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.

25 Years of Builder and Developer Magazine: A Look Back

This year marks the 25th anniversary of Builder & Developer magazine, marking a time of more than one real estate cycle, and a time of great change in the building industry.

I still remember the nascent publisher Nick Slevin making the rounds at PCBC in the early 1990s, and as both his influence and readership grew, I knew this was a magazine for which I wanted to write.  Having first entered the building industry in 1986, I’ve seen big changes in everything from product design and quality to how we market and finance new homes.

To be sure, this is a much different industry today than it was in 1990:  Back then the top 10 largest builders in the country reported a collective market share of under 10 percent of the housing market versus 17 percent in 2014 (down from 20 percent in 2008).  Back then new housing starts totaled 1.19 million for a population of 250 million (a ratio of .477 percent) versus 1.003 million in 2014 for a population of 319 million (a ratio of .314 percent).

Back then 75 percent of housing starts were for single-family homes, whereas in 2014 that share had fallen to 65 percent.  In fact, more multifamily units were started in 2014 than in any year since 1989. And yet, despite surpassing the one-million unit level in 2014, residential construction for the year still lagged below any level posted from 1959 through 2007.

Without a doubt, the housing recovery did lose some of its steam in 2014, with homeownership rates falling to a 48-year low by the second quarter of this year.  But that’s been somewhat balanced by strong growth in rental households, encouraging traditional for-sale builders such as Lennar and Toll Brothers to build rental communities in order to provide more predictable cash flow.

Another big change has been the shift from large builders focusing on specific niches -- such as entry-level, move-up or luxury homes -- to broadening their scope depending on local conditions. As a result, the importance of valid, verifiable quantitative market research -- coupled with qualitative local expertise -- has never been more crucial to avoid product, pricing and marketing blunders.

Having once worked for a builder which went bankrupt trying to grow too fast in new, unfamiliar markets while failing to appropriately address higher marketing and merchandising costs, I can attest that following gut instinct simply doesn’t work as well in a much more complicated world.

However, even given the bright spot for rental housing, with rents rising faster than incomes can keep up, affordable housing remains an elusive goal for both producer and consumer.  Over the 10-year period between 2005 and 2015, the share of renters aged 25 to 34 paying more than 30 percent of their incomes for housing rose from 40 to 46 percent. Now, more than ever, there is a rallying cry for more affordable housing, which also continues to evolve in order to fit in more seamlessly with existing neighborhoods.

If you have access to HBO, I highly recommend watching the six-part mini-series “Show Me a Hero,” which chronicles how civil rights violations in affordable housing impacted the city government of Yonkers, N.Y. at the beginning of the 1980s.

Based on a book by the same name, the series covers the very rocky political transition from the crime magnets of high-rise ghettos to low-income units scattered throughout a community in multiple flat and townhome unit configurations -- much like many affordable housing projects see being built today.

Finally, another big change over the last 25 years relates to the importance of technology in our homes.  Whereas many builders previously left money on the table to post-sale, outside vendors beyond their control (and balance sheets), today the connected home is a critical element in new homes, with over 90 percent equipped with a broadband Internet connection in order to better enable “the Internet of Things.”

Moreover, according to a recent CEA report, about one-third of builders report increased revenue from installing these technologies.  And it’s not just consumers leading the way:  Architects are also playing a key role in this area, incorporating multi-room audio, home theater and security systems into their designs.

Looking ahead, it’s hard to predict where we’ll be in another 25 years, but as the industry -- and its customers -- continue to become increasingly sophisticated, it’s safe to say that we can look forward to many exciting innovations in the way we work, live and play in our communities.

March column for Builder & Developer magazine now online

My column for the March 2015 issue of Builder and Developer magazine is now posted online.

For this issue, entitled "The Housing Rebound Continues, Version 2.0" I wanted to revisit the state of the economic rebound as well as the slow recovery in the housing market.  An excerpt:

Last December, I wrote about a slow but steady housing rebound that seemed to suggest an even stronger 2015, and this is certainly still the case. However, more updated economic information from the fourth quarter of 2014 and the first part of 2015 seem to point to a different type of animal: Look for 2015 to be the year that we see the continued return of the retail buyer, and especially the first-time home buyer...

