Friday, June 29, 2012

BuilderBytes' MetroIntelligence Economic Update for 6/29/12


Please click here to see the edition of BuilderBytes for 6/29/12 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:
  • Pending home sales in May bounce back to highest level in two years
  • Durable goods orders rose by 1.1% in May after two months of declines
  • Final estimate of GDP in 1Q12 at 1.9%
  • Initial unemployment claims fall by 6,000 in most recent report
  • Mortgage applications fall in latest survey, mostly due to decline in FHA refinancings as premiums rise
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Wednesday, June 27, 2012

Housing and the student loan crisis

Over the past few months, we’ve continued to hear about the mounting crisis in student loan debt, which has recently surpassed the $1 trillion level and is now reportedly higher than revolving credit card debt.  Moreover, since student loans are extremely hard to discharge via regular bankruptcy proceedings, there is a fear that the financial albatross hanging over graduates’ heads – currently averaging just over $29,000 for 37 million people – is forcing many of today’s milliennials to indefinitely postpone traditional milestones such as getting married, having children and buying their own homes.

This issue is definitely a cause for concern, but just what is the real impact of this issue on home buying demand?  According to a recent analysis of government data by the NAHB, the rise in student loan debt is actually a function of lower home values:  with U.S. household wealth falling by 40% between 2007 and 2010, students who were formerly able to rely on their parents’ home equity lines instead took on a patchwork of student loans from both the federal government and private lenders such as SallieMae (the former GSE fully privatized in 2004), Citibank or JPMorganChase.

Since the year 2000, student loan debt has reportedly quadrupled.  Not surprisingly, a challenging job market for recent graduates has meant a rise in 90+ day delinquency rates for student loans to 8.69% during the first quarter of 2012 (versus 6.67% for home mortgages and 4.55% for auto loans).  Even with a 42% jump in student loan delinquency rates from the third quarter of 2008, the NAHB report concludes that while the total number of distressed loans is likely to continue rising in the short run, it certainly doesn’t rise to the hue and cry of ‘a new economic bubble waiting to burst.’

In fact, the NAHB strongly supports higher education – even when supported by debt – because college degrees generally confer higher wages, which in turn is good for housing.  If anything, the trade group concludes that since a full-fledged economic recovery must include housing, support in the form of the mortgage interest deduction, affordable down payments, reforming appraisal practices and a federal backstop for issuing mortgages is essential.  In turn, higher housing values could then re-open the spigot of home equity lines that helped fund higher education in the past.

Indeed, the tipping point for indebted students may have already peaked, especially as the Obama Administration has tackled the issue head-on in an election year (not surprising considering the President enjoys strong support among younger voters).  In early June, the White House announced changes to the four-year-old Income-Based Repayment Plan (IBR).  Starting in 2014, the plan for new borrowers will allow them to pay back their federal student loans at a rate lower than ten percent of their income, versus the current rate of 15 percent.  Loans could be forgiven after 20 years of steady payments (and as low at 10 years for those choosing a career in public service) versus the 25-year limit currently in use.

Perhaps more importantly, since just over 2% of eligible borrowers are registered with the program, a new streamlined application will go online in September, allowing applicants to automatically transfer over IRS income data.  A year from now, schools will also be responsible for providing borrowers with information on repayment plans prior to graduation so they can opt for a plan that is appropriate for their income.

For those taking out private student loans, however, the future looks a bit murkier, both because interest rates are usually variable, and the 2005 Bankruptcy Reform Bill added this category alongside child support payments and criminal fines to the “cannot discharge in bankruptcy” list.  To address the student loan issue, Congressman Hansen Clarke (D-Mich) recently introduced the Student Loan Forgiveness Act of 2012, which would cap interest rates at 3.4%, halve the time for forgiveness from 20 to 10 years (5 years for those in public service) and allow borrowers with debt levels higher than their annual income to consolidate existing federal and private loans into a single Direct Loan that would then be eligible for the plan. In addition, Sen. Al Franken (D-Minn.) also introduced the True Cost of College Act, which would create a sort of Truth in Lending form for student loans.

Who knows – maybe with such relief, not only will an entire generation have more funds to help bolster the economy, but be able to buy their first home five or ten years sooner than with the existing system in place.

