Shared Top Border
sdcia_head3.jpg (14795 bytes)
SDCIA Message Board
Register Latest Topics
 
 
 


Reply
  Author   Comment  
larrywww

Senior Member
Registered:
Posts: 2,267
Reply with quote  #1 
A weird thing happened in September of 2017.  John Burns, surveyed his clients (which represents something like 15% to 20% of the entire home building industry) and home building increased 6.2% ---a trend he discovered in September of 2017.

Before this, Burns had said that home building was basically not recovering this cycle----but maybe he spoke too soon.

This was from an interview on 11/27/2017.

https://www.cnbc.com/video/2017/11/27/theres-one-huge-opportunity-in-us-property-ceo-says.html.

The other thing that he mentions is that hedge funds are maybe (again) investing in buy to rent type projects----again, not sure where.  Just when you thought the hedge funds had forever left this market---maybe nowhere else for them to earn the required returns.

I wonder if all this economic stimulus is going to (somehow) jump start the market---when you throw over a trillion dollars into an economy it must have some impact.

I don't necessarily think these impacts will apply to the California market---this would require further analysis---although it seems like Bruce's idea to build in Florida may have been a very good idea.

See also, this article on The Rise of the Single Family Rental. http://www.builderonline.com/builder-100/strategy/the-rise-of-the-single-family-rental_o

 

Why can't we have John Burns do a presentation to the club?
kaihacker

Avatar / Picture

Senior Member
Registered:
Posts: 4,874
Reply with quote  #2 
New home construction is an interesting metric because it has multiple implications.  There is the obvious additional supply factor but also the benefits to the employment number with additional construction jobs.

It would also be interesting to see if new construction is adding units at a faster pace than units are lost and also where supply stands in relation to household formation. 

I have never seen published numbers on the total number of lost housing units.  Between catastrophic loss, fire, etc and deterioration to the point of total loss, I am guessing this a pretty significant number nationwide. 

I remember articles a few years ago which stated that new construction did not keep pace with our increasing population.  I don't recall any of these articles factoring in property loss. I have seen recent charts showing new construction rising, but it is still at a pretty low level historically speaking.  

Then as you point Larrywww, not all new homes built are for sale, some are built to rent.

With prices over $300/ft in much of California, I am surprised we are not seeing more building.  I wonder how big a factor CEQA and increased fees are having. 

 

__________________
Gene Hacker

Passive and active real estate investment opportunities.
http://RiverLakeRE.com riverlakere@gmail.com

Home Inspections in Bakersfield and all of kern county:
http://bakersfieldinspections.com
larrywww

Senior Member
Registered:
Posts: 2,267
Reply with quote  #3 
To me, this was a really strange article from John Burns, who is really smart about demographics---and who has as his client many major homebuilders.

What Burns was saying was that basically this kind of home community is a new animal----it's not only a new home subdivision, but one with amenities with some rentals and some owner occupied homes.  Kind of a cross between a subdivision and an apartment.

There is also an article that he cites----The Rise of the Single Family Rental.  http://www.builderonline.com/builder-100/strategy/the-rise-of-the-single-family-rental_o

Hate to say it, but this trend probably isn't even occurring in California---more likely Florida or Texas----but I guess only Burns will know that.  But it's a fascinating trend, in any case, since even sophisticated investors like Bruce Norris have invested in developments (basically) as rentals.


And maybe Wall Street is back---that may NOT be good news for most smaller investors----though, again, the trend may only exist in certain states.


Bruce and/or sdcia should definitely interview Burns---his recent book on demographics is very interesting.

larrywww

Senior Member
Registered:
Posts: 2,267
Reply with quote  #4 


New home sales are recovering.  According to Burns, new home sales are up the last 3 quarters year over year from October to December of 2017---15%, 15% and 19%.

The real demand going forward is going to be: (1) entry level and (2) those 65 years old (not as much 55 years)----and not so much moveup homes (as has been true in the past).


larrywww

Senior Member
Registered:
Posts: 2,267
Reply with quote  #5 
More news from John Burns----the bottom has basically fallen out of the market---affordable homes are in dramatic decline.  In the 31 largest markets, affordable homes declined 20% YOY since 2014.l  Mid tier listings declined by 12% and top tier by 8%----but what is definitely missing from the market is the bottom tier---which is where most investors live.

This tends to reinforce my idea that the market is dead to alot of investors---the sweet spot is gone.  Buying mid level and upper tier housing in a market that isn't seriously appreciating----and which you frequently can't rent out at a decent rate---makes no sense.

https://www.realestateconsulting.com/barbell-crushing-supply-of-affordable-homes/
Previous Topic | Next Topic
Print
Reply

Quick Navigation:

Easily create a Forum Website with Website Toolbox.

Policy