Tuesday, August 26, 2014

BuilderBytes' MetroIntelligence Economic Update for 8/26/14

Please click here to see the edition of BuilderBytes for 8/26/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:
  • Mortgage applications rose by 1.14 percent in latest survey as rates fell by six basis points
  • Federal Reserve meetings notes shows continued commitment to keeping interest rates low
  • Architecture billings at highest level since 2007
Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

Sunday, August 24, 2014

The Politics of Drought: Homebuilding is Already Leading the Way on Water Conservation

These days, it’s nearly impossible to avoid news of one of the worst droughts to grip the State of California since records were first kept in the mid 1800s.  And it’s not just California --- as of early August, the U.S. Drought Monitor was reporting that just over one-third of the contiguous U.S. states were experiencing drought conditions.  In the case of California and the southwest U.S., a so-called “ridiculously resilient ridge” (or Triple R) of high pressure has been squatting off the coast of western Canada since January 2013, thereby diverting storms normally destined for California instead to Alaska, where record amounts of rain and snowfall have been reported.


The concern about this high pressure anomaly is that the longer it lasts, the less likely it will be to break up soon, and in the interim reinforces the jet stream’s current northern trajectory.   While it’s quite possible that extremely rare events like the Triple R are simply borne by chance (and so may end at any time), given that higher global temperatures have raised the risk of rare weather extremes, there’s a distinct possibility that this drought may continue for some time to come.

However, there are some important differences between this event and the last major drought to hit California in 1976-77, in which the state’s reservoirs plummeted to 41 percent of average capacity (versus just over 50 percent as of late August 2014).  On the demand side, although the state’s population has doubled since the last drought, per-capita water use has also dropped with the use of new water management technologies.  

It was actually the drought of 1987-92 which marked the beginning of modern water-use practices, including more efficient use of water for agricultural which made more growth in the cities possible.  Moreover, the delivery of water in general has greatly reduced waste due to evaporation or seepage, while reclaimed water for outdoor use is becoming increasingly commonplace, especially for water-hungry uses such as golf courses and freeway embankments.

Consequently, whereas municipalities might simply have refused to grant new building permits in past droughts, today the approval process for new projects has water availability as a key component.  For new developments of 40 acres or more in California, since 2002 the state has required a water supply assessment in order to confirm that there will be adequate supplies of water – which can also include new sources through conservation, recycling and transfers  -- as long as these sources include appropriate quality, quantity and reliability.

On the supply side, new homes are actually exponentially more efficient than older ones, especially those with water-hogging plumbing fixtures.   According to a report commissioned by the CBIA, an average three-bedroom home with four occupants built today uses 29,000 fewer gallons of water than smaller homes built in 2005.  Certainly one big reason for that is the “CalGreen” code, which become law in 2011 and mandated a 20-percent reduction in water use through relatively simple solutions such as low-flow toilets, shower heads and faucets.

One builder on the forefront of the water issue is Los Angeles-based KBHome, which debuted their first “Double ZeroHome” at its Dawn Creek community in the high desert city of Lancaster (average annual rainfall:  7-8 inches) earlier this year.  So named due to its dual emphasis on energy and water efficiency, the home has been engineered to recycle its own drainwater and re-purpose it for its low-water landscaping.

According to the builder, the home can save up to 150,000 gallons of water each year compared to an older resale home, for a savings of about 70 percent. Other clever innovations include a dishwater that stores the water from the last rinse cycle for use in the first pre-rinse cycle of the next load, and an energy recovery system which extracts heat from drainwater and diverts it to the home’s tankless water heater to cut down on heating costs.

Still, based on sheer numbers alone, the solution to the future availability of water has much more to do with retrofitting the existing housing stock versus the approval of new homes; if homes 30 years of age or older were retrofitted to the CalGreen standards, estimates of water savings statewide rise to 300 billion gallons per year.  Yet with a housing inventory of over 13 million California residences, encouraging homeowners to make these changes will be neither easy nor fast.  Most likely, what we’ll see are a mix of carrots and sticks from cities and water agencies to encourage greater water efficiency in homes and businesses.

Friday, August 22, 2014

BuilderBytes' MetroIntelligence Economic Update for 8/22/14

Please click here to see the edition of BuilderBytes for 8/22/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:
  • Existing home sales rose to highest level of 2014 in July
  • Leading Economic Index rose sharply in July
  • Philadelphia Fed's Business Outlook Survey shows continued expansion in manufacturing sector
  • Initial unemployment claims dip by 14,000 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.

Thursday, August 21, 2014

BuilderBytes' MetroIntelligence Economic Update for 8/21/14

Please click here to see the edition of BuilderBytes for 8/21/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:
  • Builder confidence in August rises to highest level since January
  • Housing starts staged rebound in July to highest level since November
  • Building permits in July up 8.1 percent over and June and 7.7 percent year-over-year
  • CPI edged up 0.1 percent in July; rose 2.0 percent in previous 12 months
Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

Tuesday, August 19, 2014

BuilderBytes' MetroIntelligence Economic Update for 8/19/14

Please click here to see the edition of BuilderBytes for 8/19/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:
  • Producer Price Index rose just 0.1 percent in July; up 1.7 percent over previous 12 months
  • Empire State Manufacturing Survey still improving
  • Industrial production rose again in July; capacity at just 0.9 percent below long-term average
  • Consumer sentiment dips in August but confidence still at moderate positive levels
Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

Friday, August 15, 2014

BuilderBytes' MetroIntelligence Economic Update for 8/15/14

Please click here to see the edition of BuilderBytes for 8/15/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicator:
  • Initial unemployment claims rise 21,000 in latest report; 4-week average up just 2,000
  • Mortgage applications dip 2.7 percent in latest survey as rates remain flat
  • August FreddieMac outlook shows improving economic and housing conditions
Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

Thursday, August 14, 2014

August column for Builder & Developer magazine now online

My column for the August 2014 issue of Builder and Developer magazine is now posted online.

For this issue, entitled "Second Quarter 2014 Economic Update," I wanted to focus on just how the new Fed Chair Janet Yellen is addressing the U.S. economy as well as how the economy performed in the second quarter of 2014.  An excerpt:
From Yellen’s financial perch, this collection of indices means that the U.S. economy, although slowly improving, is still too fragile to thrive without the Fed’s near-zero-rate training wheels. Consequently, it could be well into 2015 before we start to see interest rate hikes from the Federal Reserve.

Despite the perceived fragility of the recovery, the recent robust level of hiring has been more sustainable than it has in years. By including June’s 288,000 increase and factoring in upward revisions for estimated hiring in April and May, employers added an average of 231,000 workers a month in the first half of 2014 -- the best six-month run since the spring of 2006... 
To read the entire column, click here.

To read the entire August 2014 issue in digital format, click here.

BuilderBytes' MetroIntelligence Economic Update for 8/14/14

Please click here to see the edition of BuilderBytes for 8/14/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:
  • Job openings rise slightly to 4.7 million in June
  • Productivity rose by 2.5 percent in 2Q 2014
  • Retail sales mostly flat in July
Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

Tuesday, August 12, 2014

BuilderBytes' MetroIntelligence Economic Update for 8/12/14

Please click here to see the edition of BuilderBytes for 8/12/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:
  • Productivity rebounded sharpy by 2.5 percent during 2Q 2014
  • Wholesale inventories rose less than expected in June but still up over previous year
Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

Friday, August 8, 2014

BuilderBytes' MetroIntelligence Economic Update for 8/8/14

Please click here to see the edition of BuilderBytes for 8/8/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicator:
  • Initial unemployment claims dip by 14,000; 4-week average at lowest level since late February 2006
Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.