The Housing Chronicles Blog

Friday, September 14, 2018

July business inventories up 0.6 percent from June and 4.3 percent year-on-year

July business inventories increased 0.6 percent after edging up 0.1 percent in June and boosted by a strong increase in the stock of motor vehicles.  Year-on-year inventories rose 4.3 percent.

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August industrial production rose for third straight month, up 4.9 percent year-on-year

Industrial production rose 0.4 percent in August for its third consecutive monthly increase. Manufacturing output moved up 0.2 percent on the strength of a 4.0 percent rise for motor vehicles and parts. At 108.2 percent of its 2012 average, total industrial production was 4.9 percent higher in August than it was a year earlier. Capacity utilization for the industrial sector moved up in August to
78.1 percent, a rate that is 1.7 percentage points below its long-run (1972-2017) average.

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Consumer sentiment rose strongly to near-record level in early September survey

Consumer sentiment rose strongly in an early September read to 100.8, the second-highest level since 2004, and only behind the March 2018 reading of 101.4. These gains were also widespread across all major socioeconomic subgroups.

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August retail sales edged up 0.1 percent as shoppers took a break

Retail sales edged up 0.1 percent in August, the smallest rise since February.   Still, data for July was revised higher to show sales rising 0.7 percent instead of the previously reported 0.5 percent gain.

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Wednesday, September 12, 2018

The Evolution of the Master-Planned Community

It wasn’t too long ago when the typical master-planned community was mostly a collection of separate subdivisions selling under a shared branded location, with some homes wrapped around a golf course or a water feature in order to offer views (and premiums).

If there was a retail component, it was generally located on the periphery, requiring residents on various cul-de-sacs to drive for even the shortest errand.  When people went out for walks, it was generally along paved sidewalks adjacent to neighborhood streets, and did little to encourage interaction among the residents.

Today, however, the typical master-planned community developer has replaced the golf course with open space and trails, created nostalgic town centers within walking distance of each home, and started producing regular events in order to foster more interaction among those who live there.

Somewhat ironically, it was the Great Recession, the housing bust and recovery which allowed many developers the luxury of time to re-think what a modern master-planned community could be. This time period also coincided with the aging of the millennial generation into their household-forming years, with many of them opting for novel and creative experiences, versus simply demanding more living space and a higher bedroom count.

Consequently, today’s most successful master plans focus on promoting a unique sense of place, with the actual living space sometimes almost viewed as a secondary consideration.

Another major change was greater product segmentation, with a few traditional single-family subdivisions of various home and lot sizes giving way to higher-density, single-family and multi-family options, both for younger residents as well as downsizing seniors wanting to live close to family and friends.  In some cases, today’s build-to-rent homes will eventually be converted for sale at the appropriate time, thus encouraging new renters to start developing local roots now instead of later.

Yet when bumping up against unyielding costs for land and improvements, developing an experiential community with ample open space alongside a wide mix of products creates its own mix of challenges to the bottom line.

Explains Tom Martin, Senior VP, Community Development of Newport Pacific Land Company, “I would say that our focus is not only on good place making and planning, but also on innovative products such as homes on small lots, cluster detached homes and townhomes.  This allows us to increase attainability thru density while achieving an acceptable residual to the land.”

In some cases, good place making can incorporate a common theme to be used throughout the community.

At the 199-acre Sterling Meadows master plan near Sacramento, CA, developer The True Life Companies chose music as a connector, especially at its 13.7-acre main park.

In addition to interior pathways designed to resemble a treble cleft (essential to reading music), musical notes and symbols are inlaid into the pavement on pathways, in plazas and in water play areas.  Even the community’s street names are tied to music, with the exception of one key street, which is named for a fallen military veteran of the local community.

In other cases, ensuring that the community blends into the surrounding environment is critical.  At the 1,600-acre Tesoro Viejo master plan north of Fresno, CA, views of the nearby Sierra Nevada foothills are given center stage, with one-quarter of the land allocated for natural open space, parks, areas for recreation and miles of trails. For community interaction, a resort-style clubhouse, amphitheater and large event lawn will be able to host a variety of live events.

