Hammering as fast as they can: Builders struggle to keep up with demand for new homes

Houston home builders are hammering as fast as they can to keep up with a 13 percent increase in sales this year.

“Everybody is upbeat and expecting new home sales to continue to grow,” says Cernus Development’s Harry Masterson, president of the Greater Houston Builders Association. “Everybody feels we have the capacity for more home sales.”

Builders could do better if they had more tradesmen, Masterson said. When the construction business retracted three or four years ago a lot of construction workers found jobs elsewhere. Other workers were lured away by the high wages being paid in the shale oilfields.

“Everybody is quoting six months (of waiting) for a production home,” Jarvis says. For a typical custom home, buyers are going to have to wait a lot longer.

So if you’re buying a new home in the Houston area today, you may have to wait awhile for it to be built, says housing consultant David Jarvis, regional director for Metrostudy in Houston.

“Everybody is quoting six months (of waiting) for a production home,” Jarvis says. For a typical custom home, buyers are going to have to wait a lot longer, he says. “Builders are working hard to build their backlogs of sold homes.”

The supply of unsold completed home sitting vacant has dwindled to its lowest point in years, down 12 percent in October, compared to October of the previous year, according to Metrostudy.

The Metrostudy report in October showed home buyer interest remained exceptionally strong in Houston. The amount of “traffic” or number of people browsing at model home parks in October was up 20 percent over the number of home shoppers counted in October of 2012. So far this year, new home sales through October are running 13 percent ahead of the sales pace in the same 10-month period of last year, Metrostudy reports.

Surging home sales

Houston’s housing market, both new and existing homes, has been surging for more than two years. The city’s economy has enjoyed strong job growth, with thousands of people being relocated to Houston by their employers. At the same time, mortgage interest rates have been near record lows.

The inventory of existing homes for sale is tight – smaller than it’s been in years because home sales have been very strong. Home builders are going to have to increase the pace of construction to break the cycle.

Lot prices in the Inner Loop market have gone up 40 percent in recent years in many cases.

The new home market in the Inner Loop of Houston is exceptionally strong. Lot prices in the Inner Loop market have gone up 40 percent in recent years in many cases, Jarvis says.

Home sales will taper off in November and December, a consumer pattern that has held true for decades, because of the holiday season. Consumers just don’t want to buy or sell houses during the holidays if they don’t have to. But looking ahead, market conditions appear strong for the spring of 2014.

“Our sales this year have remained on pace with last year. We’re excited about that, though, because we have been preparing and we’re poised to open sales in several new communities or neighborhoods in the first half of next year,” says home builder Jim Lemming of Partners in Building. “That puts us in a strong position for sales in 2014.”

Tim Drone, executive vice president, J. Patrick Homes says 2013 was an excellent year for his company, despite the labor shortage.

“We are seeing that home sales are up by 35 percent this year compared to 2012 and we are trying to resupply the inventory which has been sold through,” Drone says.

Houston new homes sales will rise in 2014, Jarvis predicts. But they could be even better if Houston had more construction tradesmen to build the homes people want to buy.

Landon Homes dispels myths when buying new homes in St. Augustine

Since I’ve been working with Landon Homes selling New homes in St. Augustine, who in my humble opinion is one of the BEST home builders in the area, I have heard some buyers myths circulating.  I thought my blog would be the best place to clear up the number one concern.

“If the buyer does not use an agent they will get a better deal with the home builder.”

At times real estate agents are concerned that a builder will offer a better deal to their buyer, since the builder doesn’t have to pay a commission. And in reality this myth is perpetuated more by uninformed buyers than anyone else, because they think they have more ability to negotiate without an agent commission.  NOT so at Landon Homes!

The fact that if there is no commission paid on a particular home it really does not mean there is more room for negotiation. Any reputable builder would not even offer such a deal because of the ramifications it will have within the broker community. Bottom line, the buyer cannot negotiate down the percentage that would have been paid to an agent.