BuilderBytes' MetroIntelligence Economic Update for 6/27/12

Please click here to see the edition of BuilderBytes for 6/27/12 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:
  • New home sales up by 19.8% from May of 2011
  • S&P/CaseShiller Home Price Indices rise for first time in seven months
  • Consumer Confidence Index falls in June athough the Present Situation Index rose
Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.
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Tuesday, June 26, 2012

May 2012 new home sales up by nearly 20% versus May of 2011


In a weird bit of timing which coincides with this year's Pacific Coast Builder's Conference in San Francisco, the news for new housing continues to get better.  From a news release from the Census Bureau:

Sales of new single-family houses in May 2012 were at a seasonally adjusted annual rate of 369,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 7.6 percent above the revised April rate of 343,000 and is 19.8 percent above the May 2011 estimate of 308,000.

The median sales price of new houses sold in May 2012 was $234,500; the average sales price was $273,900.  seasonally adjusted estimate of new houses for sale at the end of May was 145,000.  This represents a supply of 4.7 months at the current sales rate.

Click here for the entire report.

Monday, June 25, 2012

BuilderBytes' MetroIntelligence Economic Update for 6/25/12

Please click here to see the edition of BuilderBytes for 6/25/12 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:
  • Leading Economic Index rose by 0.3% in May, reversing April's decline
  • Philadelphia Federal Reserve Business Outlook survey falls in June; future activity indicators improve slightly
  • Although overall mortgage applications fall by 0.8% in latest survey, FHA refinancings more than double during the week
Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.
Want to make sure your company or event is included in the events calendar? Contact editor Dani Smith at dsmith@penpubinc.com.

Friday, June 22, 2012

Los Angeles Economic Forecast Conference - Commercial Real Estate

Even if you missed the recent Los Angeles Economic Forecast Conference produced by Beacon Economics, you can still get a copy of the conference book for free.  As part of its ongoing association with these economists, MetroIntelligence authored the commercial real estate section for the conference book given out to attendees at this event, which took place on June 21st at the Los Angeles Airport Marriott.

Following are some of the key findings:

  • After suffering negative absorption and declining rents from the beginning of 2008 through the middle of 2011, the Los Angeles office market is finally on the mend, with vacancies expected to fall to 12% by the end of 2012 while rent growth slowly rises to 0.8% per quarter.
  • With the county’s taxable sales rising by over 7% between the fourth quarters of 2010 and 2011, absorption in the retail sector is gaining strength as vacancies head down towards the 5.0% level; look for positive rent growth to resume in early 2012 and gain strength by the end of the year and into 2013.
  • Owing in large part to improvements in global trade through the county’s twin ports, the industrial/warehouse market has been showing mostly positive – if uneven – improvement since the beginning of 2011; look for vacancy rates to approach the 4.0% level by the end of 2012 as rent growth rises to 1.0% per quarter.
  • New permits for commercial development rose by 6.5% between the fourth quarters of 2010 and 2011, led by the county’s industrial sector (13.5%) and office sector (4.9%) while permits for new retail stores fell by 4.9%; most of this activity was focused in the Tri-Cities area (i.e., Burbank-Glendale-Pasadena), the South Bay and East L.A./San Gabriel Valley.
  • With interest rates for 10-year U.S. Treasury bonds recently falling well below 2%, cap rates during the fourth quarter of 2011 for all commercial property sectors look quite competitive by comparison, ranging from 6.2% for industrial/warehouse properties to over 7.25% for the office and retail sectors.
Click here to download this commercial real estate section.

Click here to download the entire conference book.

And, finally, click here to find out more about the consulting services offered by MetroIntelligence Real Estate & Economics Advisors.  Or just give us a call at 818.584.1848.

Los Angeles Economic Forecast Conference - Residential Real Estate

Even if you missed the recent Los Angeles Economic Forecast Conference produced by Beacon Economics, you can still get a copy of the conference book for free.  As part of its ongoing association with these economists, MetroIntelligence authored the residential real estate section for the conference book given out to attendees at this event, which took place on June 21st at the Los Angeles Airport Marriott.

