Tag Archive: Ali Wolf

  1. What A Difference A Year Makes: Home Sales Then And Now

    The US housing market sold 246,500 fewer homes in 2019 compared to 2018 year-to-date. The decline stems from slowing existing home sales, but the new home market looks different today compared to last year as well.

  2. Affordability, Zoning, & A Path To Sustained Growth

    Regulation is a necessary evil to maintain reasonable and sustained growth, but any economist will tell you, artificial scarcities can lead to problems. Below are three pro-development case studies that examine zoning’s upward pressure on prices and how changing existing code could tackle affordability issues.
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  3. The Next Generation Of Homebuilders

    The groundwork is already being laid by the next generation of homebuilders. Clayton Homes, Entekra, Katerra, and ICON are big players disrupting the homebuilding process. Dvele, another budding company, recently raised $14 million to build single-family homes. After touring Dvele’s production facility in California we provide an overview of this emerging player in the industry.

  4. America, Welcome To Your New Home: The South

    Population flow across the country can influence housing demand and drive economic growth. For example, Las Vegas, Austin, and Jacksonville hold the top spots for positive net migration and are also among the top performing housing markets so far this year. 80% of the top net migration markets fall in just four states, Texas, Florida, Arizona, and North Carolina.

  5. Here Are The Hottest Markets In The Country

    The buyer urgency created by constant housing news coverage and ever-changing housing payments from rising rates is unmistakable. Last week, the Federal Reserve raised short-term rates for the second time in 2018. And, while we’ve mentioned time and time again that it is important to pay attention to Fed policy, it is also critical to remember the relationship between mortgage rates and 10-year Treasury yields. Luckily, after crossing the feared 3% threshold at the end of April, yields continue to be range-bound between 2.8% and 3.0%. This has helped stabilize mortgage rates, which currently sit around 4.6%. Our Director of Economic Research, Ali Wolf, wanted to understand how sales activity across the country has responded to higher rates and dug into Zonda to find the answer.

    We pulled contract sales data to see the biggest year-to-date winners of 2018, which include Denver, San Diego, and Phoenix.

    DENVER’S MOMENTUM PERSISTS

    Coming in at number one for the greatest growth in sales is Denver. This market has dominated news cycles for its rapidly changing fundamentals. When looking at affordability, we like to break markets into different categories. In 2010, Denver was bucketed with the moderately affordable markets like Raleigh and Atlanta. Today, the metro now falls under the least affordable category, playing in the same league as Seattle, Miami, and Los Angeles. Denver new home closing prices grew 42% from 2012 to 2017, reaching just under $500,000. This is all while the median household income is just over $75,000 and the current unemployment rate is 2.8%.

    “In metro Denver/Boulder, April year-to-date sales over $400K were up 13%, while contracts for homes priced under $400K grew 41%. We will watch to see if rising rates shift demand more towards lower priced homes,” explains our Senior Vice President of Advisory and Denver expert, Mike Rinner.

    Jeff Whiton, the CEO of the Home Builders Association of Metro Denver, notes that builders are scrambling for higher density product. He explains, “Single-family attached starts are up 35% in the first third of the year, and I expect that trend to continue.”

    Even as fundamentals change, sales in Denver are strong. Like most markets, sales historically pick up during the spring selling season, but in Denver, the spike was nearly 30% this year. The top builders in Denver are currently Richmond American Homes, Lennar, and Clayton Properties Group, who collectively make up roughly 35% of the market. Don’t be surprised to see the seasonal slowdown in the May and June data. In 2016, the average sales pace slipped 13% from April to June and dropped 27% during the same months in 2017.

    Our latest feature in Zonda lets you instantly visualize a heat map of the average new home sales rate by market. We pulled Denver to understand submarket strength, and found that Adams County has the best sales rate in the metro area. The aforementioned top builders for the metro are also quite active in Adams County. The best-selling project is Carriage House at Riverdale by Oakwood Homes, where clustered single-family detached homes start at $340,000.

    OPPORTUNISTIC DEVELOPMENT IN DOWNTOWN

    The Coloradan condominium development is the best-selling active new home project in the Denver CBSA. Standing at 19 stories tall, the building includes ground-floor retail, 294 market rate homes, 33 affordable homes, and seven penthouses. Opened less than a year ago, the community is over 80% sold out. Furthermore, their best-selling residence type is the studio unit. The 49 studios are now sold out, but ranged from 485-534 square feet and sold primarily to Millennials (mostly mid- to late-20s) for under $300,000 (some units went for more). Just two of the 113 one-bedrooms remain unsold.