Most builders set their margins based on a certain percentage they will pay for commissions throughout the community not based house by house. If a builder were found saying to a buyer, “well if you don’t use your agent I can give you a better deal…” that would be the death of their real estate agent traffic.  Imagine the ramifications it would have in the real estate community?  Whoooo boy! No builder is willing to risk that no matter how hard an individual negotiates without an agent. By informing buyers that this is not a stance the builder will take it will help squash the idea that going it alone will help them get a better deal.

Strong reputable builders, like Landon Homes, make the effort to reduce concerns and work together with real estate agents for the good of the clients and the good of the St. Augustine real estate community.  Selling new Homes in St. Augustine and creating a happy experience for Buyer and Agents alike are our main priorities.

For information on our new Homes in St. Augustine, please visit Landon-Homes.net, or contact me Mtaylor@Landon-Homes.net.

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Home sales rebound in October

The biggest impacts of the government shutdown, as it pertains to housing, are expected among buyers reliant on loans backed by the federal government. Last year, FHA loans accounted for nearly half of the mortgages used to buy homes.

HERALD-TRIBUNE ARCHIVE

Home sales across Southwest Florida rebounded from a lackluster summer, resuming a pace that rivals the market's historic boom of a decade ago.

The gains during October came despite rising interest rates, tight inventory and cancelled contracts from the three-week federal government shutdown — all limiting home sales in what is traditionally a slower month for the region.

But sustained demand from seasonal retirees — who appear to have returned to Florida a little earlier than normal this year — continued to fuel a robust housing recovery. Prices also extended an upward march that began early last year, records show.

That part of the local uptick was mirrored both statewide and nationally, with prices rising to their highest level since the bubble of the mid-2000s.

"We're still attracting a lot of people to this state, population is growing, and that's good for real estate," said Clark Toole, president of Coldwell Banker's Florida division, which is based in Sarasota. "We're on a record tourism pace too, so that all indicates our business will continue to be strong."

Realtors in Sarasota, Manatee and Charlotte counties sold 1,850 homes and condominiums in October, a 3.5 percent increase from September and up nearly 10 percent from the same time last year, according to figures released Wednesday by the industry trade group Florida Realtors.

Despite the progress, home deals in October were limited by a partial government shutdown that lingered nearly three weeks. The Congressional strife delayed real estate closings across the nation that were dependent on a loan backed by the government.

Also slowing sales was the new flood insurance reform that took effect during October. That was especially true in coastal communities like Siesta Key and Anna Maria Island, where some premiums spiked by 400 percent.

Late summer and early fall are generally considered quiet months for Southwest Florida housing.

Sales inked with the return of snowbirds around Thanksgiving then boost the region's numbers when those deals officially close in January, February and March.

This year, most industry observers expect a strong winter season, though they remain cautious of political uncertainty, interest volatility and rapidly rising home prices.

Through the first 10 months of 2013, home sales are on track for their best annual performance in six years.

"There's always a little lull right after summer," said Jack McCabe, a Florida real estate analyst. "But without a doubt the federal government shutdown stalled real estate sales in Florida and across the country. A lot of deals didn't get done."

Influx of investors

Analysts attribute the strong demand to stock market windfalls and improving housing markets in the north, which have empowered more baby boomers to buy a Florida home.

An influx of investors also has helped prop up demand.

Median home prices in the North Port-Bradenton-Sarasota metropolitan area have risen by 13.4 percent through the year to $199,500 last month, mirroring the national median. The median is the midpoint; half the homes sold for more, half for less.

In Charlotte County, prices rose by 8.3 percent to a $130,000 median during October.

"The sales pace should continue through season — the price appreciation remains to be seen," said Peter Crowley, broker and co-owner of the Re/Max Alliance Group in Sarasota and Manatee. "The question still lingers out there of whether the banks will release some of their distressed inventory, which could moderate those price gains some next year."

Inventory also is beginning to loosen, with a net gain of about 180 new listings in Sarasota during October. That was a 4.8-month supply based on the current sales pace, up from the 4.4-month supply the previous month.

But anything below the six-month mark is still considered tight — generally favoring sellers over buyers.

