Tag Archives: Home builder

Households Doubling Up, this is the “pent-up demand” for housing.


The “pent-up demand” for housing is stuck right now with high unemployment.  If we can get jobs creation going, allowing the younger age group to move out and create new households, the housing market will start to hum along.

These “doubled-up” households are defined as those that include at least one “additional” adult – in other words, a person 18 or older who is not enrolled in school and is not the householder, spouse or cohabiting partner of the householder.

Young adults were especially hard-hit, with 5.9 million people ages 25 to 34 living in their parents’ household in 2011, up from 4.7 million before the recession. That left 14.2 percent of young adults living in their parents’ households in March 2011, up more than two percentage points over the period.

Read Full Census Article

This age group that is now stuck living with their parents is what the market needs back in the workforce and buying houses.  There is a potential for this to come down the pipeline in a wave, creating a shortage of housing believe it or not.  It all depends on how we pull out of this recession/or recovery.

For a good analysis of this Census  report, check out Calculated Risk 

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Homebuilders targeted by Labor Department


The seal of the United States Department of Labor

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Saw this article from the Wall Street Journal.  Apparently the Labor Department is going after Residential Homebuilders for overtime and minimum wage violations, which to me sounds like they are really targeting the sub-contractors and their status of sub-contractors.

Sounds like a political witch hunt to me.  Most homebuilders use sub-contractors not employees to do the trades, I wonder if they are hoping to snare sub-contractors that do a large portion of their business with one home-builder as “employees” not sub-contractors.  

The Leading Builders of America, an association of 19 major home builders, called the document demands overly broad and said the inquiry was “especially troubling given that no issues have been identified to warrant an investigation.”

“These demands could require significant resources and thousands of hours of work,” the association said in a statement.

The last line in the article I think sums the whole article up: 

Many construction unions have urged the Labor Department to crack down on wage violations in part to embarrass nonunion contractors that unions hope to organize.

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I am really curious on how the Builders Association of the Twin Cities (BATC) and the National Association of Home Builders (NAHB) will respond to this.

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Mattamy Homes MN Hires New Marketing Coordinator


This is for the Builders and Developers that read my posts, just some industry news…

EDINA, Minn. – Mattamy Homes has hired Lauren DeZellar as sales and marketing coordinator for its Minnesota division in the Twin Cities area.

In her new position, DeZellar will be responsible for promoting and marketing Mattamy’s Minnesota division, including assisting in the implementation of sales promotions and coordinating and organizing community sales events, said Steve Logan, vice president of Mattamy Homes in Minnesota.

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NAHB: Builder Confidence Unchanged in August


The National Association of Home Builders reports Builder Confidence still depressed.  The Wells Fargo/NAHB HMI (Housing Market Index) remains unchanged as reported today August 15, 2011.

Wells Fargo/NAHB HMI August 15, 2011

Builders continue to confront the same major challenges they have seen over the past year, including competition from the large inventory of distressed homes on the market, inaccurate appraisal values, and issues with their buyers not being able to sell an existing home or qualify for favorable mortgage rates because of overly tight underwriting requirements,” said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. He noted that 41 percent of respondents to a special questions section of the HMI indicated they had lost sales contracts due to buyers’ inability to sell their current homes.

“The uncertain economic climate and concerns about job security are discouraging many potential buyers from exploring a home purchase at this time,” said NAHB Chief Economist David Crowe. “While buying conditions are very favorable in terms of prices, interest rates and selection, consumers are worried about what the future will bring, and builders are echoing those sentiments in their responses to the HMI survey.”

NAHB: Builder Confidence Unchanged in August.

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The Twin Cities losing Population and the impact on the housing market.


After reviewing data sets from the Metropolitan Council  and running some spreadsheets, I have come up with a couple graphs that illustrate what may be  ahead for the Twin Cities real estate market.  These are assuming Metropolitan Councils population and household forecasts are in the ballpark of what will happen.

This Chart shows the Population and the Households from 2000 to now, these we can assume are accurate figures.  The question comes into play when we look into the future.  Met Council forecasts that the 7 County Twin Cities Metro area will increase in population and households by 2020 and by 2030.  These forecasts are in putted on the chart.

Metropolitan Council figures on Population & Households 2000-2030

 
The graph “looks” like the Met Council is extremely optimistic on our population and household growth in the future, however if you look closer you will see the chart jumps from 1 year intervals to 10 year intervals.  There are 2 2010 figures as the data was compiled from their “forecast” and “estimates”  Their “estimates” are past tense, so they are fairly accurate.
Their  “forecast” missed the actual or “estimate” by only  80,251 households, just slightly larger than a large suburb or a 6% miscalculation.  I will cut them some slack, when that forecast was made I don’t think anyone had any idea what kind of turmoil the economy was going to be going through.  
On a side note, these are the figures that developers and home builders based their production on. Is it possible the Met Council contributed to our regional over surplused housing market by over forecasting growth?
 
There is also an interesting trend appearing in these charts. There is a decline of population and households between 2009 and 2010.  According to Met Councils data, the Twin Cities 7 County Metro area had a decline of 32,245 in population and 20,763 households between 2009 and 2010.  This is an alarming trend if it continues.  I will go out on a limb and jump to a radical conclusion that the reason for the population and household loss was due to the un-employment rate and these people moved out of the area or out of the State to seek employment.  You may have other conclusion on why you think we are losing population, which is a good topic for discussion.
 
If this trend continues it could do severe damage to the regional housing market.  Come to think of it, I don’t think this region has ever had a drop in population and households.
 
Let’s see what data is available.

Twin Cities population and households 1970-2010

The Met Council had some data going back to 1970, that is as far back as I could find data.  The data also was only in 10 year intervals up until 2000.  So it is possible there was a small decline somewhere in there and then bounced back up.  Either way, this is still an ominous sign for our region.

 
These future projections could be wrong if the Twin Cities 7 County region does not produce jobs.  What could impact the job growth?  Large corporations and small business moving to more tax friendly markets is a real possibility as well as the health of the  national and global economy.
 

Metropolitan Council Housing Units & Building Permits

 
If we were to assume that these projections will be in the ballpark of being accurate.  Our population growth would easily absorb the surplus inventory of housing by 2020. (hey that’s only 9 years away!)
If you look closely at the bottom of the chart you will see some small red dots with numbers above them.  That was the “housing boom” glut of new construction in the Twin Cities.
Keep in mind that the Housing Units and Building Permits represented here are for all housing types; apartments, townhomes, single family, condos, and coops.
We would likely see a need to increase the production of housing to meet future demand probably within the next few years.  The question remains on what kind of housing units will be needed.  To gauge this we will need to understand the types of employment the households will have – income to be precise.  That may range from mobile home parks to luxury homes, or may cover all types of housing and price ranges.

2009 Existing Home Sale Prices

The most recent data on Existing Home Sale Prices is from 2009.  This does not show our entire housing stock, but a good representation of the current real estate market.  It would be fairly safe to assume that these trends will continue for the foreseeable future.  This gives us a sense of “demand” by price range for the entire region. 
We do have a surplus of housing in the Twin Cities, however – if you dig a little deeper into each individual market you will discover that there is a shortage of certain types of housing. 
 
If these “forecasts” by the Met Council are accurate then there is hope on the horizon for the Twin Cities real estate market and the local home builders.
 
 If the population and household forecasts are not accurate and we continue to lose households, I am afraid we are in for a long ride…
 
What the housing market needs is strong job growth.
 

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