BuilderBytes' MetroIntelligence Economic Update for 3/27/15

Please click here to see the edition of BuilderBytes for 3/27/15 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Durable goods orders declined in February as businesses cut back on investments
• Initial unemployment claims fall by 9,000 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.

BuilderBytes' MetroIntelligence Economic Update for 3/26/15

Please click here to see the edition of BuilderBytes for 3/26/15 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• New home sales rose to 7-year high in February
• CPI rebounded 0.2 percent in February but unchanged for previous 12 months
• FHFA House Price Index rose 0.3 percent in January; up 5.1 percent year-over-year

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 3/24/15

Please click here to see the edition of BuilderBytes for 3/24/15 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Existing home sales rose modestly in February, but prices rose at the fastest pace in a year
• Federal Reserve keeps interest rates at current levels for now, but may raise the later in the year

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 3/20/15

Please click here to see the edition of BuilderBytes for 3/20/15 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Leading Economic Index edged up in February for the third straight month
• Initial unemployment claims rise by 1,000 in latest report
• Philadelphia Fed's Business Outlook Survey showed modest manufacturing expansion in February
• Mortgage applications fall 3.9 percent in latest survey even as rates dip slightly

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

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.

BuilderBytes' MetroIntelligence Economic Update for 3/19/15

Please click here to see the edition of BuilderBytes for 3/19/15 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Housing starts plummeted in February due in part to frigid winter weather
• February building permits rose 3.0 percent over previous month and 7.7 percent year-over-year
• Industrial production rebounded slightly in February and up 3.5 percent year-over-year

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 3/17/15

Please click here to see the edition of BuilderBytes for 3/17/15 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Builder confidence falls two points in March
• Producer Price Index dips 0.5 percent in February, down 0.6 percent for previous 12 months
• Consumer sentiment dips in March
• Empire State Manufacturing Survey shows modest expansion but six-month outlook dips

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 3/13/15

Please click here to see the edition of BuilderBytes for 3/13/15 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Retail sales dropped in February, likely due to harsh winter weather
• Initial unemployment claims fall by 36,000 in latest report
• Inventories flat in January as wholesale sales declined
• Mortgage applications fall 1.3 percent in latest survey as rates rise slightly

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 3/12/15

Please click here to see the edition of BuilderBytes for 3/12/15 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Job openings rose to 5.0 million in January as separations remained stable
• Wholesale inventories rose in January as sales retreated sharply

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 3/10/15

Please click here to see the edition of BuilderBytes for 3/10/15 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Job growth rose to 295,000 in February as unemployment rate fell to 5.5 percent
• Consumer credit slowed in January as credit card use reduced

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 3/6/15

Please click here to see the edition of BuilderBytes for 3/6/15 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Planned job cuts declined slightly in February, but still higher than year-ago levels
• Productivity fell 2.2 percent during fourth quarter of 2014, but rose 0.7 percent for all of 2014
• Unemployment claims rise to nine-month high as frigid weather takes a toll
• Factory orders dipped again in January as global demand cools and the dollar strengthens
• Mortgage applications largely unchanged in latest survey

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 3/5/15

Please click here to see the edition of BuilderBytes for 3/5/15 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Private sector jobs up by 212,000 from January to February
• Manufacturing sector index fell slightly in February due partly to West Coast port strike
• Service sector economy index rose slightly in January
• Personal income rose in January as consumer spending dipped

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 3/3/15

Please click here to see the edition of BuilderBytes for 3/3/15 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• January pending home sales rose to highest level in 18 months
• Fourth quarter 2014 GDP grew at 2.2 percent in second estimate
• Consumer sentiment fell in February due to severe weather
• Chicago Business Barometer plunged in February likely due to harsh winter and West Coast port strike
• Construction spending dipped slightly in January but still up 1.8 percent year over year

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

Relaxed credit standards and job growth bringing back the retail and first-time home buyer?

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.

During the depths of the Great Recession, perhaps the single most important saving grace which led us out of the crisis were investors who realized that the crash in home prices meant that many owner-occupied homes were excellent rental property investments.  Their purchases of millions of otherwise vacant homes helped to establish a pricing floor for foreclosed properties.  However, by the end of 2013, rising prices and more competitive supply for these homes meant declining profits for these investors, so they gradually disappeared from the market through the middle of 2014.

At the time, traditional buyers who live in these homes – also known as retail buyers – were not yet ready to fill the gap due to a combination of tight credit, lack of down payments and a job market which was improving but still had yet to impact wage growth.  Since then, however, several important factors have changed, mostly due to a strengthening job market and the relaxing of credit standards.

