The Housing Chronicles Blog

The future of new housing is -- foggy?

2009-11-23T13:45:00.000-08:00

It seems that one of the most important lessons that the country’s builders learned from the past downturns was to immediately react when the market turned with generous incentives, price cuts and, over time, a dramatically scaled-down industry with simplified product lines that are now affordable to almost 60% of potential buyers.

As of September 2009, this slash-and-burn strategy has sent new home inventory down to its lowest level in 14 years, which would sell in just 7.5 months. And in spite of brutal competition from the existing home market – in which 30% of sales are for distressed properties – new home prices seem to have stabilized at just under $205,000, although that could be the result of buyers taking advantage of tax credits that were recently extended until April of 2010.

Since the U.S. population and related demand for housing continues to increase no matter the economic climate, when the economy improves and people decide they no longer want to live with roommates or their parents, it is clear that a dormant industry will be revived, as we’ll need 1.3 million housing units each year just to keep up.

What’s not so clear is how fast this rebound will occur and, more importantly, how future new home communities will be shaped, marketed and sold.

Over the past 30+ years, most of the new homebuilding activity was to follow the demands and tastes of the 78-million-strong Baby Boomer generation, from starter homes and move-up housing to vacation homes, retirement communities and even condominiums in urban locations.

But according to a series of presentations at the ULI Fall Conference & Urban Expo last month in San Francisco, demographic changes in the U.S. will force many builders and developers to change how they build for a population that is getting increasingly grayer (older) and browner (more diversified).

In addition, the 70-million-strong Generation Y, having largely grown up in quiet suburbs requiring cars to run simple errands, have morphed into a gadget-obsessed cohort whose penchant for urban-oriented, walkable communities and cynicism for traditional marketing techniques will require an entirely new skill set from an industry that has long relied on precedent in the hopes that each new rebound will be much like the last.

Maybe not this time.

For one thing, according to Reach Advisors, overly rosy demographic projections of the past were used to justify multiple years of over-supply for empty-nester projects in urban areas (especially high-rise condos), vacation homes and traditional retirement communities at a time when many Baby Boomers prefer to age in place.

Moreover, even if they want to trade down to a smaller home in an active adult community, today’s over-55 homeowners are sitting on a huge supply of large homes in suburban areas against a backdrop of potential buyers that’s not just smaller, but less interested in this type of car-centric community. When many Gen-X buyers do trade up, they’re placing an economic priority on community characteristics (such as a mix of uses and population and access to transit options) rather than a large home with a premium lot.

But it’s really the Generation Y cohort – with three times the population of Generation X -- that will foster in the biggest changes to the building industry as these ‘echo boomers’ began to enter the workforce, create their own households and bring their own, separate demands to builders of homes and apartments.

For one thing, the gender gap that existed just a generation ago – in which men earned more college degrees and more money for the same job – has almost completed a polar shift, giving many women control of the household finances and home-buying decisions.

In addition, accompanying more education for Gen-Y households has been a delay in marriage and having children, thus changing both the timing and type of demand for housing needs. Most importantly, however, with today’s Gen Y woman being more fiscally conservative than her male counterpart, builders will have to change how they merchandise and model their product to appeal to this new reality.

Fortunately, there’s another reality that will allow the industry to adapt to these echo boomers: this shift will not be seen in weeks or months, but years and even decades.

L.A./Ventura Update & Forecast

2009-11-22T09:35:00.000-08:00

According to the latest data from Hanley Wood (and included in my presentation at the BIS '09 "Town Square", which you can find here), new home sales in the L.A/Ventura region are definitely seeming to stabilize, rising by 1.3% between Jan-Sep 2008 and the same period of 2009. For September alone, net sales rose by nearly 19% over the same time of 2008, although that bump could also be due to buyers trying to nab tax credits they thought were expiring at the end of November.

Buyers today are also more serious, as evidenced by the sharp drop in cancellation rates to the low double digits versus 26% in Sep. of 2008 and just 9% for the first 9 months of 2009.

Overall new home prices continue to drop, with a median of $421,000 in Sep. 2009, or $332 per square foot. For single-family homes alone, however, prices actually rose by 15% to $614,000 during Sept. 2009, although YTD they're still down by nearly 11% to the low $400,000s.

Although total new home inventory -- those units currently available for sale as well as those planned in future phases -- would still take 3 years to absorb at current sales rates, completed inventory, although rising by 18% over the past year, stands at just 6.51 months, which is very close to market equilibrium.

