Market Action Slips Away From Coasts

Based on a statistical analysis of housing price cycles in 100 major metropolitan areas, Christopher Cagan, director of research and analytics for First American Real Estate Solutions in Santa Ana, Calif., concludes that significant real estate investment opportunities during the balance of the decade will be found in local markets where home prices typically plod along from year to year and where job growth is favorable and housing prices are moderate. Conditions for above-average price increases and home building will be particularly favorable in Texas, Colorado and the energy belt areas of the Southwest, he believes. Cagan says that Texas is the real beneficiary of the energy crunch. In addition, major heartland markets are nowhere near their home price growth limits and that, along with an attractive qualify of life, could spur population movements to them. For cyclical housing markets — including most of California from the San Francisco Bay area south, much of Florida, the Washington area, Baltimore, New York and much of New England — boom times have burned themselves out by pushing housing prices to unaffordable levels. (www.washingtonpost.com)
Washington Post (5/27/06); Kenneth R. Harney

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High-Cost Materials Result in Stockpiling

With the prices of construction materials such as copper, PVC piping, cement, brick and tar continuing to rise, Gail Hoffman, executive director of the South Texas chapter of the Associated General Contractors, reports that many contractors are buying materials and holding onto them until the jobs start, although that is a strategy that smaller contracting companies can’t afford to pursue. “Some of them are not honoring material bids for more than three days because prices can change that rapidly,” she said. “What hurts is that we might bid a certain price for copper to do a job that won’t start for six weeks,” said Chad Longoria, an independent contractor who installs copper wire in new homes under construction. “At the end of the six weeks, copper has gone up again that we can’t honor our bid. Then we have to face the builder who has to get another loan from the bank. It’s getting bad out there.” NAHB economist Michael Carliner said he expects prices to decrease but remain well above levels seen just one year ago. “It’s a bubble that will pop in the near future,” he said. “With the global economy changing as it is, it’s likely we’ll see a leveling off of the demand. It will be enough to catch our breath. Beyond that, it’s anyone’s guess.” (www.caller.com)
Corpus Christi Caller-Times (5/24/06); Fanny S. Chirinos

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Speculators Abandon Local Housing Market

The psychology of Tucson, Ariz.’s housing market has cooled substantially from a year ago and real estate speculators and investors have headed east into New Mexico and Texas and others have shifted their investments to commodities such as cooper, gold and oil. KB Home recently laid off 17 workers, or 8% of its work force, in its Tucson division. “The positions eliminated were added during the rapid growth in the housing market during the last year,” said John Brown, a KB Home spokesman. “We needed to adjust our staffing levels to a more normal market.” The company is projecting that it will sell 1,140 homes in the area during the current fiscal year, which ends in November, down from an earlier forecast of 1,300 homes. Even so, that’s only 60 fewer than the record number of homes sold in Tucson in fiscal 2005 and KB has a backlog of 900 houses that it has sold but that still need to be built. Meanwhile, to the north, median home prices in the capital city of Phoenix have fallen from a high of $350,000 to $300,000, according to Marshall Vest, an economist at the University of Arizona. (www.tucsoncitizen.com)
Tucson Citizen (5/24/06); David Pittman

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Rental Housing Heats Up

From a national perspective, and acknowledging that supply and demand will vary across individual markets, demand for apartments is increasing because high prices and rising mortgage interest rates have made it a difficult proposition for households to become home owners, according to Rachel Drew, a research analyst with the Joint Center for Housing Studies at Harvard University. Rising rates on adjustable rate loans and tighter qualifying criteria are making it all the more difficult to buy. And because rental production has been low and replacement of existing units is not good, the supply is not expanding, placing upward pressure on rents. The nation is losing about 200,000 rental units annually through demolition, a Harvard report says, and gross rents have moved up steadily from $611 in 1996 to $711 in 2004. Rent increases of 6%-7% are forecast in Los Angeles this year, where the average monthly rent at the end of last year was $1,416. Vacancy rates in that market have also tightened because of the large number of condo conversions. (www.inman.com)
Inman News (5/30/06); Janis Mara

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Everybody Wants a Whirlpool Tub, But Nobody Uses It

While 62% of home owners polled by NAHB say they want whirlpool tubs, less than 6% say they actually use them. A linen closet is the most preferred amenity in the bathroom, identified by 91% of those responding to the survey, followed by an exhaust fan (88%) and a separate shower enclosure (78%). NAHB researchers were surprised to see that 76% of respondents listed water temperature controls among their top-five favorite bathroom features. Sixty-three percent of those polled indicated that high-quality products and amenities were more important than space, and 57% prefer these products to be included in the base price of the home rather than as extra-cost options. Over the next five years, NAHB researchers predict growing popularity for low-maintenance, natural materials; synthetic stucco; energy efficiency; and external security. Inside the home, open space, quality features, technology and special-purpose rooms are on the upswing. (www.ntxe-news.com)
North Texas E-News (5/26/06); David S. Jones, Texas Real Estate Center

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Troubled Teens Get Some Help From Colorado’s Home Builders

HomeAid Colorado, a philanthropic arm of the Colorado Association of Home Builders, will break ground this summer on a 14,000-square-foot residential treatment facility for 32 homeless and troubled teens in a project east of Denver. Four ranch-style homes will be erected on a nearly two-acre campus, which is being built for Third Way Center, which operates residential treatment centers, the Joan Farley Academy alternative high school and a supervised follow-up program called Nine Steps. John Laing Homes will be leading a team of subcontractors and suppliers. The homes will feature natural indoor lighting, central air conditioning, a central sound system, an open kitchen and dining area, classrooms and staff and therapy offices. The homes will surround a central courtyard area for outdoor and recreational activities. Participants in this and other HomeAid Colorado projects include builders such as Beazer Homes, Engle Homes, McStain Enterprises, Village Homes and Standard Pacific. (www.bizjournals.com/denver)
Denver Business Journal (5/22/06); Michael Perrault

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