For all of 2014, almost three million new jobs were added – the most since 1999, which was the peak of in the first phase of the Internet-related technology boom.  And, while many of these jobs were simply replacing the millions lost during the previous recession, these gains were across the board and included multiple industries.  During the last quarter of 2014, nearly 290,000 jobs were created per month, and in January 2015 another 257,000 jobs were added.

However, even with these impressive gains, during 2014 wage growth barely budged over two percent, which meant that employees simply didn’t have extra cash to use for down payments.  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 growth during the fourth quarter of 2014 -- that Federal Reserve Chair Janet Yellen has continued to postpone any hike in short-term interest rates.

Despite the sluggishness in wage growth, consumer spending did rebound strongly in 2014, adding 1.7 percentage points to overall GDP growth and posting the best showing since 2006.  And while GDP growth was much faster in the middle of the year before slowing to 2.2 percent in the fourth quarter of 2014, much of that slowing was due to an increase in imports related to increased consumer spending and a decline in federal government spending.

For lenders, one way for them to encourage the return of the retail buyer is to relax lending standards – helped in large part by FHA, Fannie and Freddie.  Last December, FannieMae launched its own program for first-time homebuyers with FICO scores as low as 620, limited cash-out refinances, and down payments of just three percent.  FreddieMac punted the start of its own low-down payment program until March 23, requiring borrowers to first seek credit counseling and setting its own FICO floor at 660.  Meanwhile, FHA has lowered its MIP insurance for 30-year mortgages to just 0.85 percent that, when combined with low interest rates, provides the lowest-cost effective financing available in its 80-year history.

For home builders, these changes bode well for 2015, with NAHB’s Leading Markets Index moving up to .90 in the fourth quarter of 2014, which means that the national housing market is back to 90 percent of normal economic and housing activity.  Of the 360 metro areas tracked by this index, 80 percent saw increases during the quarter.  At the same time, NAHB’s Housing Opportunity Index also showed housing affordability rising to nearly 63 percent, due largely to lower interest rates and some lower-priced housing inventory.

Fortunately, construction lenders have also taken notice, with the stock of AD&C loans made by FDIC-insured institutions rising by 17 percent between the fourth quarters of 2013 and 2014.   Even with such lending still strongly subdued from the peak of 2008, this gradual thawing could help provide much-needed inventory for the first-time buyers waiting in the wings.

Santa Monica-based start-up company offers home plans for sale

Recently, a guy named Ramtin Ghaneeian reached out to me to tell me about a company he and his brother launched last November called LotPlans.  Based in Santa Monica -- the base of today's burgeoning "Silicon Coast" -- the Ghaneeian brothers launched their Web-based e-commerce service out of frustration when doing their own real estate deals and looking for custom home plans that were affordable and practical.

Although there are certainly other Web sites out there which offer ready-to-go plans for custom homes, LotPlans hopes to carve their own niche through a more detailed vetting process for submitted plans as well as the ability to customize and work with a network of experts they've assembled.  I asked Ramtin to tell me what makes his company different, and here's what he had to say:

"At LotPlans, we understand that there are other companies selling house plans. However, we are a boutique shop with a huge online presence. What that means is, at LotPlans, we cater to quality versus quantity. Because we can modify any plan that we have on our site, our vision is 'If you want to build it, we have it - or we can design it!'

That being said, we don't want to feature everyone's plans on our site. In fact, we've turned away some designers and architects that we thought weren't on par with our company.

My brother and I come from a development background. And, as we were very fresh in the business, we felt there was a need for a company like LotPlans that's more personable and caters to both architects and potential home-builders. In speaking with a lot of architects, they didn't necessarily have the best relationship with their plan publishers.

At LotPlans, we develop strong relationships with our partners because we we feel like we will showcase plans on our Web site that you won't find anywhere else, along with a heightened customer experience for our clients. After my brother and I paid the high cost in fess (and time) for house plans designed for development, we thought we would launch a more user-friendly, cost-effective, and efficient company to help developers, home builders, and home designers alike.

We are a newer company, and we have grown organically. We began by pounding the pavement, begging architects and designers to trust our vision (even though we didn't even have a functioning Web site at that time) to now, where we have designers coming to us to publish their plans.

We have strict quality control, meaning we don't just publish everything on our site. That's why I like to refer to us as the low-cost, high-end boutique of online plans - and a Web site that comes with great customer service. This has grown into our passion and our customers definitely feel that when they use our service."

So if you're looking to build your dream home, add a guest house to an existing property or even build your own homes for sale as a builder, LotPlans may have what you need.  I wish these guys the best of luck just as the housing rebound turns to the next phase in which more retail buyers (versus investors) come into the marketplace.