The depleted stock has limited sales growth while also propelling Southwest Florida's ferocious property appreciation.

The shortage also has spurred a renaissance in the homebuilding industry — one of Southwest Florida's top employment sectors — as developers scramble to create new models to meet demand.

"Sarasota and Manatee have seen good growth, and I suspect it will continue that way," said John Tuccillo, Florida Realtors' chief economist. "It's been one of the more positive markets."

Trend reflected in Florida

The positive trend was reflected across the Sunshine State and nation to varying degrees.

Statewide, Realtors sold 18,728 single-family homes last month, a 1 percent increase from September and 6.5 percent jump from a year ago, Florida Realtors reported. The median price has grown nearly 17 percent through the year to reach $169,000 in October.

Nationally, existing-home sales slipped for the second consecutive month during October, while constrained inventory continued to lift home prices at double-digit gains.

Sales fell by 3.2 percent to a seasonally adjusted annual rate of 5.12 million in October. But those figures remained 6 percent higher than in October 2012. It was the 28th straight month of annual sales improvements, National Association of Realtors data showed.

The $199,500 median in October was up nearly 13 percent from the same time last year. It was the 11th consecutive month of double-digit increases.

Distressed homes — deeply discounted foreclosures and short sales — accounted for 14 percent of transactions in October. At the trough of the downturn, that ratio was 40 percent. All cash deals accounted for 31 percent of October's home sales.

The national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 4.19 percent in October from 4.46 percent in September; the rate was 3.38 percent in October 2012, according to Freddie Mac.

"Clearly buying power has dampened with rising home prices and interest rates," said Walter Molony, spokesman for the National Association of Realtors. "But supply, especially in markets with tighter inventory, also is holding sales back."

EARLIER: Home sales across Southwest Florida rebounded from a lackluster summer in October, resuming a pace that rivals the market's boom of a decade ago.

The gains last month came despite rising interest rates, an ever-tightening inventory and cancelled contracts from the three-week federal government shutdown — all of which analysts predicted would combine to limit home sales in what is traditionally a relatively slow month for the region.

But sustained demand from seasonal retirees — who appear to have returned to Florida a little earlier than normal this year — continued to fuel a robust housing recovery. Prices also increased with a double-digit gain that began early last year, records show.

Realtors in Sarasota, Manatee and Charlotte counties sold 1,850 homes and condominiums in October, a 3.5 percent increase from September and a nearly 10 percent jump from the same time last year, according to figures released Wednesday by the industry trade group Florida Realtors.

The demand has pushed median home prices in the North Port-Bradenton-Sarasota metropolitan statistical area by 13.4 percent over the year, to $199,500 in October. The median is the midpoint; half the homes sold for more, half for less.

In Charlotte County, the median for single-family homes similarly grew 8.3 percent, to $130,000 in October, Realtor records show.

In a sign that future months may also experience higher sales, inventory also is beginning to improve. Sarasota gained a net of 179 new listings during the month, leaving the market with a 4.8-month supply based on the current sales pace.

That inventory level is up from the 4.4-month supply in October 2012, but below the 6-month mark that signals a market balanced between sellers and buyers.

Housing market steadily improving

As the market improves, fewer affordable homes available

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For the past few years, the housing market has continued to recover. This year is no exception.

by: GARY ALLEN - Moving in -- The Greens, near the Chehalem Glenn Golf Course, is one of ­several areas in Newberg where new houses are being ­developed. To date in 2013, there have been 33 homes ­started in Newberg, compared to a total of 44 last year.

“When the recession was going on there was no new construction,” said Matt Willcuts of Willcuts Company Realtors. “We’re starting to see the market coming back and more builders coming back and starting to build more.”

In Newberg, so far this year there have been 33 housing starts, compared to 44 last year. For Yamhill County, 76 homes have been started this year, up from a total of 65 in 2012.

Nationally, there have been almost 4.9 million housing starts from January through August, according to a construction report by the U.S. Census Bureau.

“There’s a pent up demand for (new houses), so as long as we keep a healthy amount of lots we should be OK,” Willcuts said. “We just don’t want to flood the market.”

