Thursday, June 30, 2016

June column for Builder & Developer magazine now online

My column for the June 2016 issue of Builder and Developer magazine is now posted online.

For this issue, entitled "The Evolution of the Smart Home," I reviewed the current state of the smart home, and how the industry can help propel it from the domain of the early adopter to a mass-market necessity:

An excerpt:

It should come as no surprise that the average consumer in 2016 has a general idea of what a smart home is, with a recent study estimating that 30 million U.S. households will add smart home technology in the next 12 months.
But what may surprise you is that the market remains largely the domain of early adopters – including the purchasers of new homes – because the hype doesn’t yet match the reality.
If, as market researcher Gartner is predicting, the typical family home could contain more than 500 smart devices by 2022, the transition from early adopter to mainstream consumer will require simplicity and ease of use over shiny, new products which don’t serve to budge the status quo.
To read the entire column, click here.

To read the entire June 2016 issue in digital format, click here.

BuilderBytes' MetroIntelligence Economic Update for 6/30/16

Please click here to see the edition of BuilderBytes for 6/30/16 on the Web.

In this issue of the MetroIntelligence Economic Update, we covered the following indicators:
  • Pending home sales dipped in May year-on-year for the first time in almost two years
  • Case-Shiller Index rose 5.0 percent year-on-year and 1.0 percent from March
  • First quarter GDP growth revised up to 1.1 percent in third and final estimate
  • Consumer sentiment dips in June, but no recession is anticipated
  • Durable goods orders fell sharply in May, mostly due to lower defense aircraft demand
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Initial unemployment claims rise 10,000 in latest report

In the week ending June 25, initial unemployment claims were 268,000, an increase of 10,000 from the previous week's revised level. The 4-week moving average was 266,750, unchanged from the previous week's revised average.

Mortgage applications dip 2.6 percent even as rates edge down to lowest level since May 2013

The Market Composite Index decreased 2.6 percent on a seasonally adjusted basis from one week earlier.  The average contract interest rate for 30-year fixed-rate mortgages fell to its lowest level since May 2013, 3.75 percent.

Chicago PMI rose in June to highest level since January 2015

The PMI Chicago Business Barometer rose 7.5 points to 56.8 in June from 49.3 in May, the highest since January 2015, led by strong gains in New Orders and Production.

Wednesday, June 29, 2016

As Baby Boomers Retire en Masse, They’ll Demand Different Housing Options

Four years ago, the first wave of the enormous Baby Boom generation reached the age of 66, and therefore able to receive Social Security and Medicare benefits.  Over the course of the next fifteen to twenty years, more of this group of 76 million will eventually join these early adopters, and in so doing will undoubtedly have an outsized impact on the U.S. housing market.

Much has been written lately about the relative affluence of this cohort and what that means for retirement housing.  Not only is the poverty rate for people age 65 and over lower than any other age group, but over 80 percent own their own home.  This group is also remarkably stable by today’s standards, with about 75 percent of those in their late 60s to early 70s in a marriage.  Older Boomers can also generally look forward to greater longevity, with life expectancy for a 65-year-old American now another 17.7 years for males and 20.3 years for females, or three to four more years versus the previous generation.

As they move into this next stage of life, Boomers are also expected to redefine retirement on their own terms.  Notably, just 65 percent of workers retire in the traditional sense at age 65.  Of the remaining 35 percent, over one-third remain employed part-time, and those with a higher education (and divorced women) tend to continue working the longest.   As they sell off large homes and prized possessions, this cohort is also about simplifying their lifestyle in order to engage more in experiences such as travel, civic engagement and spending more time with family and friends.

Recently, AARP updated its annual “Livability for All” report, which surveyed residents age 50 and older in eleven different metro areas about features of their current home, a ranking of community features, and perceived gaps in between today’s conditions versus their preferences.  The report also focuses on the ‘eight domains of livability’ which the World Health Organization has not only identified as the key to the quality of life in retirement, but help cities design strategies for dealing with the rapid aging of their populations and a concurrent increase in urbanization.

What’s most striking about this survey is the split between Boomer wants and needs, with 80 percent or more preferring to age in place.  However, just over half of respondents said they would consider moving if they found a home that would maximize their ability to live independently, followed closely by living in a larger or smaller home.  Curiously, just 35 percent of those surveyed said being closer to family and lower living costs was an important factor in a move.

So, if you’re hoping to capture the imagination of retirees and convince them to sell their homes to start a new life, what should you be selling?  Besides the home itself, I would recommend also focusing on WHO’s eight domains of livability:

·       Outdoor Spaces and Buildings – Provide greenbelts, outdoor seating areas, defined sidewalks and easily accessible buildings.
·       Transportation – Help people get out of their cars by presenting other options including shuttle services, access to public transit, taxi services like Uber or Lyft or even car sharing. 

·       Housing – Accentuate the ability for buyers to age in place and provide options for housing at different income levels.

·       Social Participation – Since loneliness has been found to have an out-sized impact on health, combat social isolation with regular and accessible social activities.

·       Respect and Social Inclusion – Launch intergenerational programs so younger people can learn from the older, whether it’s mentoring, teaching or volunteering.

·       Work and Civic Engagement – Help residents remain engaged in the workforce if they so choose, even on a part-time basis.  Volunteering for Meals on Wheels, the local animal shelter or even in local politics can help retirees continue to use life-long talents and skills.

·       Communication and Information – Although today’s retirees are more tech-savvy than ever, don’t assume they all have Internet access or smart phones; information needs to be distributed in multiple ways.

·       Community and Health Services – Since at some point nearly everyone will require some type of community or health care assistance, not only is it important to have such services nearby, but that it’s also accessible and affordable.

The good news is that is does seem that today’s retirees are embracing the later stages of life with both curiosity and vigor.  Or perhaps they’re simply mindful of the quote, “Do not regret growing older. It is a privilege denied to many.”

Personal income, consumer spending and prices all rose in May while savings rate dipped slightly

Personal income increased $37.1 billion, or 0.2 percent, and disposable personal income (DPI) increased $33.9 billion, or 0.2 percent, in May.

Personal consumption expenditures (PCE) increased $53.5 billion, or 0.4 percent.

The personal saving rate was 5.3 percent, compared with 5.4 percent the previous month.

The May PCE price index increased 0.9 percent from May a year ago. The May PCE price index, excluding food and energy, increased 1.6 percent from May a year ago.


Conference Board: Consumer confidence rebounds in June after May decline

Consumer confidence rebounded in June, after declining in May. Consumers were less negative about current business and labor market conditions, but only moderately more positive, suggesting no deterioration in economic conditions, but no strengthening either. Expectations regarding business and labor market conditions, as well as personal income prospects, improved moderately. Overall, consumers remain cautiously optimistic about economic growth in the short-term.


Pending home sales dipped in May year-on-year for the first time in almost two years

After steadily increasing for three straight months, pending home sales let up in May and declined year-over-year for the first time in almost two years. All four major regions experienced a cutback in contract activity last month.


Tuesday, June 28, 2016

April Case-Shiller Index rose 5.0 percent year-on-year and 1.0 percent from March

The S&P/Case-Shiller U.S. National Home Price Index reported a 5.0% annual gain in April, down from 5.1% the previous month. Before seasonal adjustment, the National Index posted a month-over-month gain of 1.0% in April.