Monthly Archives: January 2018

Single-family housing starts, permits hit 10-year high | Chappaqua Real Estate

U.S. single-family homebuilding and permits surged to more than 10-year highs in November, in a hopeful sign for a housing market that has been hobbled by supply constraints.

Builders have struggled to meet robust demand for housing, which is being fueled by a labor market near full employment. Land and skilled labor have been in short supply, while lumber price increases have accelerated.

The Commerce Department said on Tuesday that single-family homebuilding, which accounts for the largest share of the housing market, jumped 5.3 percent to a rate of 930,000 units. That was the highest level since September 2007.

Pointing to further gains, single-family home permits rose 1.4 percent to a pace of 862,000 units, a level not seen since August 2007. The jump in groundbreaking on single-family housing units suggests housing could contribute to gross domestic product in the fourth quarter.

Investment in residential construction has declined for two straight quarters, weighing on economic growth. A survey on Monday showed confidence among homebuilders soaring to near an 18-1/2-year high in December, amid optimism over buyer traffic and sales over the next six months.

Prices of U.S. Treasuries remained at session lows after the data while the dollar .DXY pared declines against a basket of currencies. U.S. stock index futures were mixed. Last month, single-family home construction in the densely-populated South shot up 8.4 percent to the highest level since July 2007 as disruptions from recent hurricanes continued to fade and communities in the region replaced houses damaged by flooding.

Single-family starts in the West increased 11.4 percent to their highest level since July 2007. They were unchanged in the Northeast and fell 11.1 percent in the Midwest.

Overall housing starts increased 3.3 percent to a seasonally adjusted annual rate of 1.297 million units. While that was the highest level since October 2016, October’s sales pace was revised down to 1.256 million units from the previously reported 1.290 million units.

 

read more…

 

https://www.reuters.com/article/usa-economy-housingstarts/single-family-housing-starts-permits-hit-10-year-high-idUSKBN1ED1NQ

Real estate construction forecasts 2018 | Armonk Real Estate

Each year, leading economists look into their “crystal balls” in an attempt to foresee what the New Year holds for the construction industry. For 2018, this proved a tougher task given key uncertainties clouding the outlook at year end, including the incomplete 2018 federal spending package and as yet enacted tax reform legislation (just passed at time of publication). Add in storm and wildfire recovery boosting construction demand, costs and labor woes (further compounded by immigration reform), then throw in the pending mid-term elections, and the future is cloudier still.

That said, economists gave their best shot, and here is a Q&A covering their outlook for the overall U.S. economy and general construction as we neared the close of 2017. Next month, industry experts will take a targeted look at the prospects for the transportation sector.

Overall Economic Outlook

What level of U.S. economic growth do you see for 2018? What are some key drivers that will impact growth either positively or negatively?

Robert Dietz, senior vice president and chief economist, National Association of Home Builders (NAHB): NAHB sees continued modest yet positive growth prospects for 2018. We should continue to grow, but at below 3% rates. Wage growth is increasing, which is good for consumer spending and housing demand, but is a concern for employers. The wild card for 2018 and 2019 is tax reform. Smart tax reform that rewards small business and promotes housing will contribute to growth. Tax reform that increases taxes on homeowners to reward investors, including foreign owners of U.S. assets, will be counterproductive.

The tight labor market is a key limiting factor for overall economic growth. Increases for the labor force participation rate will help labor markets to continue to grow. However, absent those improvements, wage pressure could increase inflation and cause the Fed to move somewhat faster than its current gradual pace of interest rate hikes.

Ed Sullivan, chief economist, Portland Cement Association (PCA): We project GDP growth to be at 2.3% in 2018. We came off the worst recession since the Great Depression and there has been a tremendous pent-up demand. It takes time to fill this demand, and our growth has been slow.

It will likely continue to be slow driven in part by millennials who are in debt, who are taking their time to start families and who currently don’t participate in the housing market. The recession also changed peoples’ behaviors. But people forget and eventually they will return to old spending habits, just as millennials will one day start families and buy homes.

Ken Simonson, chief economist, Associated General Contractors of America (AGC): The economy should keep expanding at a moderate 2% to 2.5% rate, after inflation. However, this could be affected by big changes in tax and spending policy or by an international crisis.