Following are some of the key findings:

  • Lower home prices continue to make them exponentially more affordable than they were in the past, with 48% of households able to buy the median-priced home at current interest rates.  This compares with the low single digits between the second quarter of 2005 and the third quarter of 2007.
  • Although tax credits did help housing prices rebound temporarily, since their expiration the S&P/Case-Shiller Index in the county has been declining, falling in February 2012 to a level last noted in April of 2009 even as monthly declines have been flattening out.
  • New home sales remain in hibernation, down by 75% from their 2006 peak;  although new home prices have rebounded slightly from their most recent trough in mid-2009, they’re still off by 31% from their peak in 2007.
  • Since rebounding from their trough at the end of 2007, more recently sales of existing single-family homes have ranged mostly from 13,000 to 14,000 units, but remain under pressure due to continued competition from foreclosures; after falling by nearly 50% between mid-2007 and mid-2009, median prices have recovered by about 5% to just over $312,000.
  • Although condo prices did stage a temporary rally in late 2009 to nearly $315,000, since then the median price has gradually eroded to just under $268,500; however, one key benefit of these lower prices has been a boost in condo sales, which have risen by 89% since the last trough in the first quarter of 2008.
  • After witnessing elevated vacancy rates and pressure on asking rents due to a combination of the recession and foreclosed homes being sold to investors, the apartment market is now by far the strongest real estate sector; vacancies are expected to end 2012 below 5.5%, while rents should continue rising by 1.0% to 1.4% per quarter through mid-decade.
  • After falling sharply from the peak in the third quarter of 2008 through the end of 2010, foreclosures are again declining following a moderate rise in early 2011; fewer defaults also indicates that the last peak of the foreclosure wave is now well behind us.
  • While permits for single-family units have steadily hovered close to 600 units per quarter since the last half of 2009, permits for multi-family buildings have been rising steadily since the first half of 2010; looking ahead, permit increases for multi-family units should far out-pace those of single-family homes due to the strength of the apartment market.

Click here to download this residential real estate section.

Click here to download the entire conference book.

And, finally, click here to find out more about the consulting services offered by MetroIntelligence Real Estate & Economics Advisors.  Or just give us a call at 818.584.1848.

BuilderBytes' MetroIntelligence Economic Update for 6/22/12


Please click here to see the edition of BuilderBytes for 6/22/12 on the Web.


In this issue of the MetroIntelligence Economic Update, I covered the following indicators:
  • June 2012 U.S. Economic and Housing Market Outlook
  • Existing home sales dip by 1.5% in May, reportedly due to limited supply of inventory
  • FHFA House Price Index up by 0.8% between March and April and by 3.0% over last year
  • Federal Reserve Open Market Committee issues latest economic projections, keeps interest rates at historic lows
  • Initial claims for unemployment fall by 2,000 in latest report
Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.
Want to make sure your company or event is included in the events calendar? Contact editor Dani Smith at dsmith@penpubinc.com.

Thursday, June 21, 2012

June column for Builder & Developer magazine now online

My column for the June issue of Builder & Developer magazine is now posted online.

For this issue, entitled "The 2012 Presidential Candidates on Housing Policy," I wanted to compare what President Obama and presumptive GOP Nominee Mitt Romney have in plan for the housing market.

An excerpt:

After several years of false starts, there finally appear to be more green shoots appearing in the nation’s housing market which indicate a slow yet actual rebound.  Sales of both new and existing homes are on the mend, affordability is at generational highs, and the dreaded tsunami of foreclosures expected to lower prices even further have largely been bought up by investors to re-purpose as rental properties.  Even better, according to Moody’s housing analyst Celia Chen, homeowners will begin to favor newly built homes versus distressed homes which are damaged.

Nonetheless, because the economy remains the top concern of most voters in the 2012 Presidential election, how President Barack Obama and the GOP’s presumptive nominee Mitt Romney influence housing policy is of critical importance to homebuilders and homeowners alike...


So can market forces alone help guide this all-important sector of the U.S. economy to health, or will it continue to need more help?  The answer to that question depends on whom you ask...

To read the entire column, click here.

To read the entire June 2012 issue in digital format, click here.

Wednesday, June 20, 2012

Online registration now closed for the 2012 L.A. Economic Forecast Conference on 6/21


Although online registration is now closed, there will be limited seats available tomorrow morning.  Registration on-site will take place from 7:00 to 7:30am.

