Sixteen projects earned accolades from our panel of judges for this year’s Builder’s Choice & Custom Home Design Awards program, representing some of the best residential design work being constructed today.
Overall, the jurors—J. Carson Looney of Memphis, Tenn.–based Looney Ricks Kiss, Michael Hennessey of San Francisco–based Michael Hennessey Architecture, and Jonathan Tate of New Orleans–based Office of Jonathan Tate—praised function in smaller footprints, use of innovative building materials, and remodels that respect the existing architecture. From production homes to interior renovations to meticulously crafted custom abodes, there is no shortage of inspiration below for you to reimagine for your own projects.
EXPLORE: ALL PROJECT OF THE YEAR GRAND AWARD MERIT AWARD
A for sale sign stands before property for sale in Monterey Park, California.Frederic J. Brown | AFP | Getty Images
A Federal Reserve economist says the current housing backdrop is similar to recent economic slumps, with several metrics “consistent with the possibility of a late 2019 or early 2020 recession.”
“Data on single-family home sales through May 2019 confirm that housing markets in all regions of the country are weakening,” the St. Louis Fed’s William R. Emmons said in a report posted on the central bank district’s site. “The severity of the housing downturn appears comparable across regions—in all cases, it’s much less severe than the experience leading to the Great Recession but similar to the periods before the 1990-91 and 2001 recessions.”
Specifically, Emmons looked at sales numbers for the 12 months ending May 2019 compared to the average over the past three years. He uses December 2019 as the “plausible month for peak growth” in the current case, and then looks at how far back from the peak was the first month in which sales fell below their three-year average in the previous three recessions.
WATCH NOWVIDEO02:50Here’s what Fannie Mae is forecasting for the housing market
The process may seem at least somewhat opaque, but Emmons said it has been a reliable indicator from the housing market for when the next recession is due — usually about a year away, according to historical trends.
In the Northeast, for instance, August 2018 was the first month that sales fell below the region’s three-year average. That would be 16 months from the December 2019 assumed peak. In the previous recessions, the first negative month respectively came 23, 10 and 21 months before the peak. That would put the current pattern within the historical range, Emmons wrote.
These charts look at how each region stacks up. The four lines each represent a recession; the deviation of the 12-month sales average toward the three-year average decreases until it goes negative; the charts then show how long it took before a recession hit:
In addition to the sales numbers, Emmons said current mortgage rates, inflation-adjusted house prices and residential investment’s contribution to economic growth are similar to patterns that preceded the most recent three recessions.
Single-family home sales work best as indicator, he said, because the other metrics are national in nature and thus don’t reflect whether the deterioration has spread through all regions.
“Considering signals from other housing indicators and from indicators outside housing with good forecasting track records (such as the Treasury yield curve), the regional housing data noted here merit close attention,” Emmons wrote.Calling for rate cut
The St. Louis Fed, where Emmons works, is led by its president, James Bullard, who has been one of the loudest voices on the Federal Open Market Committee advocating for an interest rate cut. Bullard was the lone member of the monetary policymaking body in June to vote against keeping the benchmark funds rate steady. He is advocating an “insurance” cut to head off anticipated economic weakness.
There are mounting signs that global weakness and business concerns over tariffs could hamper U.S. growth or cause an outright recession.
The New York Fed uses the spread between the 10-year and three-month Treasury yields to determine the probability of a recession over the next 12 months. That part of the yield curve has inverted, which has been a reliable recession indicator. Chances for negative growth by May 2020 are at 29.6%, up from 27.5% in April and the highest level since May 31, 2008, just as the financial crisis was set to explode in September.
Still, there are hopes that the U.S. can withstand a significant downturn.
Cleveland Fed President Loretta Mester, in a speech Tuesday, pointed out that the economy has been resilient through growth scares during a recovery that began 10 years ago. Mester said she expects housing to be neutral for growth this year.
Also, Joseph LaVorgna, chief Americas economist at Latixis, said a diffusion index of leading economic indicators is showing positive trends for six out of 10 components, indicating that “the risk of a downturn remains relatively low.”
Existing home sales rebound, but manufacturing and services sector activity cools
Existing-home sales rebounded in May, increasing 2.5% month-over-month (m/m) to an annual rate of 5.34 million units, compared to the Bloomberg expectation of a rise to 5.27 million units and April’s upwardly-revised 5.21 million rate.
Sales of single-family homes were higher m/m, but down from year-ago levels, while purchases of condominiums and co-ops rose compared to last month and were down y/y.
The median existing-home price rose 4.8% from a year ago to $277,700, and marking the 87th straight month of y/y gains.