Anirban Basu, chief economist, Associated Builders & Contractors (ABC): As we enter 2018, consumer confidence is at a roughly 17-year high, unemployment is at a 17-year low, financial markets are surging, the global economy is improving and leading indicators suggest plentiful momentum during the year’s early months. It has been many years since the U.S. economy entered the New Year with such momentum.

Consumer spending will continue to be the leading engine of growth. But that will be supported by faster export growth as the world economy continues to heal, and by faster business spending growth, particularly if pending corporate tax cut legislation is passed. In short, the economic outlook for the U.S. in 2018 is quite good.

There are abundant risks, however. One could argue that asset prices rose too fast and furiously in 2017. That could set the stage for significant asset price volatility in 2018. Stock and other prices can’t rise forever. This is particularly true given rising inflationary pressures, whether in the form of wages, tuition, rent, medical care or fuel. Should interest rates rise with unanticipated rapidity due to these emerging pressures, elevated asset prices could become jeopardized, setting the stage for negative wealth effects. This means that while 2018 should be strong for the U.S. economy, there are few guarantees with respect to 2019 or 2020.

Building Construction

How strong was construction in the commercial and housing markets in 2017, and what level of growth do you expect to see in both segments for 2018?

AGC: Single-family construction spending increased 9% through the first 10 months of 2017, about the same growth rate as in 2016. But multifamily construction really hit the brakes, slipping to a 4% growth. I think that in 2018, there will be a lot of rebuilding and renovations in areas of Texas, Florida and California devastated by hurricanes, flooding and wildfires. Meanwhile, multifamily building may dip after six years of generally torrid growth.

ABC: There was a considerable volume of building construction in 2017. Leading segments included hotel, casino, office, distribution center and multifamily construction. There are many forces at work, including Millennial demographics, the e-commerce revolution, foreign investment into commercial real estate and growth both in consumer and business travel. One suspects that this momentum will stretch into 2018 since both domestic and foreign capital is on the hunt for investment opportunities that yield income.

NAHB: On the demand side of the housing market, incoming household formation data show strength for the for-sale market and some softening for rental markets. These trends are consistent with demographic data that show a growing number of millennials entering their 30s. This process will continue to sustain demand for single-family homes in the years ahead.

Single-family construction should continue along its modest growth trend (7%), while still being constrained by supply-side bottlenecks, including lack of labor and rising building material prices. Nonetheless, builder confidence, as measured by the NAHB/Wells Fargo Housing Market Index, remains solid. Remodeling should also post gains given rising homeowner wealth and reduced homeowner mobility, which will increase the need for aging-in-place and other kinds of structural improvements.

Multifamily starts peaked in 2015, and NAHB expects a leveling off process to continue over the next few years. The decline in apartment starts in 2017 was steeper than expected, with a 10% 2017 decline expected. We forecast smaller but still negative growth rates over the near-term as rental vacancy rates increase, rent growth softens and housing demand momentum moves to the for-sale market segment.

PCA: We anticipate modest growth throughout the building construction market in both the nonresidential and residential sectors. That should translate into a growth rate similar to 2017.

Nonresidential is approaching a peak and there is slowing in sectors like industrial that are impacted by the macroeconomic environment. The single-family residential market should be fairly healthy in 2018. Gains, however, will be slowed by difficult application processes, lack of Millennial participation and modest increases in mortgage rates that will impact affordability. The multifamily market still has strong potential, but it too is reaching its cyclical peak. Like 2017, next year will likely see 350,000 units built.

The big surprise is the improvement and repair sector thanks unfortunately to two serious hurricanes and California wildfires. This sector saw strong percentage gains toward the end of 2017 and will continue to see these gains throughout 2018.

Raw Material Costs

Do you expect to see the costs of raw materials such as asphalt, cement, steel and lumber increase in 2018? If so, to what level and what is driving the increases?

NAHB: We expect continued gains in building material prices, particularly for lumber given tariffs on Canadian softwood lumber. Rising building material prices was the issue that increased the most as a concern in 2017. While still below the lack of labor and lots, prices for drywall, roofing materials and other building components increased in 2017 due to hurricane repair efforts and the broader growth of the housing market. We expect this pressure on prices to continue in 2018.