Until the prime-age employment-to-population ratio rises from the current 77.2 to closer to 80 percent, the U.S. economy likely won’t see consistent and meaningful wage growth. It is mainly due to this weakness in wage growth— along with inflation that remains below its target of two percent and the decline in GDP during the fourth quarter of 2014—that Federal Reserve Chair Janet Yellen has continued to postpone any hike in short-term interest rates...

To read the entire column, click here.

To read the entire March 2015 issue in digital format, click here.

January column for Builder & Developer magazine now online

My column for the January 2015 issue of Builder and Developer magazine is now posted online.

For this issue, entitled "Practicality and Nostalgia Meet Technlogy," I wanted to review some of the new housing trends we can expect in 2015. An excerpt:

We’ll start seeing less of what I like to call the two-story, “impress the in-laws” foyers. Instead, look for larger garages with nooks for hobbies as well as specialized storage areas throughout the home where everything has its place to minimize clutter. In addition, given advances in portable fireplaces which don’t require traditional venting, look for more indoor and outdoor fire pits and even painting-sized options which can be hung on walls.

In terms of design cues, don’t be surprised to see some updated relics from the past which have been re-purposed for 2015, such as free-standing bathtubs accompanied by open wall niches for storage. The durability of porcelain is now competing with other materials as imitation wood for flooring options, which not only saves money (and the environment) versus the real thing, but is more resistant to moisture and actually stands up better to high-traffic areas over time. Similarly, the durability of naturally occurring quartzite is starting to edge out man-made quartz due to its closer appearance to marble as well as being nearly indestructible...

To read the entire column, click here.

To read the entire January 2015 issue in digital format, click here.

July column for Builder & Developer magazine now online

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

For this issue, entitled "Green Building Takes on Climate Change," I reviewed the June report released from The Risky Business Project and what that could mean for the building industry.  An excerpt:

In late 2013, a trio of business leaders including Michael Bloomberg, Hank Paulson and investment fund billionaire Tom Steyer teamed up to found the Risky Business Project with a simple mandate: Determine the potential consequences for the U.S. economy without significant changes in the way we consume and deploy natural resources...

Several years ago, the NAHB conducted its own research into the effects of housing and homebuilding on GHG emissions using data from the Department of Energy, the Census Bureau and other agencies. The association hired its own researchers and economists to review existing data on density, land-use patterns and vehicle usage.

What they concluded was that given the complexity of building communities, caution is strongly recommended as choices are made about the future due primarily to the law of unintended consequences. Solutions that may seem simple on the surface are actually much more complex, and would involve various tradeoffs that could create new problems to solve...

To read the entire column, click here.

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

April column for Builder & Developer magazine now online

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

For this issue, entitled "Help Your Buyers and Renters Cut the Cord," I tackled the issue of the ever-rising costs for pay TV, Internet and phone service from traditional cable TV or phone companies and how the move from one home to another is a perfect time to consider new options.  An excerpt:

According to Qz.com, ten percent of pay TV customers are planning to “cut the cord” in the year ahead -- although in a previous poll last year, just 0.1 percent of the eight percent making similar vows actually went through with it...

What better way to build your brand to tech-savvy Millennials than to speak in a lexicon they already understand while also showing them a way to save money well after they’ve moved into one of your homes? Then, a year down the line, when their friends are complaining about the constant fee hikes due to ‘higher programming costs’ (especially for sports channels), they can brag about how their builder or apartment management company made ‘cutting the cord’ so easy...

Simply providing information on the alternatives to the usual mainstays would be a great start. For example, many companies provide Internet-based home phone service (also known as VOIP) for a fraction of the cost charged by the usual suspects. Plus, who wouldn’t want a free starter subscription to NetFlix or Hulu Plus as part of the welcome package in a connected world?

To read the entire column, click here.

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

July column for Builder & Developer magazine now online

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

For this issue, entitled "Market Optimism at PCBC," I recounted the unbridled optimism evident at this year's show and also interviewed two builders, one public (Doug Bauer with TRI Pointe), one private (Tim Kane with MBK Homes).  An excerpt: 

As opposed to the gallows humor and despondent energy of the last several years, the 2013 PCBC — staged for the first time in downtown San Diego — was characterized by a strong optimism, with education sessions now focused on obtaining land, getting financing, growing your organization and building for an increasingly multi-cultural population. At night, besides the Builder's Bash co-hosted by this magazine, there were so many parties being thrown that it would be nearly impossible to hit them all. In summary, the new dawn for which we’ve all been waiting has clearly risen. 

