert, Director of Metrostudy’s Colorado division.

303 homes were started in 1Q12, up +38% from 4Q11, and up +29% from 1Q11. Builders closed 285 units in 1Q12, an increase of +12% from last quarter. There were 1,267 annual closings in 1Q12. “As Metrostudy has stated in the past, we believe 2011 will be the low-point for starts as builder inventory remains in check, resale listings continue to fall and pent-up demand for homes will slowly be released as the economy begins to improve,” said Covert.

“While the actual number of finished and vacant units has declined from a year ago, move-ins, or closings are at their lowest levels of this cycle pushing months of supply higher in all price points except the lowest and highest,” said Covert. “Albuquerque builders will have to remain patient a while longer until consumer confidence gets a boost from stabilizing home prices, sustained job creation, and lower unemployment, any combination of which would eventually translate to demand picking up for new homes,” said Covert.

For information contact:
john covert @ 720.493.2020 x 201
email jcovert@metrostudy.com

About Metrostudy
Metrostudy is the leading provider of primary and secondary market information to the housing industry and related industries nationwide. In addition to providing its own primary housing data for approximately 70% of the United States housing market, the company is recognized for its consulting expertise regarding real estate development, marketing and economic issues, and is a key source of research studies evaluating the marketability of residential and commercial real estate projects. Services are offered through an extensive network of offices located in major metropolitan areas throughout the U.S. For more information, visit www.metrostudy.com.

Of course, strong per-project sales paces are wonderful as long as there are a lot of projects open. What we have in South Florida is a classic case of haves and have-nots. The ‘haves’ are doing well for all the right reasons (smart marketing, good location, good builder reputation), but also because there aren’t many new-home competitors to take away sales.

The bad-news side of this story is that total market volume is low. Said another way, there isn’t much depth to the market right now. Job growth is positive again, which helps, but it should be a lot stronger for this stage of a recovery, and it needs to strengthen in order to create a market with deep demand.

Total volume is increasing (up 26% over the past year, and up 7% just in the last three months), but even with these large percentage increases, the total volume is a fifth or less of what it was back in 1999-2001, before the boom began. Now, to be fair, part of that is because there isn’t enough land. Starts will never be able to return to the old levels; we had a lot more land in play in the tri-county area in those days.

It is nevertheless encouraging to see builders all over the market raising prices on a regular basis, and to see finished inventories at low levels again.

The question on every builder’s mind should be: how can I become one of the ‘haves’? The secret sauce seems always to contain the following ingredients: strong brand reputation, solid market research, desireable location, solid market research, good pricing/positioning, solid market research, differentiated product, and … yes, you guessed it, solid market research.

Happy hunting!