ABC: The past year was associated with noteworthy increases in construction materials prices. After slumping for much of 2014 and virtually all of 2015, global commodity prices stabilized and then began to rise in 2016/17.

A more contentious view on trade, including with respect to Canadian soft lumber, also served to elevate price pressures. During a recent 12-month period, softwood lumber prices surged 15%. Diesel fuel, natural gas, iron and steel and other prices also expanded for much of 2017.

Given the expectation that the global economy will heat up even further in 2018, one would expect that materials prices will continue to rise. However, the rise in materials prices could be quite gradual. Quantity supplied is already responding to higher prices in many categories, which should translate into more gradual price increases in general.

AGC: Materials costs ended a years-long slide in late 2016 and rose at a moderate rate in most of 2017. Those increases are likely to accelerate a bit further in 2018 as global demand picks up and construction continues to grow, albeit slowly and unevenly. I don’t foresee a return to the severe, widespread escalations and occasional shortages that cropped up before the last recession.

Employment and Labor Costs

In recent years, finding skilled and experienced workers has challenged many construction companies. In fact, for many, it has been their No. 1 impediment to growth. Do you foresee companies continuing to struggle with this trend in 2018? What impact, if any, will the administration’s stand on immigration have on the industry and finding workers?

AGC: Finding capable workers will remain the leading challenge for contractors in 2018. The job market is continuing to tighten after more than seven years of continuous job gains and ever-increasing retirements of baby boomers. Restrictive immigration policies and stepped-up deportations are adding to the competition for workers and threaten to slow the growth in the overall economy as many industries struggle to fill openings or to replace the customers who are kept out of the country.

NAHB: On the supply side of the construction market, we need additional gains in the labor force participation rate to allow employers to continue filling open jobs. The construction industry is in the middle of a labor shortage and data suggest it will not turn the corner quickly. Without growth in the size of the labor force, it will be difficult for the residential construction industry to continue adding workers at the current pace of a little more than 100,000 per year. Higher wages due to a tight labor market will bring in some additional workers, but will also increase cost pressures on employers.

We could, of course, build and remodel more homes if we could add workers even faster. The demand is there. The industry must recruit the next generation of construction workers.

PCA: There is no easy fix to the labor challenge. Training programs for skilled workers are great, but they take time and we see companies struggling with labor for several years to come. The labor shortage will continue to be an impediment to company growth and immigration reform will only worsen the trend. Labor-saving technologies will alleviate some of this, but they can only go so far.

ABC: The lack of skilled workers is apparent throughout the U.S. economy, whether in construction, trucking, healthcare, hospitality, cybersecurity or a host of other industry segments…

The year 2018 will be yet another during which America’s low labor force participation rates will continue to hamstring businesses in many segments, including construction. A confluence of factors has led to these circumstances, including cultural shifts, shifts in educational philosophy, the atrophying of apprenticeship programs in much of the nation, and the ongoing large-scale retirement of many of the most talented, skilled and experienced construction workers. The nation’s shifting stand on immigration will not help, with employers finding it increasingly challenging to secure both skilled and semi-skilled personnel.

With respect to construction, the impact is to raise the cost of delivering construction services and to stretch out timetables. That makes it less likely that construction projects can move forward because this serves to reduce the predicted rate of return.

 

read more…

 

https://www.forconstructionpros.com/business/article/20985203/special-report-state-of-the-construction-industry-2018

Home prices will take a hit | North Salem Real Estate

Congressional Republicans reached a deal on a reconciled version of the House and Senate tax bills, and while experts are still sifting through the fine print to determine its potential impact, one thing seems clear: Home prices will take a hit.

This could be good news or bad news depending on whether you already own a house or are a prospective buyer, but a Moody’s Analytics report released Monday estimates that by the summer of 2019 home prices will be down nationally by 4 percent compared to where they’d be if no tax bill was passed.

To be clear: This doesn’t mean home prices will fall by 4 percent from where they are right now, but Moody’s estimates they’ll be 4 percent less in the future than they would be if current conditions held.