Join Beacon EconomicsMetroIntelligence Real Estate and Economic Advisors and the Graziadio School of Business and Management at Pepperdine University for the fourth annual 'What's Next LA?' economic forecast conference on the morning of Thursday, June 21st at the Los Angeles Airport Marriott.
The sections covering residential and commercial real estate have again been authored by MetroIntelligence Principal Patrick S. Duffy.

This seminal annual event is presented in partnership with the Presidential and Key Executive MBA program at Pepperdine University and attended by hundreds of business and public sector leaders from across the Los Angeles region. Come hear California's leading forecasters deliver new outlooks for the national, state, and local economies.
  • Why do views on the U.S. economy remain downbeat despite solid signs of recovery?
  • Gas and oil prices continue to climb. What is the breaking point for the U.S. economy?
  • Despite low expectations for growth, the Dow recently crossed 13,000. Sustainable or is another crash on the way?
  • Signs indicate that California's economy is on the upswing. Will the recovery outpace, or fall behind, the rest of the nation?
  • Los Angeles's economic recovery appears to be lagging. What's holding back California's urban center?
Following the forecast, engage with some of the state's foremost corporate leaders, venture capitalists, and education professionals about the real condition of California's business climate. The state's ability to retain its position as one of the world’s largest and most successful economies is facing heightened challenges; it is worth asking whether growth is truly being hampered or whether claims of an ‘unfriendly climate’ fail to hold up under scrutiny.
  • Do California businesses have access to the capital they need?
  • Is California truly over-regulated? Which rules most need to be changed?
  • How does the state’s tax system affect economic growth? Is the current system unfair? Unfriendly? Unbalanced?
  • What does the state’s neglected infrastructure and strained educational system imply for California's future?
All registrants receive the following:
  • 2012 Los Angeles Economic Forecast Book -- a data-packed analysis of the region's economic indicators.
  • Quarterly updates to the forecast for one full year
  • Chance to interact with forecasters and speakers
  • Prime networking opportunity
  • Breakfast buffet
  • Hosted self-parking

Toll Bros. and Shea team up for new Lake Forest MPC

In what is definitely some good news for the slowly rebounding housing market, luxury builder Toll Bros. and Shea Homes plan to build more than 2,000 homes and apartments on nearly 400 acres at Baker Ranch in Lake Forest in Orange County.
From the story:

Economists and analysts said the involvement of Pennsylvania-based Toll Bros., the largest builder in the luxury niche, was an encouraging sign for the market, jump-starting a long-planned development and infusing it with some high-end cachet.

"It is the most promising news announced since the bust, and since we have had this very slow turnaround," said Patrick Duffy, principal of MetroIntelligence Real Estate Advisors. "This is the first big announcement of this kind where they are going after the upper-end buyer, so I think there is the assumption that people are going to be able to sell their existing homes and pull out their equity to move up."...


The renewed interest in large-scale development of homes in Orange County means that builders are increasingly confident that the move-up market for homes is beginning to recover, said Duffy of MetroIntelligence Real Estate Advisors.

Much of the scarce development in Southern California since housing tanked has been in the Inland Empire, where builders have focused on small, affordable properties that can compete with foreclosures.


Home sales and prices overall in California have been improving this spring, although few experts anticipate a return to the frenetic buying and selling of the bubble years.


Click here for the entire story.

BuilderBytes' MetroIntelligence Economic Update for 6/20/12

Please click here to see the edition of BuilderBytes for 6/20/12 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:
  • Builder confidence in June rises to highest level since May of 2007
  • May housing starts rise by 28.8% above same month of 2011 but 4.8% below previous month
  • May building permits rise by 25.0% above same month of 2011 and 7.9% above previous month
Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.
Want to make sure your company or event is included in the events calendar? Contact editor Dani Smith at dsmith@penpubinc.com.