For more information on current conditions for other counties of Southern California, click here for the entire presentation. A summary table is included below:

Category	9/09	% YOY	2009 YTD	% YOY
Net Sales	282	18.5%	3,362	1.3%
Absorption	1.44	46.3%	1.77	22.4%
Can. Rate	11.3%	D-26.1%	9.0%	D-20.9%
Median Price	$421k	-6.8%	$420k	-10.7%
SFD Price	$614k	14.9%	$423k	-10.7%
Median $/SF	$332	22.8%	$320	11.9%
SFD $/SF	$234	12.2%	$178	-12.4%
Inventory	10,212	-20%	-	-
Months Inv.	36.21	D-53.60	-	-
Standing Inv.	1,836	17.8%	-	-
Months SI	6.51	D-6.55	-	-

Looking ahead to 2010 and according to the LAEDC, although population in L.A. County will continue to increase given its enormous base, the employment picture is a bit different. During 2009 the county will lose 4.1% of its non-farm jobs base, and although the pain will continue in 2010, it will be half as bad, or 2.0%. This, of course, will continue to be a drag on housing demand until at least 2012 as the unemployment rate rises to approach 13% in 2010.

Inflation, which is now under control due to temporary deflationary influences in the marketplace, will re-emerge to 1.6% in 2010 but certainly be kept under control by stagnant demand for all but the necessities of life.

Housing permits are estimated to total 6,465 units in 2009 and rise slightly to 6,855 in 2010, but the commercial sector will be under great pressure, with non-residential permits falling below $2.4 billion.

According to projections I just completed for Hanley Wood's latest LA/Ventura Market Monitor, annual new home sales will total 4,000 units in 2009 and rise by about 15% in 2010 to 4,500 homes. Prices, which seem to have bottomed out this year, will end at $420,000 and rise by 5% next year to $440,000. See table below for summaries on these forecasts, and for the complete presentation, click here.

Category	2009	2010
Population	0.8%	0.7%
Non-Farm Employment	3,902m	3,823m
Annual Change NFE	-4.1%	-2.0%
Unemployment Rate	11.7%	12.8%
Personal Income	-1.6%	1.0%
CPI Change	-0.7%	1.6%
Housing Permits	6,465	6,855
Non-Res. Permits	$2,470m	$2,370m
Ann. New Home Sales	4,000	4,600
New SF Home Price	$420k	$440k

November column for "Builder & Developer" magazine now online

2009-11-20T16:47:00.000-08:00

My column for the November issue of Builder & Developer magazine -- celebrating the 20th anniversary of the title -- is now online. In this issue, I wanted to explore how the future of how we use cars will impact new developments of all types. An excerpt:

Ask any architect of a high-density development what the biggest challenge is to make the overall design work, and he (or she) will probably answer “parking.” Whether we’re talking about condominiums, apartments or a project which mixes residential with retail and office uses, poorly designed parking can doom an entire project.

What’s more, given the rise of transit-oriented developments in other infill projects in multiple cities throughout the U.S., introducing new ways to address the parking conundrum is becoming one of the most important issues in the Green building movement... Fortunately, there are three major trends that will vastly improve not only how developers address parking, but can also increase building densities – and therefore potential revenues...

There are also a number of other columns for this special issue of the magazine, discussing a variety of green issues as well as looking back on the last 20 years. For a table of contents on these articles, click here.

Design-Plan-Build Presentation now online

2009-11-20T15:48:00.000-08:00

Along with KTGY's Damian Taitano and Simmetec USA's Bill Larson, the "Design-Plan-Build" session at the BIS '09 show in Long Beach went very well. If you missed it, you can still find a copy of my presentation on current trends -- along with best-selling projects in various counties of Southern California -- here.

Commercial REOs and CRE 2010 forecast

2009-11-20T15:45:00.000-08:00

We had a great turn-out this morning for the BIS '09 session on Residential, Commercial and REO Forecasts. But fear not -- if you missed my presentation on what lies ahead for national commercial markets, you can still find it here.

Southern California housing update & economic forecast

2009-11-20T15:38:00.000-08:00

If you missed my presentation for the Town Square at the 2009 Building Industry Show in Long Beach, you can find it here.

The mantra at ULI this week: prepare for major change

2009-11-06T10:10:00.000-08:00

I'll blog about this in more detail next week, but the major trend at this year's ULI Fall Meeting & Urban Expo is about preparing for change. We're not talking about minor changes in terms of architecture or product mix -- we're talking about significant changes due to demographic shifts in the U.S. population between now and 2050. Besides getting older, the U.S. will also get browner, as the birth rates for the Caucasian population is not high enough to replace itself.

There have been some very interesting sessions this week, into which I hope to delve into more closely next week.

