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Real Estate Big Data

Housing starts have a healthy surge, but also have a long way to go

(REAL ESTATE NEWS) Housing starts are way up this month, but will this trend remain under President Trump, or reverse?

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housing starts

Housing starts, permits, and completions, oh my

Housing starts in October hit 1.3M, rising 25.5 percent above September, and are 23.3 percent above October 2015, according to the U.S. Census Bureau and the Department of Housing and Urban Development (HUD).

Permits rose 0.3 percent above September (4.6 percent higher than a year ago), and completions increased 5.5 percent during the same period (rising 7.2 percent from last year).

“Big and welcoming news”

“Housing starts soaring past the 1.3 million mark for the first time since 2007 is big and welcoming news,” said NAR Chief Economist, Dr. Lawrence Yun. “The choke point of the housing market growth potential has been the lack of supply. The consequent tight inventory conditions has been pushing up home values to rise at faster rate than income growth over the past four years. This in turn has hurt affordability and contributed to the homeownership rate dipping to a 50-year low.”

“Now that supply is improving, future price growth should taper a bit,” added Yun. “There is no oversupply threat and even more construction is still needed to help relieve housing shortage. Let’s hope the rising construction activity continues.”

NAR has long called for housing starts to alleviate the tight inventory conditions that suppress affordability for the entire market.

What this means for the future

“Controlling for the number of household in the U.S., housing starts are only about 66% of their 50-year average,” notes Trulia Chief Economist, Ralph McLaughlin. “Clearly, the homebuilding sector represents an industry that has potential to grow under a Trump stimulus plan.”

Many are asking us how housing will react to Trump. McLaughlin says broader economic and immigration policies could be restrictive, Trump will likely implement builder-friendly policies.

“President-Elect Trump could implement a number of policies to help push the number of starts toward their historical average, but there’s a long way to go. Though Mr. Trump as discussed demand-side policies that would ease mortgage lending, such as Dodd-Frank reform, we encourage the President-Elect to also focus on supply-side policies given inventory shortages across the country,” stated McLaughlin.

He also asserts that there is a lot of room for housing starts to grow, despite this historic jump. “When taking the long view and controlling for the number of households in the U.S., housing starts are still only 66% of the 50-year average. To put October’s numbers into context, housing starts per household are about where they were in March 1993.”

#HousingStarts

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Real Estate Big Data

Fall has brought record rent prices and they’re not slowing down

(REAL ESTATE DATA) A market saturated with buyers and fewer homes, along with current job growth, is causing just as much demand for rent as to own.

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for rent sign in front of house yard

September 2021 reported an increase in rent for single-family homes from 2.6% in 2020 to 10.2% in 2021. A market saturated with buyers and little homes to choose from, along with current job growth, is causing just as much demand for rent as to own.

93% of people surveyed believe owning a home is a good investment, but many are being forced to rent even with sky-high prices due to the current state of homebuying. Buyers feel like the competition is too fierce or that a market crash resembling the 2008 crisis is looming in the near future.

Even more so than apartment complexes, private rentals of single-family homes are being scouted as they provide more room for multiple roommates or a family. Millennials aging into marriage and adulthood that would like to buy a home, but don’t feel it is the right time, are settling for paying double the mortgage of a single-family home in order to wait out the market.

“Single-family rental vacancy rates remained near 25-year lows in the third quarter of 2021, pushing annual rent growth to double digits in September,” said Molly Boesel, principal economist at CoreLogic. “Rent growth should continue to be robust in the near term, especially as the labor market improves and the demand for larger homes continues.”

Some particular markets are heating up while others are cooling off. Miami, FL saw a 25.7% gain year-over-year with the highest median rent prices across the entire US. Phoenix, AZ, and Las Vegas, NV take the second and third spots at 19.8% and 15.9%.

“Austin, Texas, and San Diego rounded out the top five markets for rent growth.”

On the other hand, major metro cities such as Chicago, Boston, Philadelphia, Washington D.C., and New York City are seeing lower rent growth, still 5% above mid-pandemic rates.

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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.

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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.

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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!

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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.

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