S.J. Housing Demand Seen Jumping
As one of the foreclosure hot spots in the nation and with home prices falling, San Joaquin County, Calif. would seem to have the biggest glut of unneeded homes in the country. But a new housing report by University of the Pacific’s Business Forecasting Center says that after the housing market stabilizes over the next two years, the area will need a rapid increase in home construction to meet the needs of a growing population. The forecast for up through 2010 calls for extremely low rates of home construction. The excess supply from the housing boom is relatively small, and the slack in the local market should be absorbed by a growing population in the next year or two, said Jeff Michael, director of the forecasting center. From 2011 to 2030, the county will need to add more than 5,000 new homes per year to meet projected population growth of 336,000, he said, adding that this is a conservative population growth estimate, compared with the state’s projection of 464,000 population growth for the same period. According to the Construction Industry Research Board, which tracks the building sector in California, a total of 690 permits were issued in San Joaquin County for the first 11 months of this year, about one-third of the total issued for the same period of last year, which was considered a light year for the industry. Michael said that the first challenge for home builders will be how fast production can increase, with some builders out of business and others perhaps cautious about expansion after their recent experiences. (www.recordnet.com)
Stockton Record (12/17/08); Bruce Spence
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As Housing Tanked, He Rebuilt His Firm
Overcoming the challenges of cerebral palsy, Brian McCarthy proved himself a skilled entrepreneur when he started a home-building business that peaked at $1.7 million of sales in 2005 before the housing market headed for the basement, leaving him with sales of just $40,000 in 2006. At that point, he rebranded his company as a remodeling business, with a focus on reworking homes to accommodate the handicapped and the elderly. The payoff: McCarthy Builders and Remodelers grossed $1.5 million in 2007 — and is headed for a record $2 million this year. “He’s had to adapt and adapt and adapt,” said his wife, Maria. “But he never gives up.” Years of therapy have shaped his speech so that even a hard-of-hearing old newspaper columnist can pick up on it. And because of the tight muscles on his right side, he’s had to transform himself from a natural right-hander to a southpaw. “Some mornings I have trouble buttoning my shirt, and I couldn’t fix a screw on your glasses,” he said. “But I can lift and pull, put up sheetrock and swing a hammer.” Half of his sales in 2007 were remodeling projects, the other half coming from the sale of the last of his housing inventory. And half of those remodeling projects involved “barrier-free design” for handicapped or elderly clients: wider doorways, accessible entrances, counter heights altered to accommodate folks in wheelchairs and showers with thresholds that fold down, then pop back up. In 2008, virtually all of the revenues have been generated by remodeling projects, 75% of them involving barrier-free design. How did he jump-start the remodeling business so fast? Simple: “I started networking the agencies that work with the disabled and the elderly,” McCarthy explained. (www.startribune.com)
Minneapolis-St. Paul Star Tribune (12/16/08); Dick Youngblood
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Special Needs Housing Expanding
Milwaukee will quadruple the number of special-needs housing units for the homeless and mentally ill, as four new complexes are close to winning needed funding and public approval. Though significant, the latest expansion only begins to fill the need, said advocates and Milwaukee County officials. The new complexes, along with two others approved in the past year, will bring to about 225 the number of special-needs units built or under development. One thousand or more of the specialized apartments are needed for Milwaukee’s poorest and neediest residents, many of whom live in substandard housing in dangerous neighborhoods, said Jim Hill, director of the county’s housing division. The push to develop decent housing for people with mental illness followed the publication of the Journal Sentinel’s series, “Abandoning Our Mentally Ill” in 2006 and 2007. The articles detailed deplorable living conditions for people with mental illness in Milwaukee, such as a shabby west side rooming house where one man’s severely decomposed body was found in his locked room. Hill said Milwaukee should continue efforts to develop 200 or so units a year for the next five years. All are tapping a mix of funding sources, including federal tax credits parceled out through the Wisconsin Housing and Economic Development Authority and money from a city housing fund. The low-income residents typically get by on Social Security disability funding and HUD rent assistance. (www.jsonline.com)
Milwaukee Journal Sentinel (12/17/08); Steve Schultze
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Kitchen How-to Features Tips From a Pro