Unsold inventory came in at a 4.3-months pace at the current sales rate, up from 4.2 months a year ago. Sales rose in all regions, with the Northeast seeing the largest increase.
National Association of Realtors Chief Economist Lawrence Yun said, “The purchasing power to buy a home has been bolstered by falling mortgage rates, and buyers are responding,” adding, that “solid demand along with inadequate inventory of affordable homes have pushed the median home price to a new record high.”
Welcome to the exurbs: remote areas just beyond the more affluent suburbs that have seen a wave of activity from builders and home shoppers.
According to a recent report by the National Association of Home Builders, the exurbs were the only regions that saw an annual increase in single-family permits in the first quarter of 2019.
Posting a 1.6% year-over-year gain, the exurbs are home to just 9% of the nation’s single-family construction. But while this might not seem like much, its share is growing – a fact that some analysts say is raising red flags.
Why? The last time the exurbs saw activity increase was during the housing boom, when speculators got a bit over-excited about the opportunity to make the big bucks by flipping homes on the cheap. But when the bubble burst, these areas were largely abandoned, and builders were left deep in the red.
A renewed surge of activity in exurban areas is a key indicator of a general lack of affordability that is plaguing the housing market.
“A shortage of buildable and affordable lots is forcing builders to increasingly look further outside of suburban and metropolitan areas to find cheaper land that provides more building opportunities,” explained NAHB Chairman Greg Ugalde.
NAHB Chief Economist Robert Dietz said the data highlights the fact that housing costs are increasing at a faster pace in large metro suburban counties.
“Supply-side issues that are hurting affordability and raising costs for builders include excessive regulations, labor shortages, rising material costs and a dearth of buildable lots in mid- to high population centers,” Dietz said.
For the fourth straight month, information compiled by Freddie Mac shows that mortgage rates continued to fall in March 2019. The 30-year FRM – Commitment rate, fell by ten basis points to 4.27 percent from 4.37 percent in February. The cycle peak was 4.87 percent in November.
The Federal Housing Finance Agency reported that the contract rate for newly-built homes, also declined by five basis points to 4.53 percent in March. Mortgage rates on purchases of newly built homes (MIRS) declined by ten basis points over the month of March to 4.36 percent from 4.46 percent in February.
According to the May 2019 Federal Open Market Committee meeting statement, the Fed is likely to continue a “patient approach” stance to rate setting for the next several months. As expected, it kept the target for the federal funds rate at its setting of 2.25-2.50 percent. The post-meeting statement characterized growth as solid, but noted that broad inflation measures had declined and were running below the FOMC’s 2% inflation target. The Committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the two percent objective as the most likely outcomes. Considering global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.
As of the end of March, the 10-year Treasury rate, is slightly up to 2.52%. The increased rate has contributed to an increase in the mortgage interest rates in the last few weeks. The average 30-Year Fixed market rate, according to Freddie Mac, was at 4.20% at the end of April compared to 4.06% at the end of March. At the end of 2018, the average 30-Year Fixed market rate was 4.64%.
Amid growing concerns about housing affordability, the latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey show a surge in home refinancing, a week-to-week increase of 39% on a seasonally adjusted basis. The increase is contemporaneous with the fourth consecutive week of mortgage rates’ declining. Despite the widespread decrease in mortgage rates, changes in purchasing activity (i.e., purchases on new or existing homes) were not as sensitive to the drop as were applications to refinance.
The last 20 years’ data of the MBA’s Purchasing and Refinancing Indexes show that refinancing activity of homes is often volatile. In early 2000, refi and purchase applications were almost the same but, the refinancing index climbed to multiples of the purchasing index over the next few years. The current period shows this divergence, as higher levels than the current level of refinancing had not been seen since late 2016.
The data also show that purchase applications are almost 10% higher than they were a year ago, that refinance applications are 58% higher on a year-over-year basis, and that, combined, both purchase and refi applications are almost 30% higher than they were a year ago. Despite the tight lending environment of 2019, as anticipated by banks’ senior loan officers in the Federal Reserve’s Senior Loan Officer Opinion Survey, the data show a rise in applications on a year-to-date and year-over-year basis, which may partially offset tighter lending standards. The mortgage applications for purchase index is usually a leading indicator for forthcoming home sales, but the latter may be conflated by other factors, such as all-cash sales. The prior few months’ data lean less to such a conclusion, as the upward trend of the purchase index in January 2019 was subsequently followed up by increases in new and existing home sales in February.