    • Best location in town. The Coloradan benefits from its location in downtown Denver practically adjacent to Union Station. The area is walkable to main employment hubs, and once development is complete, ground-floor retail will include a boutique fitness center, a coffee shop, bar, restaurant, dry bar, and more. There’s already a Whole Foods across the street. The Whole Foods was added because of the scale created by the abundance of for-rent communities in the area.
    • Limited competition. Condo development has been nearly non-existent for the past 10 years in Colorado. The Coloradan stands as just one of four actively selling communities in the Downtown Denver submarket. Roughly 95% of their traffic comes from online appointments.
    • All-encompassing. The Coloradan attracts a broad range of buyers with the exception of most families. Given the price point, location, and lifestyle, the luxury high-rise product appeals to empty nesters, singles, dual income no kids, existing condo owners, transplants, and investors.

    Fun facts about The Coloradan:
    1. Besides studios, the penthouses are the only other residence type to sell out
    2. The sales center is located in a WeWork space to create a more experience-driven relationship with the buyers
    3. There’s a fifth-floor community garden. The community will offer free classes to advise residents on the best plants and garden tactics give the cardinal direction of their respective units (HOA approved, of course)
    4. The mezzanine floor will include an “owners’ library” that will host 1-2 favorite books from each household, funded by the owner


    Rendering of the studio floorplan. Source: thecoloradan.com

    We analyzed contract sales by market in absolute terms and found that Dallas leads the nation with the most year-to-date contracts, followed by Houston and Phoenix. Please let us know if you’d like to see the full list.
    Contact us to discuss how we can help you stay competitive in today’s evolving housing market.
  6. Homeownership Rates, Economic Recovery, and Rental Market Clarity At IMN Miami 2018

    The hot and humid Miami weather didn’t stop a lively mix of homebuilders, land developers, and capital sources from being fully engaged with the all of the topics covered at IMN Miami. The key reoccurring theme throughout the day was the remaining runway in the current recovery—when does the market weaken? Our team critiqued this topic, and also dove into desirable geographies, construction costs, interest rates, the rental industry, and more.

    Macro Overview

    Ali Wolf, Director, Economic Research

    We are now in the second longest economic recovery on record and inflation is on the rise. The good news is that disposable income is at an all-time high and the 10-year bond is still below 3%. The not-so-good news is that rents and mortgage rates are inching up. Debt is also up, and while this is not not necessarily bad, the higher interest rates are a warning sign. Tracking mortgage, auto loans, and consumer debt delinquencies also give early warning signs, but there’s nothing to be worried about yet.

    Public and Private Homebuilder Panel

    Steve LaTerra, Managing Director

    Steve asked the room, “How do private builders compete against public builders?” Builders such as Van Metre Homes have created panelization plants to reduce cycle times, and McGuinn Homes has created deeper capital relationships.

    The second major question was, “Which geographies are desirable?” Since the answer depends on both job growth and limited entitlement difficulties, California does not make the cut. Instead, Steve said to look to the area that falls between urban and suburban zones and stay away from nationals.

    Building Single Family for Rent (SFR) and Building to Sell:  Homebuilder and Financier Perspectives 

    Moderated by Tim Sullivan, Managing Principal

    The origins of the Single Family Rental (SFR) industry came from investors’ desire to buy assets at a deep discount. Nobody was sure the space would work, and the fallback strategy was to sell the rental homes to the renters or other buyers, but now institutional capital accepts SFR. The “older” age of many of the SFR homes (1960 to 1990) requires more maintenance and capex reserves which is costlier to own, driving down yields.  This was the “miss” when many investors got into the space in 2008-2010. Yields are now at 5.6 to 5.9% (they were 50% plus higher in the early days) and price appreciation has been solid. The “fix-and-flip” concept still  works in lower priced markets (where homes are priced under $200k). Lenders in the space may loan from $20k to $40k per month to fix-and-flip operators (per Matt Neisser of Lending One). Some investment groups are buying new homes from homebuilders, which can help the homebuilder move inventory faster.

    The most solid markets for SFRs include: Jacksonville, Raleigh Durham, Orlando, Tampa, and Atlanta.

    Our top tips and tricks for SFRs:

    • Strong property managers are a must
    • Love your banker and tell your story clearly
    • Understand your local market
    • Be careful of expecting a lot more HPA
    General Market Outlook Panel

    Moderated by Jeff Meyers, President

    Homeownership

    Homeownership rates have not yet hit their peak and will remain fairly flat. Prices are now back to the previous peak in other markets, which makes things challenging as rates go up. In terms of starts compared to peaks, we should be at 800K new home sales. The rise of the outer suburbs is key to this growth: Suburbs are growing faster than cities and this will drive our opportunities over the next 10 years.