The reports of California's death have been greatly exaggerated

2009-10-28T10:41:00.000-07:00

Given the recent spate of articles which (again) are predicting the demise of California, Time magazine has a pretty impressive counter-attack in the Nov. 2nd issue. From the article:

Ignore the California whinery. It's still a dream state. In fact, the pioneering megastate that gave us microchips, freeways, blue jeans, tax revolts, extreme sports, energy efficiency, health clubs, Google searches, Craigslist, iPhones and the Hollywood vision of success is still the cutting edge of the American future — economically, environmentally, demographically, culturally and maybe politically.

It's the greenest and most diverse state, the most globalized in general and most Asia-oriented in particular at a time when the world is heading in all those directions. It's also an unparalleled engine of innovation, the mecca of high tech, biotech and now clean tech.

In 2008, California's wipeout economy attracted more venture capital than the rest of the nation combined. Somehow its supposedly hostile business climate has nurtured Google, Apple, Hewlett-Packard, Facebook, Twitter, Disney, Cisco, Intel, eBay, YouTube, MySpace, the Gap and countless other companies that drive the way we live...

Take that, The Guardian! Read the entire article here.

Southern California Building Industry Show coming up

2009-10-19T18:46:00.001-07:00

Today in the mail I received the brochure for the 2009 edition of the "Building Industry Show" produced by the Building Industry Association of Southern California. It will be held on November 19th and 20th (with some pre-show activities on the 18th) at the Long Beach Convention Center.

There are some new features at this year's show, including the following:

Town Square - a new venue, right on the show floor, boasting its own line-up of education, networking and business prospects. I will be speaking at the Town Square as well as moderating the panel "Design-Plan-Build" on Thursday, November 19th from 1:30-3pm.

BIS Roundtable - engage in lively conversations that are relevant to your business, share ideas and brainstorm solutions to today's most pressing issues; topics include building, development/high density, green, land acquisition/finance, sales & marketing/social media.

"REO Expo" - BIS has partnered with REOMAC and other REO-related groups to offer a "show within a show" to create new partnerships, collaborate with those working in the REO market, and to diversify existing businesses. Also included in the show will be an REO track of educational seminars.

I will be speaking on Friday, November 20th from 9-10:30am on "Residential, Commercial & REO Forecasts."

Regional Realtor Palooza - a one-stop co-op where builders and real estate agents can network to sell homes including co-op programs, builder financing & incentives and selling standing inventory (Friday 8-9am).

REO Property Auction - the first live auction BIS has ever held on the show floor of foreclosed homes for those looking to invest (Thursday and Friday from 4-6pm).

Center Stage - sponsored by Wells Fargo Home Mortgage, real estate coach Mike Ferry will discuss how new home agents and co-op brokers can work together. In addition, a series of workshops and networking events will be offered.

For more information and to register, visit www.buildingindustry show.com. See you there!

How reduced mobility is reshaping communities

2009-10-19T18:17:00.000-07:00

Joel Kotkin, urban scholar and a presidential fellow in urban futures at Chapman University, has written an interesting article in the current issue of Newsweek. In "There's No Place Like Home," Kotkin argues that a generational shift from Americans regularly moving in order to take advantage of job opportunities is giving way to a new settledness.

Given that by 2015 more people will be tethered electronically and working from home than taking mass transit, this shift could be good for families, communities and the environment. Having had established a pretty decent home office in 2000 even when I had other offices in which to work, the extra time allowed me to establish this blog and has had a marked impact on my (reduced) stress levels. So could that be a trend? From the article:

As recently as the 1970s as many as one in five people moved annually; by 2006, long before the current recession took hold, that number was 14 percent, the lowest rate since the census starting following movement in 1940. Since then tougher times have accelerated these trends, in large part because opportunities to sell houses and find new employment have dried up. In 2008, the total number of people changing residences was less than those who did so in 1962, when the country had 120 million fewer people. The stay-at-home trend appears particularly strong among aging boomers, who are largely eschewing Sunbelt retirement condos to stay tethered to their suburban homes—close to family, friends, clubs, churches, and familiar surroundings...

Our less mobile nature is already reshaping the corporate world. The kind of corporate nomadism described in Peter Kilborn's recent book, Next Stop, Reloville: Life Inside America’s Rootless Professional Class, in which families relocate every couple of years so the breadwinner can reach the next rung on the managerial ladder, will become less common in years ahead. A smaller cadre of corporate executives may still move from place to place, but surveys reveal many executives are now unwilling to move even for a good promotion. Why? Family and technology are two key factors working against nomadism, in the workplace and elsewhere.

