Connect with us

Real Estate Big Data

Housing starts drop dramatically, yet rise impressively, depending on how you look at it

If you look at the data through one lens, this data is horrifying. Through another, promising. Which lens will you use when deciphering this mixed bag of fresh stats?

Published

on

new home construction

In order to relieve the inventory shortage in America, the National Association of Realtors has said repeatedly that the most needed solution is the engine of new home construction starting back up again. March data from the U.S. Census Bureau offers mixed signals – while housing starts dropped 8.8 percent and permits hit their lowest point in a year, the 12-month rolling total of starts actually grew 13 percent year-over-year.

bar
The Bureau reports starts at the lowest level since October, and economists projected a 1.17 million unit pace, yet March fell short at only 1.09 million units.

More mixed signals

Trulia Chief Economist, Dr. Ralph McLaughlin, notes that the 12-month rolling total “a more statistically robust measure of trends in housing start data,” and in March, that total “grew impressively,” adding that April 2015 – March 2016 “represents the best 12-month span for starts since August 2007.”

Although Dr. McLaughlin points out that the number of jobs per new housing starts are rebounding, we would add that in March, the dollar fell considerably.

Single family isn’t dragging the average down

Combining multifamily and single family data, groundbreaking improved a bit in the Northeast, but the national average was drug down by a dramatic 21.2 percent dip in the Midwest and a 4.9 percent drop in the South.

Separated, multifamily starts fell 7.9 percent, while single family starts hit their highest level since October 2007. Also separated out, multifamily permits plummeted 18.6 percent, while single family home permits only dropped 1.2 percent in March. Clearly, multifamily is playing a tremendous role in dragging down the national average, but single family home starts aren’t exactly skyrocketing.

Yet construction jobs are way up

And finally, construction jobs per start has hit the 15-year average, marking the best month since November 2008.

Dr. McLaughlin notes, “This is due to the recent increase in single-family starts, which uses more workers per unit built than multifamily starts.”

He concludes that “As the share of multifamily starts decreases, we should expect this number to increase in the months ahead as more labor intensive single-family starts to pick up.”

#HousingStarts

The American Genius' real estate section is honest, up to the minute real estate industry news crafted for industry practitioners - we cut through the pay-to-play news fluff to bring you what's happening behind closed doors, what's meaningful to your practice, and what to expect in the future. Consider us your competitive advantage.

Real Estate Big Data

Cities and states where renters eviction protection policies are still in place

(REAL ESTATE BIG DATA) Even though the national eviction ban has lapsed, 7 states and over 20 cities still have policies in place for renters eviction protection.

Published

on

UnTil Debt Do Us Part representing renters debt

Half of the renters in the United States still have some protections available due to the coronavirus pandemic.

Many of these renters were those who were tenants before, during, and “after” the pandemic though the effects are still lingering. Some new renters have had to enter the expensive rental market scene after being discouraged when attempting to buy a home. Those that are over the bidding wars, rising prices, and dwindling options are stepping out of the home buying process and are opting to rent instead, driving rental prices sky-high. It’s a lose-lose situation either way.

The Supreme Court ruled in August 2021 that the national moratorium on evictions was overreaching, even though the policy had been in place since September 2020. In response, many states and cities are setting their own limits.

Even though the national eviction ban has lapsed, 7 states and over 20 cities still have policies in place for protection. More than 15% of renters are behind on payments with the average debt owed is $3,700. Though in some areas, the debts amount to $10,000 per household.

New Jersey and New York tenants can’t be evicted until the new year in most counties. In New Mexico, renters also can’t be pushed out for late payments, but the end date for that protection has not been established.

In Connecticut and Virginia, landlords can’t evict tenants who have applied for federal aid. In LA, the eviction protection ends January 31, 2022, in Austin, TX, December 31, 2021, and in Seattle, January 16, 2022.

In Oregon, Massachusetts, Michigan, Minnesota, and Washington D.C., eviction proceedings are paused for those that have their renter’s federal assistance application pending. In Nevada, showing that you’ve applied for rental assistance is considered a defense against eviction until June 2023.