Freddie Mac (OTCQB: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing that mortgage rates held steady after seeing major drops last week. Sam Khater, Freddie Mac’s chief economist, says, “Purchase mortgage application demand saw the second highest weekly increase over the last year and thanks to a spike in refinancing activity, overall mortgage demand rose to the highest level since the fall of 2016.”Khater continued, “While the housing market has faced many head winds the last few months, it sailed through the turbulence to calmer seas with demand buttressed by a strong labor market and low mortgage rates. The benefits of the decline in mortgage rates that we’ve seen this year will continue to unfold over the next few months due to the lag from changes in mortgage rates to market sentiment and ultimately home sales.”
News Facts30-year fixed-rate mortgage (FRM) averaged 4.08 percent with an average 0.5 point for the week ending April 4, 2019, up from last week when it averaged 4.06 percent. A year ago at this time, the 30-year FRM averaged 4.40 percent. 15-year FRM this week averaged 3.56 percent with an average 0.4 point, down from last week when it averaged 3.57 percent. A year ago at this time, the 15-year FRM averaged 3.87 percent. 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.66 percent with an average 0.4 point, down from last week when it averaged 3.75 percent. A year ago at this time, the 5-year ARM averaged 3.62 percent.Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following link for the Definitions. Borrowers may still pay closing costs which are not included in the survey.Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we’ve made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders, investors and taxpayers.
In an era of partisan strife, Americans of all political parties overwhelmingly agree on one issue: we need better infrastructure. Crumbling bridges, unsafe water, and communities without broadband threaten our nation’s health, safety, and economic future. Yet the federal government’s role has remained largely unchanged for generations. Why is it so hard to find consensus on such an obvious problem?D
In my three decades of work with the federal government, including my time in the White House, I kept running into the same three challenges. Our path to a new federal infrastructure policy is blocked by irrational expectations around limited funding, a failure to appreciate the diversity of needs, and misaligned incentives.
Our path to a new federal infrastructure policy is blocked by irrational expectations around limited funding, a failure to appreciate the diversity of needs, and misaligned incentives.
Let’s start with expectations.
Regretfully, federal funding is a zero-sum exercise. Federal funds for infrastructure come from individuals and companies in communities. If one community receives excess federal funding, then other communities are receiving less. Notwithstanding strong desires to the contrary, the same taxpayers contributing federal dollars are also those paying into state and local coffers. Infrastructure commentators frequently note that state and local governments cannot afford to pay for all of their infrastructure needs, so the federal government should help. Sure, the federal government can take revenues from another location or borrow against the future, but the net effect is either zero today or long-run borrowing costs.
Irrational expectations make it difficult to have reasoned policy conversations. My son used to tutor math, and one of his more creative students tried to dismiss poor test performance by declaring, “math lies.” Similarly, many shaping infrastructure policy are trying to utilize aspirational infrastructure investment math by pursuing a fantasy that federal funds can be spent on infrastructure without imposing a burden on state and local taxpayers. The inaccurate perception of the possibility of “free” federal investment leads to unattainable expectations.
While policymakers are struggling with infrastructure math, they are also facing a marvelously diverse set of infrastructure needs. When the federal government first seriously jumped into infrastructure investment, our needs as a nation were more clearly defined. For example, we needed a network of highways to connect the continent. The 1956 Highway Act addressed that need by imposing a national tax and providing a national benefit.
Fast forward six decades and our nation’s needs are vastly more diverse. In the 1950s and 1960s, the challenges were connectivity; today, it is safety, congestion, older pipes, functional bandwidth, and environmental impact. The locus of the need has also changed. The infrastructure needs of the last century were largely national in nature; today our needs are mostly local. While the federal government excelled in delivering the Interstate System, it is not well positioned to help with the broad diversity of infrastructure issues vexing our communities in the 21st century.
While the federal government excelled in delivering the Interstate System, it is not well positioned to help with the broad diversity of infrastructure issues vexing our communities in the 21st century.
Our country’s diversity of needs is amplified by diversity of ownership. Unlike many countries, most infrastructure in the U.S. is owned at the state and local level. Given the nomenclature, many Americans think the federal government owns the Interstates and the rest of the Federal Highway System, but those highways are all owned by state and local governments. Water systems are almost all locally-owned, resulting in Americans receiving water from over 51,000 community water systems. As we move further into the 21st century, our infrastructure needs will be increasingly defined by our 89,004 local governments, not by one federal government.
The third and final challenge to improving the federal role in our nation’s infrastructure is the most daunting. Federal involvement in funding state- and locally-owned infrastructure suppresses investment and encourages delay.