He said there are two main areas in Newberg where new construction is taking place: The Greens and the High­lands. Homes in The Greens sell for $340,000 to $450,000. Residences in the Highlands are a little more affordable, priced from $240,000 to $280,000, but Willcuts said there aren’t a lot of options for people looking for a home less than that.

“It’s pretty sparse if you’re a home buyer and look­ing for brand new homes up to $250,000,” he said.

“There’s basically two or three homes available. If you go from $250,000 to $300,000, there’s a few more.”

But he said below that, it’s almost impossible.

He said the fees builders pay for permits — including a building permit fee, system development charges and fees to the school district and Chehalem Park and Recreation District — can amount to $25,000.

“By the time you do those and the cost of construction, it’s almost impossible to build a new home for right around that $200,000 range,” he said.

In Yamhill County, this year there are 987 pending sales and 902 closed sales, a 24 percent increase compared to last year, according to the Regional Multiple List­ing Service.

Na­tion­ally, from January to Au­g­ust, there were 304,000 new homes sold, and more than $3.1 million existing homes sold.

Willcuts said often, the new homes are sold before construction finishes.

“I think it’s because we’re not putting out 50 homes at a time,” he said. “There’s a healthy amount of inventory.”

And the prices are increasing steadily instead of getting out of hand, as Willcuts said occurred from 2002 to 2006.

“It was just going up so fast and everyone was getting caught up in it. People were using their homes basically as ATM machines. So they’d buy it and six months later (refinance) it and keep pushing and pushing,” he said. “Now we’re seeing people getting in to these homes who qualify. They have jobs now. They have good credit. So the pendulum has swung from anybody can buy a house to it’s a little more difficult, but it’s the right people who can afford it. So I think it’s a good thing.”

With the steady increase of sales and new construction, Willcuts said he expects plenty of available lots for new housing demands within the city limits.

“Eventually we will have to expand and have that land annexed into the city limits, but our inventory now (is pretty good),” he said.

Kelly Hagglund, of The Kelly Group, said although the inventory is good now, it has decreased 18 percent since last year.

“It means that we are moving toward a seller market in some price ranges and it is the best time for a seller to get their properties on the market,” Hagglund said.

New Report Tracks Buying Motivations of Over 67,000 New Home Shoppers

New home sales represent under 7% of all homes sold this year – a figure significantly below historic levels of 16-17% newly-built.  Despite that low number, consumer research company, iHave5Questions, says that now more than ever homebuilders need to listen to what new home shoppers are saying.  That's because their latest research of 67,000 new home shoppers surveyed in 150 cities across the nation reveals that 90% of people visiting new homes today are actually on a mission to buy.  This makes the motivators behind their purchase decision all the more important to understand.

Today, iHave5Questions releases their 2013 Homeshoppers' Survey, which presents aggregated consumer research results that delve into buying patterns including international buyers, age-qualified and multi-generational housing trends, condo conversion and luxury rental predictions as well as other basic consumer demands in home function and design. 

"Our research shows buyers gravitating to builders based on brand loyalty," said David Harding,chief research officer of iHave5Questions. "This is a surprising primary motivator as it has grown 5 times since last year's report. Brands that garner this support do not necessarily build the highest cost homes.  Consumers are saying that great brand loyalty is possible at every price of a new home."

This information is crucial for homebuilders as they look to draw in new buyers and perhaps change their traditional approach of leading with location, neighborhood size and amenities. In age-targeted communities especially, over 20% are primarily motivated to purchase because of a builder's brand and reputation, but are told more about the pools and the views. Consumers seldom care.  These findings present homebuilders the ability to focus their efforts into areas considered important by their consumers.