Family, as one Pew researcher notes, "trumps money when people make decisions about where to live." Interdependence is replacing independence. More parents are helping their children financially well into their 30s and 40s; the numbers of "boomerang kids" moving back home with their parents, has also been growing as job options and the ability to buy houses has decreased for the young. Recent surveys of the emerging millennial generation suggest this family-centric focus will last well into the coming decades...

In the San Francisco Bay Area and Los Angeles, almost one in 10 workers is a part-time telecommuter. Some studies indicate that more than one quarter of the U.S. workforce could eventually participate in this new work pattern. Even IBM, whose initials were once jokingly said to stand for "I've Been Moved," has changed its approach. Roughly 40 percent of the company's workers now labor at home or remotely from a client's location.

These home-based workers become critical to the localist economy. They will eat in local restaurants, attend fairs and festivals, take their kids to soccer practices, ballet lessons, or religious youth-group meetings. This is not merely a suburban phenomenon; localism also means a stronger sense of identity for urban neighborhoods as well as smaller towns...

My interview with 'LA Business Today' wins national award

2009-10-17T17:36:00.000-07:00

I'm very pleased to announce that the segment on the real estate market which I shot for the show "L.A. Business Today" on the city-sponsored Channel 35 has won second place for its category at the 24th annual Government Programming Awards in New Orleans. The show was among 16 other entrants for 'TV/Talk Show with Operating Budgets over $400,000' and beat out the third-place winner, "L.A. Roundtable: The Future of the U.S. Supreme Court," also appearing on Channel 35.

The awards, given out each year by the National Association of Telecommunications Officers and Advisors, recognizes television programming in various categories. From the press release:

The National Association of Telecommunications Officers and Advisors (NATOA) recognized the winners of the 24th Annual Government Programming Awards (GPA) during a gala event at The Sheraton New Orleans Hotel in Louisiana. The awards program honors excellence in broadcast, cable, multimedia and electronic programming produced by local government agencies. This year, NATOA received more than 810 entries submitted by local governments in more than 21 states across the country and Canada.

“This year’s GPA winners demonstrate excellence in local government programming and we are thrilled to honor and celebrate their achievements,” commented NATOA President Mary Beth Henry. “We congratulate these members for recognizing and actively supporting government access programming’s role in building stronger, more connected communities.

Entries in the 65 categories cover a variety of programming including, among others, community events, documentary, public affairs and public service, interview/talk show, performing arts, sports, election coverage and children’ s issues.

You can watch that interview here (requires Windows MediaPlayer, my segment starts about 16 minutes into the show). Thanks again to Bob and Sharon Jimenez, co-hosts of "L.A. Business Today" for inviting me to speak on their show and submitting the segment for the GPA Awards.

New home sales up, inventory down in LA/Ventura counties

2009-10-16T10:45:00.000-07:00

Hot off the press from the BIA of Greater LA/Ventura:

Owing in large part to a combination of FHA financing, low interest rates and the federal tax credit expiring at the end of November, during August new home sales in Los Angeles County were up by 20% over July and by nearly 110% from August of 2008, the Los Angeles/Ventura Chapter of the Building Industry Association (BIA/LAV) reported today.

The monthly BIA-LAV/Hanley Wood Market Intelligence (HWMI) report, analyzed by MetroIntelligence Real Estate Advisors, showed that net sales in Los Angeles County (not including the Antelope Valley) rose to 356 homes in new-home communities of 10 units or more. For the entire state, however, new home sales fell by 13% from a year earlier, pointing to continuing, relative strength in Los Angeles County.

Indeed, since August of 2008, new home sales rose sharply in the San Fernando Valley (838%), the San Gabriel Valley (268%) and in West Los Angeles (121%), but fell moderately in the South Bay/South Central (-33%) and in the Santa Clarita Valley (-20%). Between July and August of 2009, sales rose in all submarkets except for West Los Angeles, where they fell by less than 6%. In neighboring Ventura County, sales remained mostly unchanged between July and August of 2008 at just over 40 homes, although sales have risen by 67% from August of 2008.

“While we’re not out of the woods yet, the market is definitely showing some signs of strength,” said Holly Schroeder, CEO of the BIA chapter. “As long as interest rates stay low and buyers feel confident about their investment in a new home, we hope to continue building on this rebound.”

Another sign of improving fortunes for the homebuilding industry is a sharp reduction in speculative inventory, which declined by over 50% since last August to 1,742 homes in Los Angeles County, or a supply of under five months. In Ventura County, speculative inventory has fallen by an even sharper 62% to 78 homes, which could be gone in just under two months.

