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Real Estate Big Data

New home construction data is out, and the numbers are both horrible and awesome

If new home construction data slipped this month, how can a leading economist call this “the best year since the recovery began?”

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According to the U.S. Census Bureau, housing starts in July fell 16.0 percent, but were up 10.1 percent for the year. Falling to 1.206 million, housing starts are at historically low levels, and after a jump last month, permits saw a 6.3 percent dip during this reporting period (although permits are up 7.5 percent for the year).

Although multi-family saw the biggest decline, pulling the overall number down, it is not time to panic, as it is typical for this sector to decline after frantically making up for lost winter productivity. All regions but the Midwest are doing well when looking at year to date numbers.

So why then does Trulia’s chief economist, Dr. Selma Hepp proclaim that “Despite the volatility, construction activity is in the best year since the recovery began.” Because of data.

How can this be good news?

Hepp explains by offering in her own words below the combination of single-family starts, annual growth in multi-family construction, and builder confidence:

  1. Single-family construction starts are moving up ever so slowly, and reached 782,000 annualized units in July 2015. Finally a little bit stronger than multi-family starts, the single-family starts are still below long-run average in most major metros across the county. In fact, Trulia’s latest study reveals that the single-family component is still well below historical norms even in metros seeing improvement in annualized permit activity. Only 13 out of the 100 largest U.S. metros saw increases in single-family construction over their historical norms, most notably in Austin, Houston, Charleston and Nashville.
  2. The annual growth in multi-family home construction has slowed markedly but in line with expectations, particularly among 5+ units construction which recently reached highest levels since mid-1980s. Trulia’s analysis of permit activity for multi-family construction shows that 53 out of the 100 largest U.S. metros are now building more than their historical average. In some of the top 10 markets, multi-family construction was higher than the historical norm by several fold. For example, New York’s activity is more than four times higher, while both Boston and Newark are almost three times higher. In many of these markets, multi-family construction is reaching a cyclical peak and will soon see some slowdown.
  3. Many housing markets are still building well below their historical norm. Trulia’s analysis of permit activity shows that 7 in 10 homebuilding markets t are building below their long-run norm. Most simply, areas with slower home price appreciation and fewer new jobs are still the construction laggers, but also the markets with some residual distressed inventory since the housing bust.
  4. Builder confidence for newly built, single-family homes yesterday showed the index continuing to increase to the highest level since November 2005. High confidence among builders is an encouraging indicator of future construction activity.

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Hepp concludes, “All in all, the housing recovery has reached a new milestone. Builders have become much more bullish on the housing market, with homebuilder confidence haven risen to a near-decade high. New construction is now being driven by steady home price appreciation, but more importantly by stronger economic fundamentals, job growth, and demographic trends which are key fundamentals necessary for a sustainable healthy recovery.”

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Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

Real Estate Big Data

Ultra simple shortcut to attract new (or more) real estate investors

(REAL ESTATE) Without having to spend any money, this shortcut can attract more business to boost your bottom line. And it’s a huge win-win for the nation.

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Whether you’re a real estate veteran, or looking to expand your services to the real estate investment world, a wild shortcut has just been launched, and you already have access to it for free if you’re a Realtor.

Realtors Property Resource (owned by the National Association of Realtors (NAR)), rolled out a map layer to unveil the Qualified Opportunity Zones (QOZ) across the nation this year, and it’s a tool we should all be using regularly…

The QOZ program was created in 2017 as part of the Tax Cuts and Jobs Act and is designed to improve local economies (specifically the economically disadvantaged areas) through long-term investments.

There are 8,700 QOZs in America, and real estate investment and development in those areas are rewarded with tax incentives (potentially reducing their tax liability by 10-15%, and appreciation on the investment is tax free if held for at least 10 years).

And now, you can find the investment opportunities in seconds, generate reports for investors, connect with homeowners (via the “Mailing Labels” feature) in those areas, and so much more – the new RPR features combine to create one hell of a shortcut for you. Check it out:

“With the Opportunity Zone initiative poised to transform American communities that have long been shunned by investors, NAR has developed resources to help facilitate and expedite investments in these areas. As our work continues, REALTORS® are committed to ensuring Americans can take full advantage of this valuable new initiative”, said Joseph Ventrone, NAR Vice President, Federal Policy and Industry Relations.