$45 billion in aid is allocated by Congress for federal rental assistance, but less than $13 billion has been used so far.

If you are still in need of assistance and don’t reside in any of the areas above, consult location advocates and learn your rights to see what protections are available to you.

Continue Reading

Real Estate Big Data

5 ways AI is shifting real estate and how to capitalize on it

(REAL ESTATE BIG DATA) Artificial intelligence is bringing a seismic shift to commercial real estate in everything from investing to sales to property management. Hold on!

Published

on

Woman working at desk with multiple desktops open to AI tools.

Forget about that location thing. Now real estate – especially commercial real estate – is about data, data, data. As in, Really. Big. Data. And AI is owed a large part of the credit for that.

A dizzying amount of data is being crunched and sorted and searched by artificial intelligence-enabled tools that are changing how deals get done and who will still have a job in the future.

The promise of AI to use data to predict the future is massive – and it promises to do that with more accuracy and efficiency, greater productivity, and less cost for commercial as well as residential real estate.

So, what, exactly, can AI do for commercial real estate? Let’s break it down.

What AI is

To put it simply, artificial intelligence is what lets Amazon’s Alexa talk to you and cars drive themselves. Its algorithms use data to mimic human intelligence, including learning and reasoning. Then there’s machine learning, where algorithms analyze enormous amounts of data to make predictions and assist with decision making. We’re putting them both under the same AI umbrella.

There are four main areas where AI is remaking the commercial real estate industry: development and investing; sales and leasing; marketing; and property management.

Development and investing

With its ability to quickly analyze a staggering amount of data, AI lets investors and developers make better data-driven decisions. More responsive financial modeling helps identify ideal use cases and project ROI under multiple scenarios using real-time data. Pulling in alternative data – say, environmental changes or infrastructure improvements – goes beyond traditional data points and can identify investment opportunities, such as neighborhoods beginning to gentrify. In fact, alternative, hyper-local data has become even more important as COVID-19 continues to upend property valuation models.

AI’s crystal ball comes from recognizing patterns in the data and continuing to learn from new information. It can forecast risk, market fluctuations, property values, demographic trends, occupancy rates and other considerations that can make or break a deal.

And it does all of this more efficiently, more accurately and less expensively than manual methods.

Sales and leasing

There’s a big question looming over AI and automation: Will technology put real estate brokers out of business? The short answer is, “No, but brokers need to step up their tech game.”

Keeping up with – and being open to – tech trends is essential. Clients’ ability to use online marketplaces to search for or list property will only grow, but there still is no substitute for expertise and the personal rapport that builds trust. Chatbots can’t negotiate (yet). Robots can’t show a space and weave details about the property into a story. (If you want to know more about using storytelling in real estate, check out this great marketing guide.)

But Big Data is such a powerful tool that brokers need to know how to harness it for themselves. Having more, and more nuanced, data about clients and properties means brokers can better match the two. They can be more confident in setting sales prices and rental rates. Becoming a “technology strategist” to help clients design an automation strategy for a property would be a great value add to their services. Even just starting out with a website chatbot to answer common questions would add a level of tech-savvy efficiency to communication with clients and prospects.

Marketing

Also a boon of Big Data for brokers: more sophisticated, targeted marketing for themselves, as well as for client properties.

Integrating AI with customer relationship management (CRM) tools brings a richer understanding of clients and prospects that can make choosing marketing channels and personalizing targeted content more precise.

Then there’s data-driven lead scoring. Property intelligence firm Reonomy says its commercial data mine – 52 million properties, 100 million companies, 30 million personal profiles, and 53 million tenants – can be searched in multiple ways to create custom prospect lists. (Check out Forbes.com’s “5 Ways Artificial Intelligence is Transforming CRMs” for a fascinating list of what AI can do, including analyzing conversations for sentiment analysis.)