In addition to their direct consumer research, iHave5Questions has dug deep into homebuilding industry reports to pinpoint compelling trends.  These trends have a definite impact on the way that homebuilders plan for new potential buyers and broaden their understanding of market potential – especially as it relates to the international new homebuyer.  Key findings show that nationwide average sales price per owner-occupied residential breaks down as follows:

• $220,000 (American)
• $425,000 (Chinese nationals)
• $300,000 (Indian nationals)

"Homebuilders have long focused on buyers from China," says Harding.  "With this data, there is a huge opportunity to attract buyers from India – the world's largest democracy with an economy that is growing at twice the American clip and with buyers who cite California as their favorite state and greater Los Angeles as their top city to own a home and live in America.  The growing entrepreneur and middle class, from a country soon to be the world's most populous, can be a gold mine to those ready to properly serve this segment." 

Additional Findings

iHave5Questions is a consumer research company that specializes in quick, conversational lines of questioning  designed to reveal accurate and immediately-useable results to clients.   Homebuilders are able to gauge consumer reaction in real time, even while home shoppers are still at the models.

Additional findings from the 2013 Homeshoppers' Survey include:

• 90% of consumers surveyed did not say location was their primary motivator for buying a new home.
• 87% of ALL shoppers are more motivated by factors OTHER THAN the "deal" of price,interest rates, investment value, etc.
• Consumers are looking to buy bigger homes, not necessarily with more rooms, but with bigger rooms. Buyers want a more efficient space, which luckily is more efficient for builders too and can help lower construction costs.
• Over 70% of surveyed renters in luxury apartments have a pet. This statistic is interesting for builders who may add rental apartments to their business. As well, it empowers homebuilders to deliver pet-friendly amenities and regulations to compete with the luxury apartments also vying for this customer pool.
• 29% of these same renters said that wood floors are the most important attribute of their existing residence. To entice them to move to a new home, not having wood floors would be a deal breaker.

Because of the quick and accurate consumer data and feedback, iHave5Questions is delivering a powerful new tool to new homebuilders who typically rely upon consumer research that is 4 or more years old – half the duration of a typical business cycle.  By having this information so quickly at their fingertips, they can plan more efficiently and more importantly, be relevant to the ever-changing demands and interests of new home shoppers.

The findings from the report were revealed on Thursday, November 14, 2013 at the fourth annual iHave5Questions Coffee Symposium where a select group of opinion leaders and lead marketers in the new homebuilding industry received the critical data about new home buying trends.  The event was presented in conjunction with Kovach Marketing and KTGY Group, Inc., Architecture + Planning.

About iHave5Questions

California-based iHave5Qs is a mobile market research program. It uncovers consumer motivations, attitudes and trends in industries including housing, health, sports, supermarkets, and automotive in geographic locations from California to Maryland, Utah to Texas and from British Columbia to Guandong, Province China.

A bench of experts crafts questions customized to solve each client's burning issues.  This person-to-person approach garners some of the industry's highest capture ratios. Its proprietary, real-time download of results allow clients to respond to today's consumers...today and in real time.

Read more here: http://www.sacbee.com/2013/11/14/5911687/new-report-tracks-buying-motivations.html#storylink=cpy

New home purchase apps post significant gains

Applications for new home purchases increased by double-digits in the latest Mortgage Bankers Associationupdate, signaling an America that is prepared to buy more homes. 

Texas, Florida and California were the top three states that led the way in new home purchase volume, with mortgage applications increasing 9.5%, 9.3% and 4.6%, respectively.

In the broader market, purchase applications continue to decline, dropping both week-over-week and year-over-year.

For instance, apps fell 1.8% this week after a significant drop last week, while the refinance index declined 2% from the previous week.

"The reason the broader market has slowed is because of the rise in mortgage rates," explained MBA chief economist Mike Fratantoni. 

He added, "People are taking another look at finances and re-evaluating what size home is right for them given the higher level of rates."

However, the new home purchase market is writing a different story.

By product type, conventional loans composed 67.5% of loan applications, while Federal Housing Administration loans composed 17.8% of apps.

The average loan size of new homes increased from $289,650 in September to $294,480 in October, the MBA noted.

Going forward, the MBA believes new homes sales will increase 10% in 2014, compared to 2013 — matching the continued trend that new home purchases will continue growing.

The key indicator for the continued push in new home purchases will be strong economic data, specifically employment numbers, Fratantoni stated.