“These Opportunity Zones encourage private investment into low-income communities, with the intent of stimulating economic growth and job creation,” said Bob Turner, NAR’s 2019 Commercial Liaison and RPR Advisory Council Member. “Residential practitioners will notice homes that fall within Opportunity Zones gain a boost to their marketability because of increased attention, while Commercial practitioners will likely see properties once being skipped over turn into desirable investment opportunities.”

It’s not just a shortcut for practitioners, but meaningful help for underserved areas. Talk about a real win-win.

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Real Estate Big Data

Pending home sales dip in all regions but the Midwest

(REAL ESTATE) Pending home sales slipped nationally, but there are some healthy signs for the housing sector as we look forward.

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If you’re in the field and feeling a slight slowdown, you’re probably right. Pending home sales (contracts signed) dipped 1.5% nationally, down 2.0% year-over-year, according to the National Association of Realtors (NAR). This marks the 16th consecutive month of annual decreases.

Pending home sales dipped 1.8% in the Northeast, 2.5% in the South, 1.8% in the West, and rose 1.3% in the Midwest.

Compared to last year, pending homes are 2.1% below a year ago, down 1.8% in the South, 1.5% lower in the West, and 2.4% lower in the Midwest during the same time period.

This indicator is forward-looking and lets us know how closings will look in the coming months.

NAR Chief Economist, Dr. Lawrence Yun said the sales dip has not yet reflected the market shifts that work in favor of homeownerships.

“Though the latest monthly figure shows a mild decline in contract signings, mortgage applications and consumer confidence have been steadily rising,” he said. “It’s inevitable for sales to turn higher in a few months.”

Dr. Yun noted that home price appreciation has been strongest on homes priced under $250,000 as inventory levels have been perpetually tight for several years. Price conditions are soft on upper-end homes, “especially in high tax states like Connecticut, New York and Illinois,” he added.

There are now signs for a rise in inventory, Dr. Yun states, digging into data from realtor.com, noting the largest increase in active listings (in April) compared to April 2018.

“We are seeing migration to more affordable regions, particularly in the South, where there has been recent job growth and homes are more affordable,” Yun said.

NAR has repeatedly pointed to housing starts by new home builders as one of the key paths to loosening up the tight inventory levels that continue to edge out willing buyers. Starts remain low, but with a healthy market, the inventory appears to be correcting, albeit slowly.

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Real Estate Big Data

Are you selling real estate in a high-cancer-risk area?

(BIG DATA) If you own a brokerage knowing your local ecosystem can be beneficial. Whether it’s a humble brag on your blog, or a letter to a local rep, knowing your environment is always a good idea.

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As a realtor or brokerage owner, you know the importance of understanding your community’s ecosystem in order to shape your business strategy.

However, have you considered how environmental and quality may play a role in those decisions?

A recent study published in Cancer suggests that you should. According to the study, “of every 100,000 Americans, 451 of us will get cancer in a given year.” The study “found a difference of 39 cases (per 100,000) people, between areas with the highest and the lowest environmental quality.

This establishes a significant link between environmental qualities and cancer risks.

The study also showcases a map of the US and the air quality of various regions. Red and orange areas have the worst air quality, while blue and green areas have the best air quality. As you might expect, large metropolitan areas have the worst air quality, and things improve as you move into more rural areas. You do find the most exceptions throughout the southeastern region and a vertical stretch that runs from the tip of Texas to the Dakotas up north.

These kinds of signs can either be a major benefit or a major obstacle to attracting buyers to your real estate market.

According to the most recent Gallup polls, 47 percent of Americans worry a great deal about the quality of the environment. So, how do you adjust?

If you’re in a blue or green area, make sure to get the word out! People now consider environmental quality as part of the quality of life factor. Don’t let that benefit go unnoticed. Blog about it on your own website. Use your social media to share data like this from other sources, or other information praising the environmental quality and protections of your market.

Integrate it into your marketing materials where possible.

If you’re in a red or orange area, you’ve got a bit more work to do here, and it’s going to get a bit political. There is already plenty of concern about attempts at the federal level to handicap agencies dedicated to protecting the environment. Be wary of such measures at the state and city level, and be a voice for the real estate economy in shaping this policy.

Does going to places of legislative businesses give you the heebie-jeebies? Find local organizations dedicated to improving environmental quality. Sponsor a river or park clean up event. Show your support for events like Earth Day. Don’t have those kinds of events? Harness your entrepreneurial spirit and bring these events to your community. Taking action as a community leader will be massively beneficial for your brand.

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