    Relentless Rise In Costs & Home Prices

    Costs have been rising across the board for development loans, concrete, and other materials. Home prices have also been rising but have been shielded by low mortgage rates. It’s important to point out that the process to get a mortgage is more difficult now. Millennials are unable to come up with enough down payment and have been relying on assistance from friends and family. We all know that building more housing will help drive down costs, but we still need to know where new starts will come from. Currently, there isn’t any developable land, and we likely won’t get back to the level we had before.

    Join Us At The Next IMN

    The next IMN will be in Las Vegas on September 24-25, where we will continue the conversation around private equity, debt, and joint venture financing. Register before August 17th to catch the homebuilder early bird registration discount. We hope to see you there!

  7. Detroit: Where Dilapidation Meets Redevelopment

    The streets of Detroit mimic those of Bucharest combining the preserved architecture of the late-19th century with contemporary redevelopment and pockets of dilapidation. Driving down Detroit’s 21-mile Woodward Ave, it is almost difficult to register everything you are taking in. You see the historic (and unused) home of the Model T on one side, crumbling buildings on the other, and magnificent places of worship along the way. Once America’s great city, Detroit has struggled with poverty, corruption, cronyism, and bad politics. It even filed for bankruptcy back in 2013. But, times are changing for Detroit. Developers and visionaries are working to revitalize the market and attract interest from across the country and beyond. Our Director of Economic Research, Ali Wolf, along with Vice President of Advisory, Adam McAbee, went on the “Building Density In Detroit’s Suburbs” tour provided by ULI during the Spring Meeting and outlined their findings below.

    Detroit CBSA stats at a glance, powered by Zonda:

    • 43 active builders working on 214 active projects; 43% of the activity is concentrated in Oakland County
    • 2,675 contract sales over the last twelve months
    • New home closing prices average $240,000, which means 71% of households can afford the median priced new home

    Creative use of space. While the leaders in Detroit’s suburb of Birmingham (a community located north of downtown with a population of 20,000) understand the needs of their residents to have a sense of belonging in the community, they also know the city has basic land restrictions. One way they’ve combated this is to allow restaurants to rent parking spaces from April to November to create outdoor eating spaces. If you look closely at the bottom left of the below picture, you’ll see the parking lines.

    Creating soul in the new. Throughout the tour, outsiders reflected on how charming the city feels given its history. While many of the buildings are historic, some just have the appearance of being old. In some cases, developers bucked the contemporary trend and intentionally designed the exterior elevations of the new buildings to look Parisian or industrial.

    Planning for the future. Detroit is, without question, an auto-dependent city. After all, it’s home to the Big Three automakers. With technology advancing rapidly, however, local developers don’t want to get in trouble down the line. We learned about a proposed mixed-use building with ground-floor retail, micro units (yes, even in Detroit!), and parking that the architect designed so it could easily be converted if/when self-driving cars take off.

    Give them something to talk about. Just like the ULI Fall Meeting in Los Angeles last October, the consumer experience kept creeping into the conversation. The developer and mall owner of the luxury retail center, The Somerset Collection, acknowledged that there’s undoubtedly competition from online retail, but it can never take away from good experiences and great customer service on-the-ground. The shopping mall partnered with Happy Returns to fix the pain points of online shopping. Shoppers unsatisfied with their online purchase can head to the “return bar” at the mall where the employee will box up and return the item for you to participating stores. Beyond the ease of return, you’ll receive a $25 gift card to your favorite (partnered) store to help you find something you do like.

    We work with specialists across the country to address the changing needs of both cities and consumers. Please contact us to discuss how we can help with your next development.

    Ali WolfDirector of Economic Research
    EMAIL ALI  |  ALI’S PROFILE 

  8. Redevelopment Efforts Aim To Change Tampa

    Tampa, Florida flew under the radar for years, but is now intentionally trying to reconstruct its image and expand their downtown. With a strong labor market, well-connected group of entrepreneurs (Tampapreneurs, as they are called), and increasing interest from developers and capital providers, the market appears well-positioned for future growth. Our Director of Economic Research, Ali Wolf, recently spent time in Tampa and left impressed by the redevelopment efforts.

    The Tampa metro is currently the 18th largest in the US, behind markets like Detroit and Minneapolis. However, the tide may be turning for the market. The newly released data from the U.S. Census Bureau shows Tampa as the third best metro in the nation for net migration from 2016-2017. Within Tampa, Hillsborough County was the 11th best spot in the country for population growth from 2010-2016 for those aged 25-44 (Millennials + some Generation X).