Three-quarters of infrastructure investment is made at the state and local level, yet the remote possibility of federal funding encourages governors, mayors, and county executives to postpone increasing infrastructure investment in the hope their projects will receive federal funds. This dynamic is akin to telling shoppers there is a small likelihood they will receive a coupon for 80 percent off their next suit purchase. Consumers will rationally engage in what economists call strategic delay and postpone their purchase in the hope of receiving a coupon. Many will continue to delay until their suit (our infrastructure) becomes unacceptably shoddy and worn. A few brave state and local leaders have ignored this disincentive to invest by boosting revenue, but they have done so at the peril of a future political opponent criticizing them for not working harder to get federal funding.
The federal government should reverse this coupon effect and build on the success of past incentive programs such as tax credits for renewable energy and the Smart Cities Challenge program. In all these cases, the federal government provided incentives to encourage investment, and the incentives resulted in a dramatic increase in available resources. Without this realignment, the coupon effect will encourage project proponents to ignore local resources and instead take lobbying trips to Washington, D.C.
This dynamic was displayed during a breakfast I hosted in the White House with a delegation seeking federal funding for a port project. Their best selling point was a study demonstrating the seven dollars in economic benefits that would be generated for every dollar invested in the port. I thanked them and pointed out they were in the wrong city. They should be in New York, not Washington, as there is virtually no limit to the number of investors interested in a return of such magnitude.
Updating our nation’s infrastructure policy will be challenging, but it is critical. Infrastructure is the only policy area affecting services utilized by every American, every day. Improving our nation’s infrastructure not only helps spur economic growth, but also dramatically improves our quality of life. Repeated public opinion surveys have shown that the vast majority of Americans want better infrastructure. People are tired of wasting time in traffic, worrying about water quality, or living without broadband.
Improving our nation’s infrastructure not only helps spur economic growth, but also dramatically improves our quality of life.
Overcoming the problems of expectations, diversity of need, and misaligned incentives requires us to work with the real owners of infrastructure assets: governors, mayors and county executives. They are best positioned to develop a post-Interstate, 21st century infrastructure policy framework that provides a more efficient way to build and maintain the world’s best infrastructure.
Putnam, Bronx and Sullivan counties, which are also served by the Hudson Gateway Multiple Listing Service, were the exceptions experiencing increases in residential sales of 4.7% in Sullivan, 1.9% in Putnam and 1% in Bronx County in 2018.
The lower Hudson Valley experienced historically low inventories of single-family homes at the beginning of the year, which may have contributed to an initial decline of sales. Rockland County, which experienced an 11.5% drop in sales of single-family homes, also saw an increase of 11.4% in sales of 2-4 family homes and an increase of 2.5% in condo sales. Days on market, the number of days from the time a home is listed for sale to the time of a fully executed contract of sale, was significantly lower in all counties.
Another indication of healthy demand in the housing market was the increase in sales price in all counties. Westchester County, which had the highest number of single-family home sales at 5,876 units, experienced a rise of 1.2% in median price to $650,000, up from $642,000 a year earlier. Orange County, with 3,827 units sold, saw an increase of 6.4% in its median to $258,600 from $243,000 a year earlier. Despite the diminution of units sold in Rockland County, the median sales price rose 4.5% to $460,000 from $440,000 a year earlier. Putnam County, which had a 2.2% increase in unit sales, also had a 3.7% increase in median price rising to $350,000 from $337,500 a year earlier.
Overall, in 2018, 21,338 residential units were sold in the areas covered by Hudson Gateway Multiple Listing Service. This was a drop of 2.6% from the prior year. Possible headwinds for the housing market for 2019 continue to be the unknown effect of the tax reform law of 2018, which limits the deductibility state and local taxes, and a volatile stock market. However, given the improving inventory numbers, continuing attractive mortgage interest rates, high employment in the region, and a healthy economy it is anticipated that the market will remain vibrant in 2019.
The Hudson Gateway Multiple Listing Service, Inc. (HGMLS) is a subsidiary of the Hudson Gateway Association of Realtors, Inc. (HGAR). HGMLS’s principal service area consists of Westchester, Putnam, Rockland, Orange and Sullivan counties. It also provides services to Realtors in Bronx, Dutchess and Ulster counties.
The reported transactions do not include all real estate sales in the area or all sales assisted by the participating offices, but they are fairly reflective of general market activity. HGMLS does not provide data on sub-county areas, but persons desiring such data are invited to contact Realtor offices in the desired areas. Prior reports back to 1981 as well as current market information and a directory of Realtor members are available on the Association’s website at www.hgar.com.
Note: The median sale price is the mid-point of all reported sales, i.e., half of the properties sold for more than the median price and half for less. The median is relatively unaffected by unusually high or low sales prices. The mean sale price is the arithmetic average, i.e., the sum of all sales prices divided by the number of sales. The mean does reflect the influence of sales at unusually low or high prices.