Monday, June 18, 2012

BuilderBytes' MetroIntelligence Economic Update for 6/18/12

Please click here to see the edition of BuilderBytes for 6/18/12 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:
  • Consumer sentiment falls in early June
  • CPI fell by 0.3% in May but rose by 1.7% over last 12 months
  • Both industrial production and capacity utilization edged down slightly in May
  • Empire State Manufacturing Survey expands slightly in June but indicates waning optimism for next six months
Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.
Want to make sure your company or event is included in the events calendar? Contact editor Dani Smith at dsmith@penpubinc.com.

Friday, June 15, 2012

BuilderBytes' MetroIntelligence Economic Update for 6/15/12


Please click here to see the edition of BuilderBytes for 6/15/12 on the Web.


In this issue of the MetroIntelligence Economic Update, I covered the following indicators:
  • 80 metros listed as improving markets in June
  • May retail sales dip 0.2% from April but 5.3% above same month of 2011
  • Business inventories rise to record high, largely due to dealers stocking new cars
  • Producer Price Index falls by biggest one-month drop in nearly three years
  • Mortgage applications rise to highest level since May of 2009
  • Initial unemployment claims rise by 6,000 in latest report
Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.
Want to make sure your company or event is included in the events calendar? Contact editor Dani Smith at dsmith@penpubinc.com.

Wednesday, June 13, 2012

BuilderBytes' MetroIntelligence Economic Update for 6/13/12

Please click here to see the edition of BuilderBytes for 6/13/12 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:
  • Both prices for U.S. imports and exports declined in May
Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.
Want to make sure your company or event is included in the events calendar? Contact editor Dani Smith at dsmith@penpubinc.com.

Monday, June 11, 2012

BuilderBytes' MetroIntelligence Economic Update for 6/11/12

Please click here to see the edition of BuilderBytes for 6/11/12 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:
  • Consumer credit rose for 8th consecutive month in April
  • Trade deficit falls to $50.1 billion in April
  • Wholesale inventories rise faster in April versus previous month
Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.
Want to make sure your company or event is included in the events calendar? Contact editor Dani Smith at dsmith@penpubinc.com.

Friday, June 8, 2012

BuilderBytes' MetroIntelligence Economic Update for 6/8/12


Please click here to see the edition of BuilderBytes for 6/8/12 on the Web.


In this issue of the MetroIntelligence Economic Update, I covered the following indicators:
  • Federal Reserve Beige Book indicates continued economic expansion from early April to late May
  • Labor productivity declined by 0.9% in first quarter of 2012
  • Initial unemployment claims fall by 12,000 in latest survey
  • Mortgage applications increase by 1.3% in latest report
Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.
Want to make sure your company or event is included in the events calendar? Contact editor Dani Smith at dsmith@penpubinc.com.

Wednesday, June 6, 2012

BuilderBytes' MetroIntelligence Economic Update for 6/6/12

Please click here to see the edition of BuilderBytes for 6/6/12 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:
  • New factory orders decline by 0.6% in April
  • Service sector continues to improve in latest ISM survey
Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.
Want to make sure your company or event is included in the events calendar? Contact editor Dani Smith at dsmith@penpubinc.com.

Monday, June 4, 2012

BuilderBytes' MetroIntelligence Economic Update for 6/4/12

Please click here to see the edition of BuilderBytes for 6/4/12 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:
  • Construction spending in April rose by 0.3% from previous month and by 6.8% from April of 2011
  • Non-farm employment rose by just 69,000 jobs in May
  • Personal income rose by 0.2% in April as consumer spending rose by 0.3%
  • Manufacturing sector activity expanded in May
Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.
Want to make sure your company or event is included in the events calendar? Contact editor Dani Smith at dsmith@penpubinc.com.

Friday, June 1, 2012

BuilderBytes' MetroIntelligence Economic Update for 6/1/12


Please click here to see the edition of BuilderBytes for 6/1/12 on the Web.


In this issue of the MetroIntelligence Economic Update, I covered the following indicators:
  • Pending home sales take a dip in April after three consecutive monthly agains
  • Private sector jobs rose by 133,000 from April to May
  • Planned layoffs rise sharply in May
  • Mortgage applications fall by 1.3% in latest survey in week before Memorial Day weekend
  • U.S. GDP rose by 1.9% in 1Q12 versus 3.0% in 4Q11
Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.
Want to make sure your company or event is included in the events calendar? Contact editor Dani Smith at dsmith@penpubinc.com.