Headlines – Week of November 21, 2010

November 29, 2010

 7 Trends That Will Drive the Future of Housing

According to a feature article on ProSalesOnline.com, seven trends that will influence what and how builders will sell future housing.  Although some of these trends will take years before they become important, others will have an impact as early as January 2011.

PROSALES Online is a source for news and information about the management, finances, and operating concerns of America’s 50,000-plus pro-focused building materials dealers.  The magazine is published by Hanley Wood which focuses exclusively on North America’s residential and commercial construction industry. Hanley Wood develops magazines, Web sites, e-newsletters, exhibitions and conferences, and custom marketing and data services that support builders’ critical information needs.

The following are trends the editors believe will have the biggest impact on housing in 2011.

1. Big builders are wringing the extras out of construction costs and dropping the national average cost-to-build 36% to $52 per square foot.

2. Starting in 2011, Energy Star will ramp up its efficient design and quality installation standards. To get Energy Star certification, builders will have to install the right insulation, HVAC systems, and other features related to energy efficiency correctly every time.

3. Sheds are the next evolution. As homes get smaller, a separate shed will become a popular home addition.

4. There are 81 million “Echo Boomers” who were born from 1981 to 1999, compared to just 78 million Baby Boomers born from 1946 to 1964. These children and grandchildren of Boomers will drive home-building for years.

5. By 2015, demographers say, more than two out of every five households occupied by Generation Y people born between 1981 and 1999 will be WINKs (women with incomes and no kids).

6. Make room for the “Sandwich Generation” – Baby Boomers living with both their kids and their parents. These families like having two master suites, a second cooking area, and lots of storage.

7. Baby Boomers want to keep working and continue to live where they have always lived. They want a first-floor master bedroom near the washer and dryer and lots of convenient storage.

 Full Article

Moody’s hopeful on recovery, notes pent-up Fla. demand

According to Moody’s Analytics economist Chris Lafakis, the pace of the national recovery is moderating and the lift spurred by nearly $800 billion in federal stimulus spending is fading, but there are several promising signs that growth will continue, including in Florida.

The economist believes the Federal Reserve will remain aggressive with the quantitative easing plan lifting asset prices, reducing corporate borrowing costs, and increasing the willingness of consumers to spend.

Lafakis predicted substantial growth in Florida’s economy, mentioning that the Miami, Orlando and Tampa areas are expected to recover “quite significantly” due to a rebound in population growth and an increased willingness of people to travel to Florida for vacations.

Lafakis says that by the end of third quarter 2011, construction jobs will grow by nearly 27% statewide.

Nationally, corporate balance sheets are strong and business profits have “fully recovered from the recession,” he said, adding that businesses are in a position to hire more employees, though their level of willingness varies.

Household liabilities in the United States have fallen by $900 billion since peaking two years ago and a shift to spending and addressing pent-up demand for purchasing “creates a lot of economic juice.

The National Conference of State Legislatures said states are collectively facing budget gaps that total half a trillion dollars in the coming years. The good news is that State tax revenues bottomed out in fiscal 2010 and that tax collections are growing in 42 states in fiscal 2011, which began July 1.

Foreclosure expert predicts new wave of bank repossessions

A foreclosure investor said bank repossessions will return to record numbers in mid-2011, once the robo-signing scandal has blown over.

According to an article on Miami Herald.com, the foreclosure slowdown initiated by banks will lead to a sharp drop in bank-owned properties and an increase in short sales, followed by a new wave of bank-repossessions.

Rich Meyer, a Miami real estate professional and a veteran of Broward County’s courthouse foreclosure auctions, said the current halt in new foreclosure inventory would be temporary, and predicted a return to record-high bank repossessions by mid-2011.

As the market for bank-owned homes, or REOs, dwindles, there will be more competition and prices will increase. Banks are also likely to favor short sales over foreclosures in the near term.

According to the president of Bank of America’s home loan unit, mistakes were made in the bank’s foreclosure processes, causing some homeowners to be foreclosed on while they were on track for a mortgage modification.  About 20% of Bank of America’s defaulting loans are in Florida.

The Congressional Oversight Panel recently released a report stating that the potential fallout from “foreclosure irregularities” could be significant.

Full Article

Florida leads U.S. in serious mortgage delinquencies

According to an article in The Palm Beach Post,  Florida still leads the nation in the percentage of homeowners who are “seriously delinquent” on their loans.

In the state, 19.5% of borrowers were either 90 days past due or in foreclosure in the third quarter. Add in borrowers who are 30 and 60 days late, and nearly one in four Floridians are behind on their loans.

The good news is that Florida’s seriously delinquent rate is down from 20.1% in the second quarter. But no other state has Florida’s high level of late payers. Nevada was No. 2 at 17.83%, while Illinois’ 10.8% ranked third.

In Florida, 48% of the state’s homeowners are underwater and many have given up and have stopped paying their mortgages.

According to the Mortgage Banker’s Assocation, part of the blame lies with the way foreclosures are handled in Florida.  Florida and other states where foreclosures go through the courts have foreclosure inventories that are twice as high as so-called non-judicial states.

Of course, the court system is only partly to blame for Florida’s delinquency problem. The bigger culprits are a withering collapse in prices and an 11.9% jobless rate that’s well above the national unemployment rate of 9.6%.

Full Article

Posted by Scott R. Lodde

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