Property and facility management

The Internet of Things (IoT) is already helping property and facilities managers control and predict energy costs, as well as proactively address maintenance issues. Integrating smart technology like thermostats and sensors with AI also means more efficient space planning. Smart security cameras and wi-fi tracking can create “people heat maps” that can identify underutilized or overcrowded areas.

IBM’s TRIRIGA does that and more. Part of the Watson project, TRIRIGA offers AI-driven insights to show how people are actually using a space and ensure a company has the right amount of space in the right areas. It can also analyze common questions from a chat log, then use that data to create an AI virtual assistant to automatically answer those questions – and update itself as it learns new data. Maintenance requests, room reservations and more can be fully automated.

Strategic space planning has become even more important during the pandemic, as work-from-home trends and safety concerns reshape offices as workers return. (Need ideas for your office? IBM’s Returning to the Workplace guide might be a good place to start.)

Barriers to adoption

There’s no question tech-enabled commercial real estate companies will have a competitive edge. The question is, when will more of them agree enough to adopt AI more widely?

PropTech with and without AI has exploded over the past few years – and that’s part of the problem. In an Altus Group survey, 89% of CRE executives said the PropTech space needs significant consolidation before it can effectively deliver on industry needs; 43% said that is already underway or will occur within 12 months.

Then there’s the undeniable learning curve that comes with any tech tool – an investment of time as well as money. The survey also showed concerns about regulatory requirements for data collection and management, having enough internal capacity, and nonstandard data formats.

Despite those perceived barriers, there’s also no question that innovation and disruption from AI are moving at a dizzying pace – and that commercial real estate needs to keep pace.

Continue Reading

Real Estate Big Data

Supply crisis hits housing – starts and permits fell in September

(REAL ESTATE) New data from the Commerce Department shows a dip in permits and starts, but if you look closely, multifamily is carrying that weight, so how is single family production going?

Published

on

housing starts

Last month, housing starts fell 1.6%, which is only a slight dip, but permits fell 7.7%, and the gap between units completed and those still under construction is the largest on record, according to reporting from the U.S. Commerce Department.

While starts and permits hit a year low and while labor shortages, supply chain issues, and rising prices of raw materials, it should be noted that single-family starts actually remained unchanged, and permits for single family homes only fell 0.9%, so what we’re looking at here is a slowdown in the multifamily sector as sales heat up in single family housing..

Another factor at play here regarding still-tight inventory levels is the federal mortgage forbearance program as a response to the pandemic. As the program wraps up, more inventory will come online.

Dr. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR) explains: “The current mortgage default rate of at least three months is running high at 3.5% compared to less than 1% before the pandemic. However, foreclosures have been at historic lows so far due to the forbearance support. The default rate will certainly fall as long as the economy continues to generate jobs, but the end of the federal support program inevitably means some homeowners will need to sell. This will be another source of housing inventory.”

Because tight inventory levels have kept the market restricted and sales below what demand is, the residential real estate sector should see hope in this analysis.

But there is no sector safe from the supply chain crisis or prices rising again on raw materials. Reuters reports that many materials like windows and breaker boxes are in short supplies while the cost of building materials have surged, like copper which is up 16%, and lumber prices are jumping back up to record highs set in May.

Homebuilder confidence is up, according to the National Association of Home Builders (NAHB), but their most recent survey also indicates that “builders continue to grapple with ongoing supply chain disruptions and labor shortages that are delaying completion times.”

The Mortgage Bankers Association (MBA) reported today that mortgage applications for new home purchases are down 16.2% compared to September 2020, and applications are down 4% compared to August. It is notable that the average loan size hit $408,522, the highest on record, and another indicator of increasing construction costs.

Going forward, analysts expect the backlog of starts to continue as labor and supply chain issues persist. And although the news isn’t overtly positive, single family housing on its own is actually performing better than in 2020. There is light at the end of the tunnel for hopeful homebuyers.

Continue Reading
Advertisement

Our Partners

Get The Daily Intel
in your inbox

Subscribe and get news and EXCLUSIVE content to your email inbox!

Still Trending

Get The American Genius
in your inbox

subscribe and get news and exclusive content to your email inbox