During the show, I had the chance to chat at length with two builders gearing up strongly for what we hope is an extended industry renaissance, but these aren’t huge, public builders with operations in multiple markets. Rather, they include the first builder to go public since 2004 (TRI Pointe Homes) as well as an established niche player with the financial backing of a large Japanese conglomerate (MBK Homes). In both of these cases, growth is forecast to be steady and the ability to build multiple product types. 

 To read the entire column, click here.

To read the entire July 2013 issue in digital format, click here.

May column for Builder & Developer magazine now online

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

For this issue, entitled "The Housing Market Roars," I reviewed the strength of the housing market and if the rebound is sustainable.  An excerpt:

By almost any measure – and as noted regularly in BuilderBytes’ MetroIntelligence Economic Update -- the housing market is not only on the mend, but rebounding much faster than most economists and housing analysts predicted. Not only did the median price for existing homes rise by nearly 10 percent nationally over the past year, but they continued rising during the seasonally slow winter months, and already show signs of gaining altitude as the spring buying season continues. 

Meanwhile, a combination of reduced new home construction, fewer foreclosures, investors paying cash for homes to rent out and owners still sitting on underwater homes means inventory levels that have fallen to 12-year lows. So is the current scenario just an economic blip, or have we finally launched into a sustained rebound that will last? 

To read the entire column, click here.

To read the entire May 2013 issue in digital format, click here.

April column for Builder & Developer magazine now online

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

For this issue, entitled "In Search of a Great Market Study," I reviewed the lessons I've learned working as a consultant as well as for a public home builder with projects in multiple markets and a private land developer with holdings throughout the western U.S. An excerpt:

With the positive news regarding the housing market continuing to pile up over the past year, we’re also starting to see a rebound in the demand for more traditional market studies for new or re-energized projects by builders, developers and investors. Yet because almost anyone can call themselves a new home market research consultant — requiring little more than business cards, a decent Web site and attending various networking events — like with any other product or service, the term ‘buyer beware’ is certainly relevant.

Following is a list of three questions I made sure to ask when working for a home builder and in the position to hire such firms: 

To read the entire column, click here.

To read the entire April 2013 issue in digital format, click here.

February column for Builder & Developer magazine now online

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

For this issue, entitled "The New Qualified Mortgage Rules," I wanted to cover how the new mortgage rules could impact the building industry, especially for those builders with in-house or related mortgage, title and escrow operations.  An excerpt:

About 20 years ago, it was fairly common for home builders to have close relationships with outside mortgage lenders. This was done for two reasons: to streamline the financing process for their buyers and to bolster their competitive position by offering various incentives for using these affiliated lenders. Throughout the 1990s, most large builders figured out that bringing these operations under the corporate umbrella — including in-house title and escrow services — could make the process even more efficient, while also adding more revenue streams to the bottom line. 

However, with the latest rules released by the Consumer Finance Protection Bureau (created in July 2011 as part of the Dodd- Frank Act), the existence of these in-house affiliates are now in jeopardy. In the original Dodd-Frank Act, the total sum of fees and points that lenders could charge consumers was capped at 3 percent of the loan amount. What the latest rules make clear is that this 3 percent will also include services such as title insurance, settlement costs, inspections, and escrow services when the provider is owned by the lender or part of the same corporate umbrella. These new rules are expected to take effect in early 2014. 

To read the entire column, click here.

To read the entire February 2013 issue in digital format, click here.

September column for Builder & Developer magazine now online

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

For this issue, entitled "The Rise of the Single-Person Household," I had read an interesting article in Fortune magazine about the demographic changes in the U.S. and the generational rise of single-person households.  What does that mean for our industry? An excerpt:

According to the most recent Census Bureau statistics, just 51% of adults today are married, putting singles within shouting distance of becoming a majority cohort.  Moreover, 28% of the country’s households now include just one person, which has doubled since 1960 and is the highest in U.S. history.  And this trend isn’t just confined to the U.S. – single-person households account for 50% of the total in cities like London and Paris and even higher (60%) in Stockholm...

Of course singles also buy homes, and that is attracting the attention of both brokers and builders.  Today, single households buy one-third of homes and, according to the NAR, unmarried men and women account for 10% and 21% of all buyers.  Interestingly, despite their higher incomes, men in their thirties and early forties show little interest in buying a home, while women increasingly look to homeownership as a way to graduate to the next life stage of total independence. Then, and only then, will many of them even consider partnering up with a significant other...