“The big story this time is the huge reduction in inventory levels,” said Greg Doyle, Regional Director for Hanley Wood. “Within a few months, we could see builders running out of new inventory for buyers, so those looking for new homes in the region should move quickly.”

The report also shows continuing pricing stability in both counties, with the median asking price in Los Angeles County ranging from $522,000 to $529,000 between June and August of 2009. In Ventura County, the median asking price has ranged from $452,000 to $454,000 during July and August of 2009 but is down from a reported $500,000 in June.

Building for the Future of the Automobile

2009-10-15T16:45:00.000-07:00

Ask any architect of a high-density development what the biggest challenge is to make the overall design work, and he (or she) will probably answer “parking.” Whether we’re talking about condominiums, apartments or a project which mixes residential with retail and office uses, if the parking is confusing, inconvenient, expensive or offers too many compact spaces, the entire project can suffer.

What’s more, given the rise of transit-oriented developments in multiple cities throughout the U.S., introducing new ways to address the parking conundrum and getting people out of their cars is becoming one of the most important issues in the Green building movement.

Given the growing importance of the multi-family sector to the building industry, this is a problem that will only become more prevalent: over the last 20 years, the number of multi-family permits has regularly captured from 22% to 30% of the national total.

And, according to the Census Bureau, although 2009 will likely end up with less than 150,000 multi-family permits, near the height of the building boom in 2004, nearly 460,000 permits were issued. Fortunately, there are three major trends that will vastly improve not only how developers address parking, but can also increase building densities – and therefore potential revenues.

The first trend, in place for a decade, is the simplest: get people out of their cars. In late 2007, Zipcar merged with Flexcar to form the largest car-sharing service in the world, with 6,500 cars serving nearly 300,000 members in 49 cities. Reportedly capturing half of the current car-sharing market, the premise is to charge people by the hour (generally close to or under $10) and get them hooked enough on the idea to get rid of their cars.

Those who do claim to save an average of $600 per month, and studies in Europe show CO2 emissions reduced by up to 50% per user, in large part because members without their own cars simply drive less. Multiply that savings by the estimated 20 cars abandoned for each Zipcar, and it’s easy to see why the idea has helped the company sign up 8,500 companies, 120 colleges and universities and multiple governments. Not to be outdone, car rental companies including Hertz, Enterprise and even U-Haul are looking to leverage their existing infrastructure to the car-sharing market.

More recently, both new condominium projects and existing apartment owners such as Equity Residential and Prometheus Real Estate Group have began partnering with Zipcar to offer this new amenity to their residents – made even easier by the recently announced Zipcar App available for free on Apple’s popular iPhone.

The second major trend is targeted towards those developers who must plan for individual cars but are frustrated by the huge space requirements of traditional parking structures: automated parking systems that can boost building densities by up to 40%. Already used in Europe and Asia with over 12,000 spaces installed, California-Based Simmatec, USA argues that a variety of Green benefits (and capable of adding LEED points) include more open space, smaller building footprints, reduced storm water runoff and energy consumption to light and ventilate a structure, fewer emissions from cars seeking a parking space, and less noise.

For developers, additional benefits include lower expenses related to labor, liability, operating expense and security as well as a potential income boost from more parking stalls as well as from the nascent carbon credit market. Best of all, suddenly a project deemed infeasible due to a small lot can now – with the right parking system in place -- become a reality while simultaneously addressing environmental concerns.

The third trend is related to automobile design itself. With the structures of today’s cars largely regulated by the reliance on the internal combustion engine and its related parts to turn the wheels, a shift to all-electric cars with far better batteries could dramatically change how cars look and function. In the first phase, developers of both single-family and multi-family projects will have to increasingly offer charging stations – an advantage soon to be leveraged by car-sharing services such as Zipcar.

Yet down the road in the second phase, instead of a single engine paired with a drivetrain, each wheel could have its own electric engine, fostering in the most dramatic changes in car design in over a century. It’s quite possible that tomorrow’s cars could look strangely different than they do today, and in the process force us to completely re-invent how we plan for parking to serve projects of all shapes and sizes.

Affordablility continues to improve in most metros

2009-10-13T22:27:00.000-07:00

According to economist G.U. Krueger of HousingEcon.com, affordability ratios in the U.S. have reached record highs. Say what? Read more about this good news here.

October column for Builder & Developer now online

2009-10-13T22:20:00.000-07:00

My column for the October issue of Builder & Developer magazine is now online. Since this month's issue of the magazine focuses on affordable housing, I addressed the very important role of the public sector in making affordable housing even possible. An excerpt:

The national tax credit program, which for the past 20 years has provided a critical way to finance low-income rental housing, is now under duress because investors such as Fannie Mae and Freddie Mac exited the market last year, thereby taking 40% of the funding off the market. Much of the balance was previously funded by the banking industry, most of which no longer has profits against which to offset taxes.

