February 2, 2013
Four-Year Boom Expected for the US Hotel Industry
At this year’s Americas Lodging Investment Summit, the world’s largest hotel investment conference optimism was high as the U.S. hotel industry continues to flourish. Many in the industry say they expect the good times to keep rolling for a few more years until supply catches up with demand.
98 percent of delegates at this year’s conference, including investors and hotel-service providers, said they expect positive revenue per available room growth in 2013
Mark Woodworth, president of hotel property-research firm PKF Hospitality believes this is the best time that we’ve seen in the industry, in terms of fundamentals being solid, going back to the mid-1970’s.
Key fundamentals, including demand growth, average daily rate growth, revenue growth and profit growth are several times their long-run averages, while new construction is “well below average.
See CNBC video on ALIS conference HERE
STR releases updated 2013, 2014 forecasts
According to the most recent forecast from Smith Travel Research, the U.S. hotel industry expects to see performance increases during 2013 and 2014. Overall, in 2013 occupancy is expected to rise 0.8 percent to 61.9 percent, average daily rate is forecasted to increase 4.9 percent to $111.27 and revenue per available room is expected to grow 5.7 percent to $68.86.
The forecasted ADR would surpass the 2008 peak level ($107.41), and the projected RevPAR would surpass the 2007 peak level ($65.56).
Supply in 2013 is forecasted to rise 1.0 percent, and demand is projected to be up 1.8 percent.
The forecast for 2014 includes:
- a 1.3-percent increase in occupancy to 62.7 percent;
- a 4.6-percent rise in ADR to $116.43;
- and a 6.0-percent growth in RevPAR to $72.97.
In 2014, supply (+1.5 percent) and demand (+2.8 percent) are both projected to increase.
Posted by Scott R. Lodde
January 8, 2013
Improving U.S. Housing Markets
In the latest sign of a housing recovery in U.S. housing markets, the number of metropolitan areas on the National Association of Home Builders/First American Improving Markets Index (IMI) rose for a fifth consecutive month to 242 in January for a net gain of 41, more than the number of improving markets one month earlier.
Florida’s improving markets in January include Cape Coral, Deltona, Jacksonville, Lakeland, Miami, Naples, North Port, Ocala, Orlando, Palm Bay, Panama City, Pensacola, Punta Gorda and Tallahassee.
Overall, five markets dropped off the list in January because at least one month showed at least a slight decline in market improvement. In Florida, Sebastian and Crestview lost their improving status.
242 out of 361 metros nationwide (67 percent) appear on that list, including representatives from almost every state in the country. The story is no longer about exceptions to the rule, but about the growing breadth of the housing recovery even as overly strict mortgage requirements hold back the pace of improvement.
For more information on the IMI click HERE
South Florida Foreclosure Filings Poised To Top 350,000 Since 2007
According to a new report from CondoVultures.com, a recent surge in foreclosure filings in 2012 pushed South Florida to the brink of surpassing the threshold of 350,000 notices of default being initiated since the real estate crash began in 2007.
Lenders filed nearly 14,700 foreclosure actions in the tricounty region stretching from Miami north to West Palm Beach in the fourth quarter of 2012, representing a 41 percent surge in filings on a year-over-year basis compared to the same October through December period in 2011.
For the year, lenders filed more than 50,300 notices of default in the 12 months of 2012 in Miami-Dade, Broward, and Palm Beach counties after filing less than 34,100 actions during the same January through December period in 2011.
Despite the spike in South Florida foreclosure actions, the 2012 total number of filings initiated in the region is down compared to the same 12-month period in previous years when more than 57,600 actions were filed in 2010 and nearly 98,300 actions were filed in 2009.
Many are blaming the administrative irregularities caused by “robo-signing”. The problems caused during the repossession process first surfaced in late September 2010, creating a “foreclosure freeze” that prompted many lenders to slow the number of defaults being initiated against borrowers in South Florida between October and December 2010 compared to the same three-month period in 2009.
The slowdown in the foreclosure filing process continued throughout 2011.
In February 2012, the nation’s five largest mortgage servicers reached an agreement with the federal government and the attorneys general from 49 states to provide at least $25 billion in relief to borrowers.
The settlement agreement incentivizes the mortgage services to consider various options – including principal reductions, mortgage modifications, and short sales before filing to foreclose on borrowers who owe more than their residences are worth currently.
Posted by Scott R. Lodde
December 21, 2012
PKF: U.S. hotel market set to prosper through 2016
Another positive outlook for the hotel can this week when PKF Hospitality Research stated the U.S. lodging industry will see perpetual gains in demand, occupancy, ADR and RevPAR through 2016.
RevPAR for U.S. hotels is projected to grow at a compound annual average rate of 7.2% for the next four years … more than double the historical long-run average.
The report cautions, however, that the U.S. federal government’s ongoing “fiscal cliff” budget standoff is clouding what would otherwise be a sunny outlook for 2013.
Without falling off the fiscal cliff, the PKF believes RevPAR will increase by 6.0% in 2013. However, if budget negotiations fail, it can be assumed that RevPAR growth will be well below that. Under almost every economic scenario, 2014 is shaping up to be a year of strong gains in both occupancy and ADR.