Harold Dieterle, the celebrity chef who graduated from the Culinary Institute of American and became the first winner of the Bravo TV contest “Top Chef,” has been working with Beazer Homes in Atlanta, poring over floor plans and offering his expertise on how kitchens can become more functional. Beazer planners are turning to Dieterle with questions such as, “How far does the fridge need to be from the prep area?” and “How far should the sink be from the stovetop?” “Kitchens are no longer a place where you go to slave behind a stove,” said Dieterle. “But a good kitchen is based on three things: a good layout, plenty of storage and functionality.” On layout, Dieterle says, “It all has to make sense. Everything you need should be within arm’s reach. The layout should be nice and open.” One of Beazer’s single-family homes at Atlantic Station fits those criteria. The island with the sink is opposite the vented five-burner stove; the stainless steel refrigerator is at the end of the island, adjacent to a built-in pantry with shelves that swing out for easy access. And there’s plenty of space between the stove and island for two cooks to work simultaneously without crowding each other. Dieterle likes having an array of storage options within a short stretch of the stove and sink. In the Beazer model, the island and cabinetry around the stove feature deep drawers for pots; a lazy Susan in the corner cabinet; and a knife drawer with a built-in cutting board. Most of the shelving is adjustable and, in the pantry, there are built-in sections for items that are tall and bulky. Dieterle loves the upgraded stoves that home owners are adding to create gourmet kitchens. With multiple burners, griddles and grills, though, the kitchen needs a bigger power supply and gas line to keep it all going. (www.ajc.com)
Atlanta Journal-Constitution (11/16/08); H.M. Cauley
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Home Buyers Turn to USDA for Mortgages
With tightened lending standards leaving builders and real-estate agents scrambling for new ways to move cash-strapped buyers into homes, one increasingly popular option is the U.S. Department of Agriculture’s Rural Development Guaranteed Loan program. Created in 1991 as a way to boost homeownership in rural areas, the program is being tapped by home buyers in overbuilt exurbs who are attracted to the no-money-down terms. The department insured $7 billion in loans during the 2008 fiscal year, which ended Sept. 30, up from $3.6 billion the previous year. In October and November, the agency had already insured some $1.7 billion in loans. To be eligible for a USDA-backed loan, a borrower can’t have income that exceeds 115% of the median county income, and the loans are restricted to areas with lower population density — generally towns of no more than 25,000 residents. The loans that come through the program are made by private lenders, then insured by the government and sold to Ginnie Mae. Home builders, many of which have overbuilt properties in these areas, are eagerly promoting the program to sell excess inventory. The USDA program accounted for 40% to 50% of sales in October and November for Scottsdale, Ariz.-based home builder Meritage Homes, says John Bargnesi, vice president for sales. “It’s one of our main tools right now.” (www.wsj.com)
Wall Street Journal (12/16/08); Nick Timiraos
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A Spark of Life for Real Estate
In a development cheered by mortgage brokers, interest rates have dipped to their lowest levels in years, providing what some say is a glimmer of hope in this dismal housing market. Brokers in Charlotte, N.C. have seen a spike in business since Nov. 25, when the Federal Reserve announced plans to buy up to $600 billion in toxic mortgage assets. The move has prompted interest rates to fall, and that could translate into an incentive for home shoppers who are debating whether to buy, brokers say. “We’re saying to Realtors®, ‘Hey, if you’ve got people sitting on the fence, you may want to let them know that,” said Doug Bell, managing partner of First Trust Mortgage, where brokers are receiving 35% to 50% more calls than usual. Home sales and prices in the Charlotte area have dropped in recent months, but the region is still faring better than most cities. Average home prices declined 3.5% for the 12 months through September, according to S&P/Case-Shiller home price data released late last month. Sales of Charlotte-area houses, townhouses and condos fell almost 31% in October, compared with October 2007, according to figures released last month from the Carolina Multiple Listing Services. That marks the 17th consecutive month of double-digit declines. Lower mortgage payments will ease the burden of debt for home owners who refinance, eventually leading to better credit and looser lending, said Wachovia economist Mark Vitner. In addition, if more people are willing to jump into the housing market, they could drive up home prices and fuel the economy. Interest rates haven’t been this low for a sustained period of time in the past decade, he said. (www.charlotteobserver.com)
Charlotte Observer (12/9/08); Kirsten Valle and Nancy Stancill
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