"The job market data from October was stronger than expected and that will be the source of homebuying going forward," the chief economist said.

He concluded, "It’ll be the main source of support for new home purchases and our expectation is that an increase in rates will be a minor headwind."

Building a Home? 5 Things to Know

It’s not ‘new news’ that the real estate market has picked up in many parts of the country. Though lots of buyers are out shopping, inventory is still low. Nobody can predict when that situation will improve, of course. But large national home builders, as well as small local ones, are buying up land, getting plans drawn up, and starting construction on new homes.

But is a new-construction home the right path for you? Here are five things you should keep in mind.

1. New homes may not be listed in your local MLS.

Unlike a regular seller who lists their home with a local real estate agent, homebuilders often have their own employees working for them on site. They do this to have more control and to cut costs.

What does this mean for you, a buyer? Mostly, it may mean the home builder isn’t a member of the local MLS. As a result, the homes may not show up in your agent’s MLS search. The builder may be more apt to advertise online, in the paper or with billboards. So if you’re interested in newly built homes, work with your agent to make sure you’ve identified all the possibilities.

2. New homes are often sold before they’re built.

A builder will generally get financing lined up and map out both a construction and a sales process. This means they’ll try to sell as many homes as possible, before they’re even built. To accomplish this, they’ll build out model homes and allow buyers to go in and review floor plans, fixtures and finishes while the homes are under construction. Depending on the state, builders need to get through some of the approvals process before they can actually start signing contracts.

For the most part, you can get a sense of what your new home would look and feel like and where it will be located in the community. Ready to move forward? You’ll likely have to put down a deposit, from a few thousand dollars to 10 percent of the purchase price.

Be aware that even if there are 100 homes in the community, they won’t all be available at once. Home builders tend to release the homes in phases. If the first 10 homes sell quickly at the asking price, and the market continues to do well, the builder can raise the prices on the second or third phase. Also, the sales cycle for a new community can take years. The last phase could end up being priced 10 percent or more than phase one, simply because the real estate market has appreciated.

3. The first buyers may get the best discounts.

A home builder, especially early in the sales process, wants to get a few homes under contract quickly. If the builder can announce they have 10 homes under contract in a few weeks, the project can seem more desirable to future buyers.

Also, builders like to go back to their lenders with positive news about the project and their investment. To do this, they need early buyers to sign contracts.

For buyers, this means there could be room to negotiate the price down early in the sales process. But with the reward, there is potential risk. By being an early buyer, you’re committed to the project. If for some reason sales don’t manifest or you don’t want to move ahead before the home is built, you risk losing your down payment. For example, right after the housing downtown, some buyers were stuck under contract on new homes where sales had stalled.

4. Builders don’t have a personal or emotional attachment to the house.

A typical seller has lived in the home for many years, raised their family or built memories there. So when it’s time to sell, the seller may experience all kinds of issues, questions and uncertainties, which can come out in the negotiation and purchase process. As a consequence, the seller may unconsciously price the home too high because they’re not ready to emotionally detach from it. They may want to know more about you or what your plans are for the property. If given a choice between two buyers, the seller may pick one over the other for non-financial reasons.

With a home builder, it's just a numbers game. They’re focused more on spreadsheets than sentiment. They want to make sure you’re qualified and can get a loan. They set the prices based on their inventory, though there may be a little room for negotiations.

5. Discounts may be available in the form of upgrades.

Is the project you’re interested in nearing the end of its sales cycle, with many homes already sold? If so, the builder may be a little more willing to negotiate with you, not so much on price but on upgrades. If they reduce the price on your home and the sale closes, then that sale price becomes public record. But if they offered you an upgrade package (hardwood floors instead of carpet or higher-end appliances), there isn’t any way to track that. What could amount to thousands of dollars in upgrades could end up being a better deal than simply getting a price reduction.

For many first-time buyers, new construction could be a great idea. If you’re used to renting and relying on the landlord for mechanical fixes and general maintenance, you can almost be assured that your first few years in a new home will be maintenance-free.