homesmillbrae.com » Department Of Commerce

New Nightmare for Home Builders: Not Enough Skilled Workers

Fri, 07 Dec 2012 22:40:58 +0000

Housing starts are finally coming off their lows of barely a half a million in 2009, and are now surging quickly up in to a rate of around 800,000 annualized, according to the U.S. Department of Commerce. While this is still about half the pace of a normal housing market, it still means builders are looking for workers, especially skilled workers.

“About two weeks ago we started getting calls, like 7 or 8 a day, and we’ve been asked to bring students to work sites,” says Linda Thomas, an employment liaison for Job Corps. “They said look just bring them with their resumes, we’ve got work, we’re pushing more contracts now. Business is doing well, building is doing extremely well in the area.”

(Read More: Pending Home Sales Surge to Five Year Highh)

This is a drastic change from just six months ago, when Thomas was still finding herself the beggar, not the chooser with home builders. Her main concern is that all this new momentum will come to a grinding halt should the nation’s economy go over the so-called “fiscal cliff.”

“A contractor, once he sets up a job, then he has to get money for that job because he has to buy the materials and so forth, so if a bank is a little scary or his lender is a little scary, a private lender, he may not have the funds to start the project, therefore we won’t have the jobs.”

(Read More: Top Destination States for Jobs)

Article source: http://www.cnbc.com/id/100271485

Apartment Demand Ebbs as ‘Avalanche’ of New Units Open

Thu, 04 Oct 2012 06:25:46 +0000

One of the biggest upsides to the downturn in housing has been a surge in demand for apartments.

Whether burned by foreclosure or afraid of losing money in homeownership, Americans have run in droves to rent. That resulted in a strong rise in rents and a big drop in vacancies over the past few years, as investors rushed to build more supply. Now, just as that supply is about to come on line, demand appears to be weakening.

Apartment vacancies fell by just ten basis points in the third quarter of 2012, from 4.7 percent to 4.6 percent, according to Reis Inc. While that is still an improvement, it is the slowest rate since the recovery began in 2010; vacancies fell by an average 35 basis points every quarter from 2010 and 2011.

“Demand for apartments still clearly outstrips supply growth, with absorption figures higher than construction, and vacancies declining. Still, there is cause for concern in the near-term that demand is abating for multifamily, just as a veritable avalanche of new projects begins to open their doors early next year,” notes Reis economist Victor Calanog.

The change in occupied apartments also slowed to the lowest rate of absorption since the first part of 2010 and represented less than half the quarterly average of the past two years. This is particularly concerning, given how many new apartments are under construction and scheduled to open in the next two years. Multi-family housing starts were up 37 percent in August from a year ago, according to the U.S. Department of Commerce.

Reis estimates that accounting for delays and cancellations, between 160,000 and 200,000 new units will open in 2013. In 2014 that “total” figure (not adjusted for delays) exceeds 320,000. That is in the 79 markets it tracks, where only 41,000 or so units were built in 2011. The average annual figure from 2001 to 2008 was about 120,000.

Many analysts still believe apartment demand will remain robust in the near term, relative to where it has been historically, as so many potential home buyers are shut out of the mortgage market due to damaged credit. They also point to a shift in the homeownership mentality of younger Americans, who have seen what the housing crash did to their parents and who are gravitating more and more to urban centers.

“Renting an apartment offers extreme flexibility in today’s techie generation and offers sociability,” says Alexander Goldfarb of Sandler O’Neill. “It’s huge how much kids want to be with other kids, and apartments lend themselves well to that. We are not seeing a sudden wave of people moving out to buy homes, even though housing is finding a floor.”

In fact, Goldfarb says the move-out rate is now at 16 percent, below the historical average of 20 percent. The biggest issue for the big apartment REITs, like Equity Residential
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], he adds, is slowing growth rates. The stocks themselves are down and underperforming because investors expected this to be the peak year for the sector.

“Does that continue or do other trends boost them?” asks Goldfarb. “When you look at absolute growth rates, it will look very good relative to other sectors, and that will bring investors back to apartments.”

Goldfarb does not believe that the burgeoning single family rental market is taking share away from the multi-family sector, but others say it could play a role, especially for lower income families looking for more space. Investors in some of the hardest hit housing markets have been buying up as many distressed properties as they can find, citing new demand.

“I see unprecedented demand, more than I’ve ever seen in 15 years,” says James McClelland, CEO of Chicago-based MACK Companies, a rental property investment group. “Our waiting list is already up to 4 months. if you pass our criteria to become one of our renters you get the honor of sitting on a four month waiting list until the next home is available to you.”

The housing market may be recovering, but it is far from a robust recovery, and the lessons learned in the latest crash will likely keep rental demand high. Given where other commercial sectors are with vacancy rates, apartments are still the healthiest; it remains to be seen what all the new supply will do to the fundamentals over the long term. Analysts say 2014 is the year to watch.

Sector Watch: US-Based REITS

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—Simon Property Group
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—Equity Residential
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—Apartment Investment Management Co
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—Vornado Realty Trust
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—Boston Properties
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—FelCor Lodging Trust
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—AvalonBay Communities
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—American Capital Agency Corp
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—UDR, Inc
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—Essex Property Trust, Inc.
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—Camden Property Trust
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Questions? Comments? And follow me on Twitter @Diana_Olick

Article source: http://www.cnbc.com/id/49271964?__source=RSS*blog*&par=RSS

Credit Crunch Has Home Builders Sleepless in Seattle

Thu, 17 Mar 2011 02:38:13 +0000

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The only thing more cold and gloomy than my pre-dawn live shot here in Seattle this morning was the February housing report from the Department of Commerce.

Housing starts plunged 22.5 percent in February from the previous month, and building permits, which are an indicator of future activity, dropped 8.2 percent.

You can’t blame it all on the weather either, as starts were even down 28 percent out West.

Some of the housing pundits this morning are saying this is all a good thing, as there is still far too much supply on the market, and builders need to sell all that before they start building more, but tell that to a home builder. The real issue now is credit. The big public builders can get some cash from the banks, but they represent barely a quarter of the market. The private builders are in real need now.

“Our view is that the housing market will start to get back on its feet this year,” notes HIS Global Insight’s Patrick Newport. “The forecast, however, hinges on builders being able to access credit. If builders cannot get financing to build new homes, housing will remain in the dumps.”

Here in Seattle, California-based Shea Homes is going in a new direction for financing, tapping private equity, which appears to be far more willing to back private builders than the banks.

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Article source: http://www.cnbc.com/id/42110876?__source=RSS*blog*&par=RSS