Disclosure: I am long KBH. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More…)

The real estate market, like any other market, is a numbers game. Demand versus Supply. If one is greater than the other, it tips the balance and creates a turn in the market. Did we turn? Let’s look at the numbers.

Demand can be tracked simply by population growth. Using 2010 US census numbers, we can track back 50 years of population growth and get an average compound growth of 1.4% growth per year. Factors such as birthrate and immigration make this demand stable and consistent through the last 50 years.

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Secondly, let’s look at Supply. New supply comes onto the market in terms of new homes built each year. The best way to track this is through housings starts. Let’s track back 50 years of housing starts to see our levels of new supply to the market.

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From the graph, the average cyclical real estate market is plotted through 10 year cycles. It’s rather clear that the 10 year cycles have been pretty predictable the last 50 years up to 1997. Instead of the cyclical downturn we should had expected in 1997, we accelerate upward mainly due to the dot-com bubble. This continued to after 2001 when the dot-com bubble popped, and was followed upward with historically low interest rates from the Federal Reserve. It’s no wonder why we had a dramatic downturn in 2006, followed by historically low starts the next 5 years to clear the supply. Excluding the bubble period, if you break down these 10 year averages from the last 60 years, the average new housing starts are close to 14M per decade. There are decades where the homebuilders either overbuilt or under-built, but the demand over time remains consistent to level out this supply. More dramatically though, in the last 4 years, the total cumulative housing starts combined to a number barely over 2.2M homes. To reach the historic 14M decade average, there will need to be 2M housing starts per year or a sum of 11.8M starts in the next 6 years.

If we are able to meet 2M homes per year, the homebuilders would need a dramatic spike in housing starts the next 6 years.

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From the latest housing report this month, the homebuilders are currently on pace to reach only 894k (revised, Oct 2012) (seasonally adjusted) new starts this year. It is no wonder why new homebuilders are in “catch-up” mode buying any large developed parcel of land to meet the supply shortage. Furthermore, to support this data, inventory in many local markets are experiencing 50 year historic lows. So in principle, the increased demand due to consistent population growth, combined with decreased supply shortage from the last 4 years, will equal price appreciation in the next 6 years. Do you think we hit a bottom now?

Who are the best homebuilders that are position to take advantage of this shortage?

Any homebuilders that survive the downtown of the last 5 years are all in a great position to take advantage of the next 5 years. More specifically, homebuilders with the largest and key coastal land position will benefit the most. I like KB Home (KBH) as my top pick due to its heavy land position in California. They own more than 60% of their total land holdinsg in California, with the majority of the remainder in other hot markets like Texas. Fundamentally, their balance sheet and cash position is solid with moving a large part of their short-term bond holdings ($585M) well out to 2020 and beyond. In addition, they have a meaningful deferred tax asset of $883M that could be used to potentially offset $2.2B future taxable income. All of this combined will just provide them with a significantly large cash position to fill the shortage the next 5 years in housing.

Additional disclosure: John Chiem is a realtor in the SF Bay Area real estate market.

Article source: http://seekingalpha.com/article/1081501-why-housing-will-surge-in-the-next-5-years

Fast Forward Property Management, located in the San Francisco Bay Area, is offering three tips to property owners on how to fill vacancies.

“Owners and property managers invest a great deal of time and money to attract and maintain high-quality residents,” said Jade Powell of Fast Forward Property Management. “High vacancy rates can quickly turn a highly profitable investment property into a money-losing liability.  When a tenant leaves, you lose money by not being able to collect rent and can spend a considerable amount of time and money painting, repairing, cleaning, and advertising your unit.”

Fast Forward Property Management offers expert advice for those in the Bay Area, Sonoma County, San Francisco, Sacramento, San Jose, and Santa Rosa looking to fill their vacancy with a new tenant.

The following three tips should be considered by property owners:

First, place banners and signs around the property and launch ad campaigns online and with other media outlets.

Second, work with real estate sales professionals to develop referrals. Real estate sales professionals are a great source because many people go to them for listings, especially those new to the area, so it is wise to build a business relationship with them.

Finally, offer $150 to $250 to any tenant who refers someone that is approved for a lease. This provides motivation for current tenants to be on the lookout for new tenants, minimizing the amount of time and money spent by the property owner searching for someone to fill the vacancy.

These are great suggestions that every property owner should bear in mind to maintain successful rental properties.

For more information about property management, and all services provided by Fast Forward Property Management, visit them on the web at www.FastForwardPMBayArea.com or call them at (877) 388-0998.

About Fast Forward Property Management

Fast Forward Property Management is a property management firm in the San Francisco Bay Area that specializes in managing apartment buildings, HOA, and commercial properties.  The staff at Fast Forward Property Management has over 40 years of experience in rental management. They offer the Greater Bay Area communities of Sacramento, San Francisco, San Jose, Santa Rosa, and Sonoma County property management services.

Filed under:

Real Estate , Fast Forward Property Management, BlockShopper BNR, San Francisco Bay Area

Article source: http://sf.blockshopper.com/news/story/243210-Bay_Area_Fast_Forward_Property_Management_Offers_Three_Tips_on_Improving_Vacancy_Rates