Apartments are a great way to ease the burden of population growth, if you would call it a burden. 

Blanca Torres
Reporter- San Francisco Business Times

Email
 | Twitter
 | Google+
 | LinkedIn

The Bay Area is a great place to live, and people keep moving here regardless of astronomical housing prices.

Somehow a prohibitively expensive cost of living doesn’t ward off population growth.

In fact, the Bay Area is expected to swell 30 percent by 2040 to 9.3 million people — meaning we will need an estimated 660,000 new housing units. Policy and market demands influence developers to build, yet residents often oppose planning for population growth.

I wrote on a story for our current print edition on how policy and market demands influence developers. That piece accompanies a larger story about residents who oppose planning for population growth.

The Bay Area’s perception of development is full of ironies.

No one wants sprawl because we want to preserve natural environments, but people also don’t want density or tall buildings that could possibly, at some angles, block views of nature.

People love it when companies go on hiring sprees and industries flourish, but they don’t like it when a new apartment building to house those workers comes along.

“Growth really needs to be seen as an opportunity,” said Gabriel Metcalf, executive director of SPUR, San Francisco Planning and Urban Research, during a recent Commonwealth Club panel I attended on how development trends need to address climate change. “Regions of the United States that are growing have the opportunity to take all that growth and rebuild both our cities and our suburbs so that they become more walkable, so that they can be organized into nodes for transit”

I know many dream of owning a single family home with all the fixings, but in reality, that’s just not sustainable and this is the Bay Area, right, aren’t we all about sustainability?

Now, here’s my take on why we should consider apartments a viable solution even though time and time again, residents do what they can to block those developments from moving forward.

1. Young and old people don’t like mowing lawns or cleaning large homes.

2. People in the Bay Area like using public transit — when it’s nearby. So, put apartments near transit and more people get to live by it.

3. Apartments are a way to fit lots of people in less space using up fewer resources such as land and energy.

4. Roof decks on apartments are great for catching views of the region and nature. If you are worried about an apartment building blocking your view, hike up Mt. Diablo and take some photos with your smartphone that you can refer to later.

5. Apartment developments can energize underutilized areas, such as vacant lots that you drive by and ignore all the time, places that won’t be turned into tract homes anyway.

Blanca Torres covers East Bay real estate for the San Francisco Business Times.

Article source: http://www.bizjournals.com/sanfrancisco/blog/real-estate/2013/05/5-reasons-apartments-can-save-the-bay.html?page=all

Apartments are a great way to ease the burden of population growth, if you would call it a burden. 

Blanca Torres
Reporter- San Francisco Business Times

Email
 | Twitter
 | Google+
 | LinkedIn

The Bay Area is a great place to live, and people keep moving here regardless of astronomical housing prices.

Somehow a prohibitively expensive cost of living doesn’t ward off population growth.

In fact, the Bay Area is expected to swell 30 percent by 2040 to 9.3 million people — meaning we will need an estimated 660,000 new housing units. Policy and market demands influence developers to build, yet residents often oppose planning for population growth.

I wrote on a story for our current print edition on how policy and market demands influence developers. That piece accompanies a larger story about residents who oppose planning for population growth.

The Bay Area’s perception of development is full of ironies.

No one wants sprawl because we want to preserve natural environments, but people also don’t want density or tall buildings that could possibly, at some angles, block views of nature.

People love it when companies go on hiring sprees and industries flourish, but they don’t like it when a new apartment building to house those workers comes along.

“Growth really needs to be seen as an opportunity,” said Gabriel Metcalf, executive director of SPUR, San Francisco Planning and Urban Research, during a recent Commonwealth Club panel I attended on how development trends need to address climate change. “Regions of the United States that are growing have the opportunity to take all that growth and rebuild both our cities and our suburbs so that they become more walkable, so that they can be organized into nodes for transit”

I know many dream of owning a single family home with all the fixings, but in reality, that’s just not sustainable and this is the Bay Area, right, aren’t we all about sustainability?

Now, here’s my take on why we should consider apartments a viable solution even though time and time again, residents do what they can to block those developments from moving forward.

1. Young and old people don’t like mowing lawns or cleaning large homes.

2. People in the Bay Area like using public transit — when it’s nearby. So, put apartments near transit and more people get to live by it.