The result is hundreds of stalled projects waiting for funding to make up for 3 million affordable housing units destroyed, converted to condominiums or upgraded to market-rate rentals since 2003. In some places, the waiting lists for assistance are so long that new applications are being denied.

To address this deteriorating situation, the Treasury Department said in May that it would funnel $5 billion in federal stimulus dollars to buy unsold tax credits for affordable housing projects approved since 2008; developers who wish to redeem unsold credits can also exchange them for government grants, but only at a ratio of 85 cents to the dollar...

Click here for the entire column.

Inland Empire Executive Housing Seminar materials now online

2009-10-06T12:00:00.000-07:00

This morning, I gave a presentation on the Inland Empire housing market as part of Hanley Wood Market Intelligence's Executive Housing Seminar series.

Speaking on the national housing market was Boyce Thompson, Editorial Director for magazine titles Builder, Big Builder and Multi-Family Executive.

If you want a .pdf of my presentation, click here. Soon I'll publish a post highlighting the findings from the speech.

If you want a .pdf of Boyce's presentation, click here.

Lenders clamping down on short sales

2009-10-05T16:20:00.000-07:00

In a move that strikes me as a bit counter-intuitive (at least on a macroeconomic scale), mortgage lenders are pulling back sharply on allowing short sales, which over the last year have accounted for 12% to 18% of sales activity. From a story in BusinessWeek:

Troubled homeowners may be losing a major lifeline: so-called short sales. To get bad loans off their books and spur home sales, lenders have been forgiving the difference between the outstanding mortgage balance and the purchase price. Banks were never eager participants in short sales, and now financial firms—even those that can offload losses to the government—are balking at such transactions. Some lenders are forcing the sellers to pay extra money at closing. Others want a promissory note for part of the amount due.

The situation could be a setback for the already wobbly housing recovery. A record one-third of borrowers owe more on their mortgage than their properties are worth, notes research firm First American CoreLogic. The number of underwater homeowners will only continue to rise since values are still falling. And if distressed borrowers can't negotiate short sales, more may be forced into foreclosure, further depressing prices...

Click here for full story.

Inland Empire Executive Housing Seminar - October 6, 2009

2009-09-29T14:16:00.000-07:00

Looking for an update on national housing markets with a focus on California's Inland Empire?

On the morning of Tuesday, October 6, 2009 at the Mission Inn in Riverside, I'll be speaking along with Boyce Thompson, Editorial Director for Builder, Big Builder and Multi-Family Executive magazines for the next HWMI Executive Housing Seminar.

Boyce will discuss national trends, whereas I'll focus on what to expect in terms of new home supply, foreclosures, absorption trends, land acquisition and an overview of which projects are actually selling (and why).

7:30am Registration & Networking Breakfast

8:00am Opening Remarks (Mike Ellison, Regional Director)

8:15am National Market Overview (Boyce Thompson)

8:45am Local Housing Market Overview (Patrick Duffy)

9:30am Q&A

To register for this event, click here.

To invite a colleague, click here.

Hope to see you on October 6th in Riverside!

San Francisco South Bay/Silicon Valley Economic Conference materials now online

2009-09-29T14:05:00.000-07:00

Miss the San Francisco South Bay/Silicon Valley Economic Forecast Conference on Sept. 24th in San Jose, CA? Fear not, you can still download conference materials including the following:

Conference Book (real estate sections provided by MetroIntelligence)

Christopher Thornberg Presentation (national and state picture)

Jon Haveman Presentation (local picture)

Lynn Reazer Presentation (Incoming President, Nat'l Assn. of Business Economists, "Outlook for California's Exporters")

Rohit Dixit Presentation (VP, Corp. Strategy, HP, "Business Strategy in an Uncertain Economy")

Housing Chronicles hits 8.5 million headline views via BlogBurst

2009-09-29T13:08:00.001-07:00

I'm pleased to announce that since February of 2008, The Housing Chronicles Blog has surpassed 8.5 million headline views through the blog syndication service BlogBurst. The breakdown of headlines is as follows:

Top 10 Publishers (All History) for Housing Chronicles

	Total Views
Reuters	8,011,522
FoxNews	196,568
Chicago Sun Times	194,504
Computer Shopper	85,773
Livestrong	17,102
IBS	5,203
Wall Street Journal	5,046
Palm Beach Post	719
usatoday.com	284
CT Green Scene	209

Thank you for reading!