    Select counties in the Midwest saw the most out-migration, which coincidentally benefits Florida. According to research from The Ohio State University, Florida, Texas, and Kentucky are the top three outbound states for Ohio residents. In fact, Tampa plays up the lifestyle as it would appeal to some of their new residents – “We have all the amenities of major cities, with the community feel of smaller towns.”

     

    WHY TAMPA?

    Tampa is one of the markets that has something for everyone:

    Relative affordability. On average, owning a home is cheaper than renting in the metro. The market average for a detached single-family new home is $270,000 and $185,000 for existing. If one is looking in the popular Hyde Park/Davis Island ZIP code, though, the price point approaches $800,000 for a new detached home and $700,000 for a resale.

    Manageable traffic. Locals will still complain about the traffic, but compared to other metropolitan areas, Tampa has it easy. Tampa ranks 33rd for the worst traffic in the US; Los Angeles, New York, San Francisco, and Atlanta are the top markets for traffic. According to Redfin, Los Angeles, New York, and San Francisco all fall within the top 10 cities house hunting in Tampa.

    Excellent weather 60% of the year. Tampa has seven months of beautiful weather and five months of hot temperatures. For comparison, Cleveland, one of the aforementioned markets contributing to Tampa’s growth, has four months of nice weather and four with the average temperature 45 degrees or lower.

    Close to the water. Tampa residents have easy access to a slew of beaches either nearby in the Bay or along the Clearwater-St. Petersburg coast, setting it apart from nearby Orlando.

    Professional sports teams. Tampa has as many professional sports teams as Orlando and Jacksonville combined, which is great for the nearly 60% of Americans that are sports fans. Locals can cheer on the Tampa Bay Lightning, Tampa Bay Rays, and the Tampa Bay Buccaneers.

    Ability to serve the country. The MacDill Air Force Base, located just south of downtown Tampa on the peninsula, has been a critical component of the market since the 1940s.

    Culture and history. Tampa’s Latin American influence permeates throughout Ybor City (great for cigar aficionados) and the food scene, adding authentic elements to parts of downtown.

    Shops with soul. The Tampa Heights area is transforming thanks to two new food halls. The Hall On Franklin, provides a unique experience in the form of an upscale food court with sit-down service. A seven-minute walk away is the other, Heights Public Market (HPM). The 22,000-square-foot industrial market provides bars, restaurants, collaborative work space, a grocery store, a butcher, and more. HPM (photo from our visit below) serves as a base to further development in the area north of downtown.

     

     

    THE GAME CHANGER? 

    Strategic Property Partners, the developer of the Water Street Tampa downtown redevelopment plan, is controlled by Jeff Vinik, the owner of the Tampa Bay Lightning, and Bill Gates’ Cascade Investment Fund. Water Street Tampa is expected to breathe new life into the Channelside District. The revitalization project will include 53-acres of live-work-play space near the Lightning’s existing stadium. Upon completion, the walkable development will act as an anchor to the city. It is projected to include two new hotels, retail, public space, office space, bike paths, cultural amenities, entertainment venues, and housing (both for-sale and for-rent). The College of Medicine for the University of South Florida is also scheduled to open in 2019 at Water Street Tampa, further backing the region’s health care industry.

     

    Source: Waterstreettampa.com

     

    MIX OF URBAN LIFESTYLE AND BEDROOM COMMUNITIES 

    Lennar’s acquisition of both CalAtlantic and WCI Communities helped it secure a solid foothold in Tampa.

    • Of the active builders in Hillsborough County, Lennar makes up over 30% market share.
    • Lennar contributes to the myriad of housing options in the market, ranging from townhome communities in the up-and-coming South Tampa area to single-family detached homes in the bedroom community of Lutz (pictures below).
    • Lennar has two of the top ten selling new home communities in Hillsborough County, both south of Brandon and with prices in the $200,000s.

    D.R. Horton, who comprises 12% of Tampa’s market share, is successful in Tampa under their Express Homes line. The affordable homes are largely sprinkled along the Riverview to Sun City Center corridor and are priced between $166,000 to $226,000. The average monthly sales rate per community is 4.2.

     

     

    West End II townhomes by Lennar starting at $390,000 for 2,100 square feet

     

    The Promenade At Lake Park 50s by Lennar starting at $352,000 for 1,900 square feet

    “Of the large metropolitan areas in the state of Florida, Tampa is one that is poised for significant growth due to its expansive waterfront amenities, exciting downtown redevelopment, excellent employment opportunities, and its housing affordability. Transportation infrastructure, including interstate and regional roadways, the international airport, and the Port of Tampa all contribute to Tampa’s bright future for economic development opportunities,” concludes Mike Timmerman, our Florida expert and Senior Vice President of Advisory.