3. Apartments are a way to fit lots of people in less space using up fewer resources such as land and energy.

4. Roof decks on apartments are great for catching views of the region and nature. If you are worried about an apartment building blocking your view, hike up Mt. Diablo and take some photos with your smartphone that you can refer to later.

5. Apartment developments can energize underutilized areas, such as vacant lots that you drive by and ignore all the time, places that won’t be turned into tract homes anyway.

Blanca Torres covers East Bay real estate for the San Francisco Business Times.

Article source: http://www.bizjournals.com/sanfrancisco/blog/real-estate/2013/05/5-reasons-apartments-can-save-the-bay.html?page=all

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.

(click to enlarge)

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.

(click to enlarge)

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.

(click to enlarge)

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

The 2012 report compares the average home listing price of more than 72,000 four-bedroom, two-bathroom properties listed on coldwellbanker.com between January and June 2012. The average home price in Vienna area came in at $668,317.

Arlington topped the list with an average price of $678,486. Behind it was Alexandria at $587,716, according to the report. The least-expensive market in the state was in Danville, with an average home price of $153,957.

Nationally, the most expensive state-level market was Hawaii, with an average home price of $742,551, followed by Massachusetts and California. The least expensive statewide home market averages were Nebraska, Iowa and Georgia.

Nationally, the most expensive market was Los Altos, Calif., where the average price listing of a four-bedroom, two-bathroom home was $1.7 million. The report noted the Los Altos market is within 15 minutes of Google, Apple, Facebook and Stanford University, highlighting the success of the technology industry.

“The success of many of our native tech companies has shined a spotlight on Silicon Valley and our real estate market in the San Francisco Bay Area,” said Rick Turley, president of Coldwell Banker Residential Brokerage in the San Francisco Bay Area, in a press statement. “Listing prices in our market are a product of ongoing high demand, projected population growth and the low inventory levels of homes in what is one of the most desirable locations to live.”

The most affordable market this year is Redford, Mich., where a four-bedroom, two-bathroom home is listed at $60,490.

Read the full report here.

Article source: http://vienna.patch.com/articles/report-vienna-second-most-expensive-home-market-in-state

PARSIPPANY, N.J.

November 28, 2012
5:43am

•  The difference between Silicon Valley and the Central Valley

•  “A product of ongoing high demand, projected population growth and the low inventory levels”

What’s the difference between living in Los Altos in Silicon Valley and Delhi in the Central Valley?

Just $1,583,834.

That’s the difference in the median prices of homes in the two cities that are just 112 miles apart, according to a new report Wednesday from Coldwell Banker Real Estate LLC, which is listing the media prices it has found in 2,500 markets.

Several of the nation’s most expensive real estate markets are in Northern California, it says. Google, Apple, Facebook and Stanford University are all located within 15 minutes of this year’s most expensive market, Los Altos, where the average listing price of a four-bedroom, two-bathroom home is $1,706,688.

“The success of many of our native tech companies has shined a spotlight on Silicon Valley and our real estate market in the San Francisco Bay Area,” says Rick Turley, president of Coldwell Banker Residential Brokerage in the San Francisco Bay Area. “Listing prices in our market are a product of ongoing high demand, projected population growth and the low inventory levels of homes in what is one of the most desirable locations to live.”

Lowest median in the Central Valley is in Delhi in Stanislaus County where the money that fell off the table in Los Altos might buy a four-bedroom, two-bath home: $122,854.

In contrast, the most affordable market this year is Redford, Mich., where a similar home, four-bedrooms, two-bathrooms, is listed at $60,490 — a listing price difference of more than $1.6 million from Los Altos. In fact, says the report, 28 homes could be purchased in Redford for the price of a similar home in Los Altos.

Overall, the report found the average listing price of a four-bedroom, two-bathroom home in the U.S. to be $292,152. Affordability remains strong in many markets across the country as 36 percent of the markets analyzed by the report had an average home listing price of less than $200,000 for four-bedroom, two-bathroom homes.

The five most expensive markets are all in California, with four in the San Francisco Bay Area. Los Altos tops the list, followed by Newport Beach ($1,658,000), Saratoga ($1,582,434), Menlo Park ($1,506,909) and Palo Alto ($1,495,364). But even with these high priced markets, California was not the most expensive state. The average listing price of a four-bedroom, two-bathroom home in California ($431,625) is less than both Hawaii ($742,551) and Massachusetts ($489,063).

Article source: http://www.centralvalleybusinesstimes.com/stories/001/?ID=22378