World Habitat Day - Monday October 5, 2009

2009-09-29T12:55:00.001-07:00

From a press release issued by Habitat for Humanity:

The United Nations has designated the first Monday each October as World Habitat Day.

This year on Oct. 5 in Washington, D.C. and around the world, please join Habitat for Humanity in support of this global observance as we come together and declare that the lack of decent, affordable housing is unacceptable.

According to the United Nations, more than 100 million people in the world today are homeless. Millions more face a severe housing problem living without adequate sanitation, with irregular or no electricity supply and without adequate security.

Worldwide, more than 2 million housing units per year are needed for the next 50 years to solve the present worldwide housing crisis. With our global population expanding, however, at the end of those 50 years, there would still be a need for another 1 billion houses. (UN-HABITAT: 2005)

Raising awareness and advocating for change are the first steps toward transforming systems that perpetuate the global plague of poverty housing. World Habitat Day serves as an important reminder that everyone must unite to ensure that everyone has a safe, decent place to call home.

The U.N. further states that both developed and developing countries, cities and towns are increasingly feeling the effects of climate change, resource depletion, food insecurity, population growth and economic instability.

Rapid rates of urbanization cause serious negative consequences - overcrowding, poverty, slums with many poorly equipped to meet the service demands of ever growing urban populations.

With over half of the world’s population currently living in urban areas the U.N. believes there is no doubt that the "urban agenda" will increasingly become a priority for governments, local authorities and their non-governmental partners everywhere.

U.S. Housing Facts

About 95 million people, one third of the nation, have housing problems including a high-cost burden, overcrowding, poor quality shelter and homelessness. (National Low Income Housing Coalition: 2004)
One in three American households spend more than 30 percent of income on housing, and one in seven spends more than 50 percent. (Joint Center for Housing Studies: 2006)
The number of low-income families that lack safe and affordable housing is related to the number of children that suffer from asthma, viral infections, anemia, stunted growth and other health problems. About 21,000 children have stunted growth attributable to the lack of stable housing; 10,000 children between the ages of 4 and 9 are hospitalized for asthma attacks each year because of cockroach infestation at home; and more than 180 children die each year in house fires attributable to faulty electrical heating and electrical equipment. (Sandel, et al: 1999)

Global poverty facts

By the year 2030, an additional 3 billion people, about 40 percent of the world’s population, will need access to housing. This translates into a demand for 96,150 new affordable units every day and 4,000 every hour. (UN-HABITAT: 2005)
One out of every three city dwellers – nearly a billion people – lives in a slum. (Slum indicators include: lack of water, lack of sanitation, overcrowding, non-durable structures and insecure tenure.) (UN-HABITAT: 2006)
UN-Habitat has reported that because of poor living conditions, women living in slums are more likely to contract HIV/AIDS than their rural counterparts, and children in slums are more likely to die from water-borne and respiratory illness. (UN-HABITAT: 2006)
Housing formation generates non-housing related expenditures that help drive the economy. (Kissick, et al: 2006)
Investing in housing expands the local tax base. (Kissick, et al: 2006)

Celebrations of World Habitat Day in Washington, D.C. will be an excellent opportunity to foster global discussion and raise the profile of shelter and urban issues at the national and international level. Events in the United States and around the world include policy forums, award presentations, luncheons, dinners, house-building and exhibitions.

What can you do for World Habitat Day?

Now it is time to deliver a strong message to Congress:

Make housing a priority. Pass legislation that would prioritize adequate and affordable housing.

Ask Congress to Make Housing A Priority on World Habitat Day!

EDUCATE your community with Habitat for Humanity’s World Habitat Day handbook to learn more about the importance of secure tenure and neighborhood revitalization. Get even more information about the issue of insecure tenure by reading Habitat’s Shelter Report: building a secure future through effective land policies.

Brainstorm ways to get more people involved. Learn from the successes of last year’s campaign, and come up with brand-new ways to celebrate and publicize the important work of Habitat for Humanity.

Take a virtual tour of the Capotillo informal settlement in the Dominican Republic and put yourself in the shoes of those who live in a broken community of violence, poverty and danger.

Link to Habitat for Humanity’s World Habitat Day 2009 resources page on your social media pages, personal web site or blog to spread the word and raise awareness.

DONATE to be a part of making the world a better place and support Habitat’s efforts. Donate online today!

San Diego County Apartment Overview now online

2009-09-23T09:08:00.000-07:00

Yesterday, I gave an overview of the past, present and future of the San Diego County apartment market to the county's apartment association. If you're interested in that sector and would like to view a .pdf of my presentation, you can find that online here.