To read the entire column, click here.

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

February column for Builder & Developer magazine now online

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

For this issue, entitled "The Green Building Revolution Expands," I discussed the merging of green building and smart building techniques for all types of new building projects. As part of this column, I also interviewed CityView CEO Henry Cisneros (former HUD Secretary under President Clinton) and AMCAL President Arjun Nagarkatti.

An excerpt:

For the last two decades, we’ve continued to hear about the advantages of “smart growth,” and in most cases that means new developments which promote efficient land use, urban redevelopment, neighborhood revitalization and economic opportunity.Over the past few years, that definition has also expanded to include green building techniques, especially those related to energy efficiency and sustainability. Once relegated to certain project types, today smart, green building encompasses everything from high-rise office buildings to low-rise affordable housing options...

To read the entire column, click here.

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

November column for Builder & Developer magazine now online

My column for the November 2011 issue of Builder & Developer magazine is now posted online.

For this issue, entitled "Beware the Politics of Economics" I wanted to discuss how the politicization of economics can end up shielding voters from the important issues they should be considering. Since we'll be seeing a lot of politically charged rhetoric over the next year regarding the economy, it's more crucial than ever to recognize what got us to the situation we're in -- and the best ways we can escape it. Hint: neither major party has yet addressed these solutions.

An excerpt:

...What we should demand from our elected government is the truth about our strengths and weaknesses in a global world. Our strengths remain solid, including a younger, less-taxed population versus other developed countries, a more innovative economy and the dollar as the global reserve currency.

But our weaknesses remain formidable, including a two-party system which discourages compromise, self-absorbed seniors who have no problem forcing younger generations to pay for now-outdated retirement plans, income inequality which hinders growth, an education system which can’t seem to churn out globally competitive students and a crumbling infrastructure whose price tag is apparently too high to seriously debate, much less repair...

To read the entire column, click here.

To read the entire November 2011 issue in digital format, click here.

October column for Builder & Developer magazine now online

My column for the October 2011 issue of Builder & Developer magazine is now posted online.

For this issue, entitled "How to Create Insanely Great Products," I reviewed the many lessons that the building industry could learn from Apple and its co-founder and former CEO, Steve Jobs. Although it will be pretty obvious that I wrote the column itself prior to his death, the points I wanted to make are still the same. RIP Steve Jobs.

An excerpt:

Like many others of my generation, I grew up with Apple products from the Macintosh to the iPad. When I bought my last car, I made sure it offered a direction connection from an iPhone or iPod to the stereo system, and I regularly give iTunes gift cards to family members under 25. When my parents got sick of the constant viruses and software updates to run their standard-issue PC, even when approaching age 70 they decided on an all-Apple format for their home office.

In other words, this is a company which has become so pervasive that it’s cut across almost all the lines which often separate consumers – gender, age, ethnicity, religion, language and, to an extent, income – while in the process managing to shake up several legacy industries and creating one of the world’s most valuable companies. Now that Apple CEO Steve Jobs is shifting gears to become the company’s non-executive chairman, I started thinking about rare it is to have a business visionary like Jobs and what the building industry might learn from his success...

To read the entire column, click here.

To read the entire October 2011 issue in digital format, click here.

July column for Builder & Developer now online

My column for the July 2011 issue of Builder & Developer magazine is now posted online.

For this issue, entitled "Tracking Shadow Inventory," I've been recently working on a project for a multi-family client to track non-traditional apartments in Southern California such as REO units, sales of non-owner-occupied homes and compare both the cost of ownership versus these apartments as well as what the new owners could rent them for and break even. Since the subject seemed so timely, I thought it was well worth covering it in more detail.

From the column:

...For apartment builders and owners, today's low interest rates means that potential tenants can often find a nicer and larger home for close to what they would otherwise be paying to live in a typical apartment. In some cases - such as when putting 20 percent down and borrowing the rest at 4.5 percent or so for 30 years - the monthly payment for both attached and detached homes plus taxes and HOA fees (when applicable) could still up to 25 percent less than what a tenant would pay for a traditional apartment...

To read the entire column, click here.

To read the entire July 2011 issue in digital format, click here.