By year-end 2013, PKF-HR is forecasting the national occupancy rate to be 62.1%. While this is below the pre-recession peak of 63.1%, it does surpass the long-run average occupancy level of 61.9% per STR.
Much of the gains in ADR will be experienced by properties in the luxury, upper-upscale and upscale chain segments. Occupancy levels for these properties are projected to remain above 70% through 2016.
Roughly 85% of future RevPAR growth will be driven by increases in ADR.
PKF-HR is forecasting net operating income to grow at a compound annual rate of 10.0% through 2016.
Expectations High for Existing-Home Sales and Pricing
In addition, the median price of an existing-single family home rose to $180,600 in November, up 10.1 percent from November 2011.
In a related report from J.P. Morgan Chase & Co., the firm expects U.S. home prices to rise 3.4% in its base-case estimate and up to 9.7% in its most bullish scenario of economic growth.
Standard & Poor’s said it expects a 5% rise in 2013.
According to a monthly economic outlook released by Fannie Mae’s Economic & Strategic Research Group, despite lower expectations for the economy’s progress as a whole this quarter, home sale and price trends suggest housing finally represents “a tailwind to growth,”
Home prices have seen strengthening year-over-year gains over the last several months and prices are expected to end the year on a positive note for the first time in six years according to Fannie Mae economists.
They projected the median price of an existing home would rise 4.2 percent on an annual basis in 2012, to $173,000. They expected the median price of a new home to increase 4 percent, to $236,000. Fannie Mae is projecting that median prices of both new and existing homes will rise an additional 1.7 percent in 2013.
Existing-home sales, new-home sales and single-family housing starts are expected to see substantial increases from last year. Fannie Mae predicts each will rise 9.6 percent, 19.5 percent and 25.7 percent, respectively, in 2012 compared to 2011. They expect further improvement next year with increases of 6.4 percent, 21.9 percent and 22.4 percent, respectively.
Posted by Scott R. Lodde
December 13, 2012
STR Year-End 2012 Forecast for US Hotels
Smith Travel Research (STR) released its preliminary year-end data. STR projects that the U.S. hotel industry will finish 2012 by posting strong performances in all major metrics.
Based on STR data through November, preliminary 2012 year-end results for the U.S. hotel industry include:
- · Increases in supply (0.5 percent) and demand (2.8 percent);
- · a 2.3-percent increase in occupancy to 61.3 percent;
- · a 4.3-percent rise in average daily rate to US$106.17; and
- · a 6.6-percent jump in revenue per available room to $65.08.
Record demand along with limited supply growth, has fueled the increases in the other measurement categories.
STR’s latest forecast was issued at its Hotel Data Conference in September and included a 0.5-percent increase in supply, a 2.6-percent increase in demand, a 2.1-percent increase in occupancy, a 4.4-percent increase in ADR and a 6.5-percent increase in RevPAR.
Homes Fuel Economy
Once considered a drag on growth, real estate has reversed course and is now a key economic driver at a time when other sectors are slowing.
Macroeconomic Advisers projects the economy will grow at a 1.4% annual rate in the fourth quarter, with housing contributing 0.4 percentage point. IHS Global Insight is projecting a 1% growth rate, with housing contributing 0.53 of a percentage point—the largest contribution since 2005.
Home prices rose 3.6% in September from a year ago, according to a recent S&P/Case-Shiller National Index. Prices are up 7% through the first nine months of 2012, which is the strongest rise since 2005 and puts prices on a trajectory to beat even the most optimistic forecasts from earlier this year. The gains also are broad-based, with the 20 cities tracked by the Case-Shiller index—except Chicago and New York—showing year-over-year gains.
While rising prices now are driving the housing market forward, that couldn’t have happened without a painful cycle of losses. Lower prices and rock-bottom interest rates have boosted affordability. The average monthly mortgage payment on a median-price home in October, assuming a 10% down payment, fell to $720 at prevailing rates, down from nearly $1,270 at the end of 2005.
Highlights from the NAR 2012 Profile of Home Buyers and Sellers
The annual survey conducted by the NATIONAL ASSOCIATION OF REALTORS® of recent home buyers and sellers provides insight into detailed information about their experiences
Here you can find highlights from the latest report.
- 39 percent of recent home buyers were first-time buyers, a slight rise from 2011, but closer to the historical norm of 40 percent.
- 65 percent of recent home buyers were married couples—the highest share since 2001. Conversely there was the lowest share of single buyers since 2001.
- For 52 percent of home buyers, the first step in the home-buying process was taken online.
- The typical home buyer searched for 12 weeks and viewed 10 homes—a decline from 12 homes in prior year, which speaks to the tightened inventory in many areas.
- 89 percent of buyers purchased their home through a real estate agent or broker, similar to last year’s report—a share that steadily increased from 69 percent in 2001.
- 88 percent of sellers were assisted by a real estate agent when selling their home.
- Only 9 percent of recent sellers sold via FSBO sale. Among FSBO sellers who did not know the buyer prior to the sale—20 percent sold via FSBO because the buyer directly contacted them.