The drops are projected to hit hardest in markets where home prices are already high. East Coast cities like New York, Philadelphia, and Washington D.C. show heavy drops, as do West Coast cities, including San Francisco and Los Angeles. South Florida and a few cities in the Midwest also stand to see substantial drops.

The home-price drops are mostly the result of three key provision changes in the tax bill, which could be signed by President Trump as early as this week: the lowered cap on mortgage-interest deductions (MID), from $1 million to $750,000; the cap on state and local tax (SALT) deductions of $10,000; and the doubling of the standard deduction.

Currently, homeowners can deduct interest they pay on their homes and second homes on loans up to $1 million in value. While lowering the cap to $750,000 is a fairly modest measure—the House bill lowered it to $500,000, and the deduction’s many critics would like it repealed outright—it means wealthy homeowners in hot real estate markets are exposed to higher tax bills.

The same goes for SALT deductions. Currently, taxpayers can deduct what they pay in state and local property and income taxes from their federal returns. Under the new law, taxpayers can only claim a maximum of $10,000, although it can be any combination of income or property taxes. This hits high tax states like New York and New Jersey particularly hard.

Because the MID and SALT deductions are baked into the price of homes, eliminating or capping the deductions will inherently lower the value of homes that are particularly exposed to the MID cap or are in high tax areas.

The new standard deduction complicates things further. When taxpayers file federal returns, they have a choice between itemizing their deductions or taking the standard deduction. The new law will double the standard deduction from $6,350 to $12,000 for individuals and from $12,700 to $24,000 couples.

It doesn’t make sense for taxpayers to itemize unless their deductions are greater than the standard deduction, and with the standard deduction doubling, fewer taxpayers will itemize. This will lead to fewer people taking the MID and SALT deductions, further weakening their value and thus home prices.

A recent Zillow report showed that under current law, roughly 44 percent of homes were worth enough to justify itemizing and taking the MID. Under the new law, only 14.4 percent are worth it.

 

read more…

 

https://www.curbed.com/2017/12/18/16791532/tax-bill-home-prices-drop

New York City real estate has its worst quarter in 6 years | Mt Kisco Real Estate

New York real estate has its worst quarter in 6 years - and there could be more pain ahead

New York real estate has its worst quarter in 6 years – and there could be more pain ahead

Manhattan real estate sales and prices took a fall in the fourth quarter, and they’re likely to slide even further this year after the new tax rules take effect.

Total sales volume fell 12 percent compared with the fourth quarter of last year — the lowest quarterly level in six years, according to a report from Douglas Elliman Real Estate and Miller Samuel, the appraisal firm. The average sales price in Manhattan fell below $2 million for the first time in nearly two years.

Brokers say the declines were simply the result of uncertainty around the Republican tax plan, as buyers held off until the details of the new law became clear. They say many of those buyers have since rushed in and will help show a rebound.

Yet the luxury market in Manhattan is suffering from an expanding glut of high-end and highly priced apartments. And analysts say that while sales may rebound slightly in the first quarter of 2018, the tax law — which limits the deductibility of state and local taxes — will continue to add pressure to New York City housing prices, especially at the top.

“There will be an impact on prices and sales,” said Jonathan Miller, president and CEO of Miller Samuel. “But it may take up to a year and a half to two years to see the full impact.”

The high end of the Manhattan market is showing the biggest cracks. Inventory of luxury apartments — those in the top 10 percent by price — grew by 15 percent. There is now a 17-month supply of luxury apartments in Manhattan, up from 10 months a year ago.

And with giant new condo towers sprouting up in every corner of the city, those numbers are likely to grow.

Miller said that resales — as opposed to new development — are holding up strong, with median sales prices up by 2 percent over last year. But prices for new developments fell 17 percent over last year and the number of sales are down 20 percent.

The number of new developments is expected to continue to rise this year and next, which will add to inventory, Miller said. While demand for “low-end” apartments priced at $1 million to $2 million remains strong, sales of apartments of more than $5 million will get tougher. In part, that’s because the rich have more discretion on when and where to buy homes — and with the costs of owning a home in New York going up with the tax plan, apartments aimed at the rich will see the biggest price hits.