The tradition-oriented Town Center, modeled after a typical small town’s Main Street, will include new stations for fire and police protection as well as the Welcome Center. Dubbed “The Hub,” the center will include a neighborhood coffee bar, food options and multi-use offices for daily use long after the last home has sold.

For more built-out environments, the challenge is how to transform a large swath of land which will still appear relatively seamless when completed.  In between the downtown area and a 30-acre harbor in Honolulu, HI, Howard Hughes Corp. is re-envisioning a former center for heavy industry and commercial fishing into the environmentally friendly Ward Village.  Here, cars are given a lesser priority than pedestrians, bikes and buses, encouraging a slower pace of life.

When completed, a central plaza with a Farmer’s Market, a future light rail stop, 4,000 residential units and over one million square feet of retail and commercial space – including scores of existing businesses – will allow locals to visit some of their long-favorite haunts in a re-envisioned place.  Others will simply call it home.

September business inflation expectations remain unchanged at 2.2 percent over the next year

Firms' inflation expectations were virtually unchanged at 2.2 percent over the year ahead during the September survey.  Sales levels compared to "normal times" declined somewhat over the month. Profit margins declined as well, and year-over-year unit costs went unchanged at 2.0 percent, on average.

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July consumer credit use rose 5.1 percent, mostly due to auto and student loans

Total consumer credit rose in July to a seasonally adjusted $3.91 trillion, for an annual growth rate of 5.1 percent. Revolving credit, such as credit cards, rose only 1.5 percent per annum. Nonrevolving credit, typically auto and student loans, jumped 6.4 percent per annum.

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August Small Business Optimism Index soared to new 45-year record

The NFIB Small Business Optimism Index soared to 108.8 in August, a new record in the survey's 45-year history, topping the July 1983 highwater mark of 108. The record-breaking figure is driven by small business owners executing on the plans they've put in place due to "dramatic changes in the nation's economic policy."

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July open positions and job quitters both rose to record levels, layoffs declined slightly

More workers quit their jobs in July since January 2001, rising to 3.6 million, or 2.4 percent of the nonfarm workforce. The number of positions waiting to be filled rose to 6.94 million, or 4.4 percent of the workforce, both of which are the highest figures since this series launched in December 2000. Layoffs declined slightly to 1.65 million, or 1.1 percent of the workforce.

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August Producer Price Index dipped for first time in 18 months, up 2.8 percent year-on-year

The Producer Price Index for final demand, seasonally adjusted, declined 0.1 percent in August after no change in July.  On an unadjusted basis, the final demand index rose 2.8 percent for the 12 months ended in August.

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Friday, August 31, 2018

August Chicago PMI slipped 1.9 points from July but still up 6.9 percent year-on-year

The MNI Chicago Business Barometer slipped to a three-month low of 63.6 in August, down 1.9 points from July's 65.5.  A softening in Supplier Deliveries, Order Backlogs and Employment offset gains in Production and New Orders, driving the decline in the Barometer. However, it still sits 6.9% higher on the year and continues to signal robust business conditions.

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Final August consumer sentiment index remained subdued due to higher prices and interest rates

Although there was a small uptick in late August, consumer sentiment remained at its lowest level since January. Most of the August decline was in the Current Economic Conditions Index, which fell to its lowest level since November 2016. These results stand in sharp contrast to the recent very favorable report on growth in the national economy.

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Monday, August 27, 2018

July Chicago Fed's National Activity Index fell to +0.13 from +0.48 in June

Led by slower growth in production-related indicators, the Chicago Fed National Activity Index (CFNAI) declined to +0.13 in July from +0.48 in June. The index's three-month moving average, CFNAI-MA3, moved down to +0.05 in July from +0.20 in June.

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Thursday, August 23, 2018

2Q 2018 commercial/MF loan originations up 32.0 percent from 1Q and 4.0 percent year-on-year

According to the Mortgage Bankers Association's (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, second quarter 2018 commercial and multifamily mortgage loan originations were four percent higher than during the same period last year and 32 percent higher than the first quarter of 2018.

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Fed meeting minutes: More interest rate hikes, concerns about global trade disputes discussed

U.S. central bankers discussed raising interest rates soon to counter excessive economic strength but also examined how global trade disputes could batter businesses and households.

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