- Approximately two-thirds of home sellers only contacted one agent before selecting the one to assist with their home sale.
Posted by Scott R. Lodde
November 18, 2012
Single-Family Rental Demand is Outstripping Supply
As reported in a Wall Street Journal article, according to a report by real-estate firm CoreLogic, demand for single-family rental housing is outstripping the available supply of homes. Some housing markets that have been hit hardest by the foreclosure crisis have seen rental demand jump by more than 25% in the past year.
The article points to the fact that many families who have lost their homes to foreclosure or that can’t qualify for mortgages given tighter underwriting standards are now renting.
The magnitude of rental-demand gains are eye-opening as markets such as Port St. Lucie, Fla.; Riverside, Calif.; and Tucson, Ariz., have all seen rental demand jump by 25% over the past year . 22 of 30 markets tracked by CoreLogic have seen year-over-year leasing gains.
Slightly more than 50% all rental units in the U.S., or around 21 million units, are single-family homes. Around four in five of those unit owners are individual investors.
The CoreLogic reports shows that investor demand for rentals shows little signs of weakening.
Leasing activity was up 7% from one year ago in August and up 12% from the beginning of this year, even though the inventory of homes for rent is down by 11% from one year ago.
As a result of this increase, it would take just 2.6 months to rent the available stock of for-lease homes in August, down from 3.2 months of supply last year and over 5 months in 2007.
Single-family rents rose by 2% last year and have increased by 1% so far this year, after declining in 2009 and 2010. CoreLogic expects rent growth to increase throughout 2013, though at a lower rate.
The largest rent increases were found in North Port, Fl; Cape Coral, Fl; and Honolulu, where rents increased by more than 6%.
Warren Buffett Makes a Huge Bet on the US Housing Market
Legendary investor Warren Buffett is buying up real-estate brokerages around the country and is betting on a housing turnaround. Buffett is partnering with Brookfield Asset Management, a Canadian real-estate investor, to more than double the size of his brokerage business.
Berkshire’s HomeServices of America Inc. unit will be the majority owner of the venture to manage a U.S. residential real-estate affiliate network. The firms plan to offer a new franchise brand, Berkshire Hathaway Home Services, starting next year. Brookfield’s network has operated under the Prudential Real Estate and Real Living Real Estate brands.
Berkshire has also purchased a brick maker, won the loan portfolio of bankrupt mortgage lender Residential Capital LLC at auction and built its HomeServices unit by agreeing to acquire real-estate brokerages in states including Oregon and Connecticut.
4 Top Real Estate Markets for Foreign Buyers
A recent National Association of Realtors study estimated that foreigners and immigrants who’ve lived here less than two years spent $82.5 billion on U.S. homes in the 12 months ended March 31. That’s about 9% of the total paid for all U.S. housing purchases during the period.
The NAR study found that foreigners spent more on average — $400,000 per property vs. $252,000 for the overall market — and paid cash for homes 62% of the time instead of taking out mortgages.
Foreigners and recent immigrants are diving into U.S. real estate because buyers consider housing here a good investment and see America as a safe haven for assets.
Many also need a place here for business trips, vacations or retirement or expect their children to study at U.S. colleges and need housing.
Additionally, some foreigners buy property in conjunction with buying U.S. businesses. Under the EB-5 program anyone who invests $1 million in a U.S. company and creates 10 jobs can qualify for an “EB-5” visa and eventual citizenship. (The requirement drops to $500,000 if you invest in a depressed U.S. locale.)
NAR found that Mexicans accounted for 8% of all sales to foreigners and recent immigrants during the 12-month period studied.
Other top sources for foreign buyers included Canada (24% of all sales to non-U.S. nationals), China (11%), India (6%) and Britain (6%).
Buyers from different countries favor different parts of America.
For instance, the NAR found that lots of Germans have bought property in southwest Florida, while many Canadians gravitate toward Arizona.
Canadian Home Buyers in Florida
In Florida, 2013 is shaping up to be the ‘Year of the Canadians’ according to many of the state’s real estate professionals and industry experts. On the tourism front, 3.6 million Canadians visited Florida in 2011, spending approximately $4 billion. The total number of Canadian tourists more than doubles Florida’s second-largest source of tourists: Brazil.
Once Canadians get a taste of Florida, they’re increasingly putting up more permanent roots. Canadian buyers represented 31 percent of Florida’s international real estate purchases in 2011, according to the National Association of Realtor’s August 2012 report, “Profile of International Home Buyers in Florida.”
The next four closest countries are: Brazil (9 percent); United Kingdom (5 percent); Venezuela (7 percent) and Argentina (5 percent).
Almost half of the Florida home purchases in 2011 by Canadians were condos or apartments (48 percent) and about 90 percent were cash deals.
Conservative by nature, more than half of the properties purchased by Canadians were priced below $199,999 (65.4 percent). Canada’s top three destinations for property include the Bradenton-Sarasota-Venice area on Florida’s west coast with 14.4 percent of all purchases in 2011. Fort Lauderdale was second with 12.9 percent and Naples-Marco Island was third at 11.9 percent.
Posted by Scott R. Lodde