Miller said that while buyers have already adjusted, sellers may take more time to catch up.

“The sellers were already recalibrating after 2015,” he said. “Now they will have to readjust again.”

read more…

 

https://www.cnbc.com/2018/01/02/manhattan-real-estate-prices-and-sales-fell-ahead-of-tax-changes.html

Home projects for the New Year | Cross River Real Estate

New Year’s Resolutions for Your Home

Easy tasks that will make you happier, healthier and even wealthier!

Prevent Bathroom Mold

Prevent Bathroom Mold

No matter where you live, the high moisture level in your bathroom can cause mold and mildew. Eliminating bathroom dampness is the key to keeping mold from growing. To do that, follow these steps:

First, after a bath or a shower, squeegee water off the shower walls. That eliminates at least three-fourths of the moisture that supports mold and mildew growth.

Second, run your bath fans during your bath or shower and for a half-hour after to flush out moisture. Or add a timer switch to make this step automatic.

Third, if you have tile, seal the grout lines annually with a standard grout sealer to waterproof them.

To get rid of the current mold, scrub with detergent and water, then let the surface dry completely. Or use a solution of 10 percent bleach and 90 percent water (a stronger bleach solution will not give better results). Spray or brush on the solution, let it sit 10 minutes, then rinse it off and let dry.

If the fans aren’t clearing out most of the moisture in your bathrooms after five to 10 minutes, your fans may not be moving enough air. Fans are certified by the volume (cfm, or cubic feet per minute) of air ‘exhausted’ out of the room. To find the recommended fan capacity for your bathroom, simply multiply the bathroom square footage by 1.1 (assuming an 8-ft. ceiling; for a 9-ft. ceiling, multiply by 1.5).

Restore Free Flow to Your Showerhead

Restore Free Flow to Your Showerhead

If the flow from your showerhead is growing weaker, the cause is probably mineral buildup. Many manufacturers recommend that you remove the showerhead and soak it in a half-and-half mixture of warm water and vinegar (any type). But there’s really no need to remove the head. Just pour the mix into a heavy-duty plastic bag and attach it to the shower arm with a rubber band. The acid in the vinegar dissolves minerals, but prolonged contact can harm some plastics and metal finishes, so remove the bag every 15 minutes and check the shower flow.

Clean Out Dryer Lint

Clean Out Dryer Lint

If you notice that it takes longer than normal for loads to dry in your clothes dryer, it may be time to clean out the vent. First detach the duct from behind the unit and then push a plumbing snake through your dryer vent from outside. Tie a rag securely to the snake end. Pull the cloth and snake through a couple of times and your clean vent will not only save energy but possibly prevent a fire as well.

If you discover that your dryer vent cover needs repair, this is how to fix it and this video shows you how to replace the vent it it’s in bad shape.

Sparkling Dishwasher

Sparkling Dishwasher

Add a cup of vinegar to your empty dishwasher and let it run a full cycle once a month or so. Your kitchen may smell a bit like a pickle jar for a few hours, but hard-water lime buildup will be rinsed away, making your spray arm and other dishwasher parts work flawlessly.

Check Your Gutters

Check Your Gutters

A 1,000-sq.-ft. roof will shed about 620 gallons of water during a 1-in. rainfall, or about 103 gallons per downspout if you have six downspouts. That’s a lot of water dumped right next to your basement. Although it may seem obvious, clean and properly functioning gutters with downspouts that empty away from the foundation are key to avoiding major and expensive home repairs.

So before you leave for a vacation, take a walk around the house and check your gutters. Check to see if leaves, sticks or other debris are blocking the inlet of the downspout and preventing water from flowing down the spout. Also make sure your downspout extensions are discharging the water far enough from the foundation and that you always reattach them after you mow your lawn.

Avoid a Scalding by Setting Your Water Heater to 120 Degrees

Avoid a Scalding by Setting Your Water Heater to 120 Degrees

Plain old tapwater can be dangerous. Water heaters set too high send thousands (mostly children) to hospitals each year with burns. Most safety experts recommend a setting of 120 degrees F. But finding that setting on the dial isn’t easy—most dials aren’t labeled with numbers.