    Contact us to discuss how we can help you with your next project in Tampa.

    Ali WolfDirector of Economic Research
    EMAIL ALI  |  ALI’S PROFILE 

  9. Meyers Research Appoints Leadership Team For Zonda

    Meyers Research, the housing industry’s leading provider of rich data for residential real estate development and new home construction, announced the promotion of 6 key leaders.

    “We are thrilled to announce promotions in our incredibly diverse and interdisciplinary team with people from all backgrounds from design to technology to economic research. We are answering the demand of the strong housing market, and are hiring rapidly to support our client base.”

    – Jeff MeyersPresident

    Zonda, a Meyers Research iPad app containing data and analytics for the housing industry, hit record new sales and recently celebrated over 30+ releases. Zonda currently stands as the homebuilding industry’s only mobile data platform with real-time updates combined with rigorous analytical research.

    Due to its success, Meyers Research has announced exciting promotions for key members. These promotions are a result of their continued commitment to deliver valuable data that has driven organizational success for thousands of clients.

    1. Ludmilla Schappert, Executive Vice President, Product Development
    2. Melissa Billiter, Chief Financial Officer
    3. Amy Dudley, Executive Vice President, National Sales
    4. Hamin Balaporia, Executive Vice President, Technology
    5. Shagane LauneyVice President, Design
    6. Ali Wolf, Director, Economic Research

     

    Ludmilla Schappert, Vice President, Research Technology

    Melissa Billiter, Vice President, Accounting

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    About Meyers Research

    Meyers Research, a Kennedy Wilson Company, is the housing industry’s leading provider of rich data for residential real estate development and new home construction. Headquartered in Costa Mesa, CA, the company has developed an innovative Zonda iPad application geared for homebuilders, multi-family developers, lenders, and financial institutions to analyze the latest housing market trends, and inform the strategic thinking behind its premier consulting practice.

  10. March Zonda Newsfeed: Strong Momentum For Spring Selling Season

    MARCH ZONDA NEWSFEED

    It’s no surprise that the Federal Reserve, with Jerome Powell at the helm, decided to continue the normalization process by raising rates this week. The move was well communicated, and it set the tone for a high likelihood of two more increases this year. Inflation concerns were downplayed in the prepared remarks, but there are hints on the consumer side that more is on the way. While the housing industry is worried about the corresponding rising mortgage rates, demographic tailwinds and buyer urgency point to another strong spring selling season.

    Ali Wolf, Director of Economic Research

    Price Stability Persists

    The Consumer Price Index (CPI) grew 2.2% YOY.

    • Core CPI, a more stable indicator that strips out highly volatile food and energy prices, increased 1.8% YOY
    • While the 2.2% looks above the 2.0% target that the Fed outlines, CPI is not their preferred measure of inflation. The Personal Consumption Expenditure Index, the measure closely followed by the Fed, grew 1.7% YOY, similar to the growth in December
    • Higher inflation could cause the bond market to react and drive up yields, which are directly correlated with mortgage rates. Higher inflation could also trigger the Fed to raise interest rates more aggressively, also influencing mortgage rates and overall economic growth

     

    Consumer Confidence At Highest Level Since 2000

    The index came in at 130.8 in February, which is the highest reading since November 2000.

    • The primary driver of this consumer confidence read is the strong labor market. Nonfarm payrolls have increased for 89 consecutive months, the longest stretch on record
    • Looking forward, the Expectation Index rose 5.5% MOM. The reading reflects consumer optimism for the future state of the economy
    • The Fed chair noted that consumers will drive economic growth going forward as household balance sheets improve

     

    Strong Momentum For Spring Selling Season

    Housing market shows strength over last year despite higher mortgage rates.

    • Purchase mortgage applications rose 1.4% compared to last week and 4.0% above last year. The 30-year fixed-rate mortgage currently sits at 4.45%, higher than 4.44% last week and 4.23% last year
    • Mortgage applications are a leading indicator of the housing market that gives a pulse of future purchase activity. For example, the purchase mortgage data is updated through mid-March, while the existing home data released this week lags as its shows data through February
    • With mortgage rates steadily climbing since the new year, the refinance share of applications declined to 38.5%, the lowest level since 2008

     

    INSTANT HOUSING INSIGHTS WITH ZONDA

    Zonda updates housing data instantly in real time, so you don’t have to wait monthly or weekly for the latest insights. Plus, you’ll have access to over 50 Market Reports full of rich infographics and news highlights spanning coast-to-coast. Curious?

    GET A FREE ZONDA DEMO »

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