Housing Chronicles post cited in Carnival of Real Estate

2009-09-21T10:35:00.000-07:00

The Housing Chronicles Blog has again been cited by The Carnival of Real Estate, which is a weekly selection of blog posts related to real estate markets, marketing and investing.

This week the Carnival is hosted by The Real Estate Dispatch, which is the blog associated with the BiggerPockets.com real estate social networking site.

For this entry, given the current battle in reforming health care (and the pros and cons of having the private market police itself), I focused on the role of government in providing other important services, namely affordable housing. Whether through Section 8, other HUD programs or tax credits (which have been disappearing due to the lack of profits by investors against which to claim these credits), this is an issue which continues to grow, especially here in California. Whereas builders over-built McMansions in the exurbs of the Central Valley, desert areas and the Inland Empire, we remain severely under-built when it comes to affordable rental housing.

You can read that post here.

Thank you to Joshua Dorkin and The Real Estate Dispatch blog for the recognition!

The rising trend of 'strategic defaults'

2009-09-21T10:25:00.001-07:00

Given the economic problems associated with foreclosures, it's hard to imagine that taxpayers will want to continue propping up Fannie Mae, Freddie Mac and FHA in the wake of the rising tide of 'strategic defaults.' Sure, it might be an objective decision for individuals but collectively it'll be interesting to see the impact in our now ethnically challenged society. From Kenneth Harney's "Nation's Housing" column in the L.A. Times:

Research using a massive sample of 24 million individual credit files has found that homeowners with high scores when they apply for a loan are 50% more likely to "strategically default" -- abruptly and intentionally pull the plug and abandon the mortgage -- compared with lower-scoring borrowers...

Among researchers' findings are these eye-openers:

* The number of strategic defaults is far beyond most industry estimates -- 588,000 nationwide during 2008, more than double the total in 2007. They represented 18% of all serious delinquencies that extended for more than 60 days in last year's fourth quarter.

* Strategic defaulters often go straight from perfect payment histories to no mortgage payments at all. This is in stark contrast with most financially distressed borrowers, who try to keep paying on their mortgage even after they've fallen behind on other accounts.

* Strategic defaults are heavily concentrated in negative-equity markets where home values zoomed during the boom and have cratered since 2006. In California last year, the number of strategic defaults was 68 times higher than it was in 2005. In Florida it was 46 times higher. In most other parts of the country, defaults were about nine times higher in 2008 than in 2005.

* Two-thirds of strategic defaulters have only one mortgage -- the one they're walking away from on their primary homes. Individuals who have mortgages on multiple houses also have a higher likelihood of strategic default, but researchers believe that many of these walkaways are from investment properties or second homes.

* Homeowners with large mortgage balances generally are more likely to pull the plug than those with lower balances. Similarly, people with credit ratings in the two highest categories measured by VantageScore -- a joint scoring venture created by Experian and the two other national credit bureaus, Equifax and TransUnion -- are far more likely to default strategically than people in lower score categories.

* People who default strategically and lose their houses appear to understand the consequences of what they're doing. Piyush Tantia, an Oliver Wyman partner and a principal researcher on the study, said strategic defaulters "are clearly sophisticated," based on the patterns of selective payments observable in their credit files. For example, they tend not to default on home equity lines of credit until after they bail out on their main mortgages, sometimes to draw down more cash on the equity line.

Strategic defaulters may know that their credit scores will be severely depressed by their mortgage abandonment, Tantia said, but they appear to look at it as a business decision: "Well, I'm $200,000 in the hole on my house, and yes, I'll damage my credit," he said of defaulters. But they see it as the most practical solution under the circumstances.

The Experian-Wyman study does not try to explore the ethical or legal aspects of mortgage walkaways. But it does suggest that lenders and loan servicers take steps to screen and identify strategic defaulters in advance and possibly avoid offering them loan modifications, since they'll probably just re-default on them anyway.

Barack Obama on the economy

2009-09-21T10:13:00.000-07:00

In case you missed it, President Obama's speech on the economy (and education) is below.

Some highlights from CNNMoney.com:

President Obama on Monday pushed his plans to make the nation's economy more stable in the future by investing in education for high-tech industries.

The president unveiled a new "innovation strategy" that builds on $100 billion of economic stimulus funds to support entrepreneurship, education, infrastructure and other investments.

The plan aims to make the U.S. economy more competitive and help prevent volatile "boom and bust" cycles in the future, Obama said...

Obama reiterated his call for increased investment in green energy technology, electronic health records and manufacturing advanced vehicles.

The president also pointed to proposed tax cuts and trade policies his administration has perused as ways to make U.S. companies more competitive and prosperous.