If the stickers on the water heater don’t tell you how to set the temperature and you can’t find the owner’s manual, use this method: Run hot water at the tap closest to the water heater for at least three minutes. Then fill a glass and check the temperature. If the water is above 120 degrees, adjust the dial, wait about three hours and check again. Repeat until you get 120-degree water. For a final test, check the temperature the following morning, before anyone uses hot water.

read more…

https://www.familyhandyman.com/smart-homeowner/

New single family home sales jump dramatically | South Salem Real Estate

Sales of new single-family houses in the United States jumped 17.5 percent to a seasonally adjusted annual rate of 733 thousand in November of 2017 from a downwardly revised 624 thousand in October and beating market forecasts of 654 thousand. It was the strongest number since July of 2007. Sales rose in all four regions. New Home Sales in the United States averaged 650.82 Thousand from 1963 until 2017, reaching an all time high of 1389 Thousand in July of 2005 and a record low of 270 Thousand in February of 2011.

United States New Home Sales

 

US New Home Sales Highest Since July 2007

Sales of new single-family houses in the United States jumped 17.5 percent to a seasonally adjusted annual rate of 733 thousand in November of 2017 from a downwardly revised 624 thousand in October and beating market forecasts of 654 thousand. Sales rose in all four regions.

Sales surged in all four main regions: South (14.9 percent to 416 thousand); West (31.1 percent to 194 thousand); Midwest (6.9 percent to 77 thousand) and Northeast (9.5 percent to 46 thousand):
The median sales price of new houses sold was $318,700, above $315,000 a year earlier. The average sales price was $377,100, also higher than $363,400 in November of 2016.
The stock of new houses for sale was flat at 283 thousand. This represents a supply of 4.6 months at the current sales rate.
Year-on-year, new home sales increased 26.6 percent.
read more…
https://tradingeconomics.com/united-states/new-home-sales

Single-family houses constructed at best pace in more than a decade | Waccabuc Real Estate

Construction of new homes increased 3.3 percent in November — with the gain largely coming from single-family houses being built at the strongest pace in more than a decade.

The Commerce Department said Tuesday that builders broke ground on homes last month at a seasonally adjusted annual rate of 1.3 million units. The increase marks a key moment in the recovery from the Great Recession: Builders started work on single-family houses at the fastest pace since September 2007, which was just a few months before the start of that economic downturn.

Ralph McLaughlin, chief economist at the real estate company Trulia, said completed new homes are likely to finish at a post-recession high, but completions are still just 65 percent of their 50 year-average.

Driving the rebound in home construction has been a shortage of existing properties being listed for sale.

Fewer people are putting their property on the market, despite healthy demand from buyers because the unemployment rate is at a 17 year-low and mortgage rates remain at attractive levels. New construction has filled some of this gap with starts on single-family houses rising 8.7 percent so far this year.

Still, not enough new homes are being built to totally end the supply squeeze. Over the past year, the number of sales listings for the much larger market for existing homes has fallen 6.4 percent.

The construction growth last month came from the South and West, while the Northeast and Midwest reported declines.

Builders are also backing away from the apartment rentals that until recently were a driving force behind the rebound in residential construction. Ground breakings for multi-family buildings such as apartment complexes have declined 8.5 percent year-to-date.

The move away from apartment construction has corresponded with a shift by the millennial population toward buying homes, said Mark Fleming, chief economist at First American Financial, a real estate transactions firm.

“The last two quarters have seen an increase, specifically a shift from renter occupied to owner occupied households, as Millennials age out of rentership and into homeownership,” Fleming said.

Building permits, an indicator of future construction, slipped 1.4 percent in October to 1.3 million. But the number of permits authorized so far this year has increased 5.8 percent.

Relatively low mortgage rates have helped would-be homebuyers, even as property prices have climbed faster than wages. The average rate on 30-year fixed-rate U.S. mortgages was 3.93 percent last week, slightly better than the 4.16 percent rate a year ago, according to mortgage Freddie Mac.

read more…

 

https://www.usnews.com/news/business/articles/2017-12-19/us-housing-starts-rose-33-percent-in-november