Canadian company DROP Structures is on a mission to allow people to “drop” the company’s incredible cabins (almost) hassle-free in just about any location. One of the most versatile designs is the minimalist Mono, a tiny prefab cabin that runs on solar power and can be set up in just a few hours.
Although the minuscule 106-square-foot cabins take on a very minimalist appearance, the structures are the culmination of years of engineering and design savvy. According to Drop Structures, the cabins, which start at $24,500, typically require no permit. Thanks to their prefabricated assembly, they can be installed in a matter of hours.
Built to be tiny, but tough, the Mono tiny cabins are clad in a standing seam metal exterior, which was chosen because the material is resilient to most types of climates and is low-maintenance. The cabins also boast a tight thermal envelope thanks to a solid core insulation that keeps the interior temperatures stable year-round in most climates.
The Mono features a pitched roof with two floor-to-ceiling glazed walls at either side. This standard design enables natural light to flood the interior space and create a seamless connection between the cabin and its surroundings.
The interior space is quite compact but offers everything needed for a serene retreat away from the hustle and bustle of urban life. The walls and vaulted ceilings are made out of Baltic Birch panels that give the space a warm, cozy feel.
The biggest advantage of these tiny cabins is versatility. The structures can be customized with various add-ons including extra windows or skylights, a built-in loft, a Murphy bed and more. They can can also go off the grid with the addition of solar panels.
The tectonic plates of America’s major real estate markets continue to shift beneath our feet. Little more than a year ago, unstoppable home price increases seemed to be the new normal just about everywhere. Go, go, go! It was a never-ending party for sellers, and mass anxiety for price-squeezed buyers. But then last fall came signs of a housing slowdown, as big-city prices began to level off—or in some markets actually drop. Was a housing bubble about to burst?
Well, not quite. Nationally home prices still rose 6.9% year over year in April. But here’s the thing: That’s actually the lowest price growth in five years. And according to the latest data, 1 in 5 metropolitan areas is now seeing decreases in home prices, compared with half as many a year ago. So what are the places moving from a seller’s market to a buyer’s? The realtor.com® data team set out to find those metros where home prices are falling the most.
“In a lot of markets buyers are hitting an affordability ceiling,” says Chief Economist Danielle Hale of realtor.com. “Prices just can’t keep rising if buyers can’t keep up. They are dropping out, and that’s why we’re seeing prices adjust [down] in some markets.H
There are some surprises on this list—including some of the highest-profile markets in the country (hello, San Francisco Bay Area!). It turns out there is a limit to how high home prices can go, even in some of America’s most alluring, if overheated, places.
Some markets are seeing price drops due to overbuilding: This creates too much supply and not enough demand, so prices naturally fall. And just like in past years, in other areas, natural disasters devastated lives, communities, and local real estate.
“A disaster will affect your ability to market” your home, says Orell Anderson, president of Strategic Property Analytics, in Laguna Beach, CA. It can boost home prices and rents in unaffected pockets as locals compete for housing. But it can also hurt an area’s image as folks don’t want to suffer through another disaster. “The market will demand a discount.”
To figure out where prices are down the most, we looked at the change in median list prices on realtor.com from April 2018 to April 2019 in the 250 biggest metropolitan areas.* We filtered out markets where price per square footage was up over that period. And we limited the ranking to no more than three metros per state.
So where are prices declining the most? Buckle up, let’s take a cross-country trip.
Median list price: $1.1 million Median list price change: -8.4%
Yes, you read that right. Perennial hottest market in the U.S., San Jose is seeing the steepest declines in home prices these days. For the past few years, home prices in this city at the heart of Silicon Valley have soared at double-digit rates. But last fall, red flags started to appear. Sellers began slashing list prices, with the number of price reductions jumping 200% over the previous year. Now prices are plummeting faster than anywhere else in the U.S.
Time for a quick reality check: None of this means that San Jose has become a bargain. It’s still America’s most expensive real estate market. But therein lies the problem—prices just shot up too high. From April 2017 to April 2018, median list prices soared a remarkable 28%. And even in the San Francisco Bay Area, what comes up must come down. Eventually.
“When [prices] jump that quick, it can produce a reaction with buyers, who say, ‘I can’t do it anymore, that is just too expensive,'” says Patrick Carlisle, Bay Area chief marketing analyst at the real estate firm Compass.
Federal tax law changes also played a role. Homeowners can now deduct only up to $10,000 in property and income taxes combined. Plus, the amount of mortgage interest deduction folks can write off on their taxes was reduced. In pricey areas like San Jose, that can translate into a big financial hit.
This has led dwellings to sit longer on the market, climbing from a median 19 days to 27 from April 2018 to April 2019. Meanwhile, the amount of abodes currently for sale has jumped 92%.
Median list price: $681,100 Median list price change: -5.4%
In late 2017, the Thomas fire burned almost 300,000 acres, destroying more than 1,000 homes in Ventura County, part of the Oxnard metro, and surrounding areas (including Santa Barbara County). At the time it was the largest wildfire in California history. And that was just the beginning of the widespread damage—the conflagration damaged ground soil and tree roots, leading to mudslides that wiped out still more homes.
In the disaster’s wake, some displaced victims left the area altogether instead of going through the long, painful process of rebuilding. Others who were thinking of moving to the area changed their plans altogether.
Overall rising prices in the area north of Los Angeles are also to blame. Last spring, buyers hit their breaking point, says local real estate agent Kevin Paffrath, of meetkevin.com. With high prices, mortgage rates, and the tax changes, many stayed on the sidelines, lessening demand in the area.
Median list price: $265,000 Median list price change: -5.4%
The 64,000 Texas A&M University students that pour into College Station every fall—plus all of the faculty and staff—need lots of places to live. But builders in pro-development Texas went a bit overboard in recent years. That resulted in a glut of new homes in this market two hours northwest of Houston, pushing inventory up 18.3% year over year and causing prices to tumble.
Eventually, investors are expected to snap up many of these properties and rent them out to students. But it also means buyers have options. So they can take their time finding the right one—and then negotiating the price down.
Median list price: $750,000 Median list price change: -4.9%
Prices are sky-high in this golden metro encompassing all of wealthy Fairfield County, home to some of the toniest enclaves just outside of New York City. But as in California, tax law changes made buying sprawling mansions in uber-wealthy communities such as Greenwich more expensive. That’s because the state has some of the highest property taxes in the nation—and now homeowners can’t write off nearly as much.
Plus, many of the affluent buyers who might normally head for Fairfield County may be choosing to go to Manhattan instead. That’s because the city has had an influx of new, luxury towers going up in recent years—including the flashy, massive development Hudson Yards.
Median list price: $948,300 Median list price change: -4.1%
When California home prices overheated late last year, it was no surprise that San Francisco—the second-most expensive metro in the nation, after San Jose—took a big hit.
Prices here jumped 10% from April 1, 2017, to April 1, 2018, making homeownership a steeper-than-ever climb for ordinary people. And more homes are going up for sale in lower-priced areas nearby, like Oakland, which is pulling the metro’s median list price down, says Carlisle of Compass.
But prices may soon surge again. San Francisco–based Uber and Lyft just went public, and Pinterest, Slack, Postmates, and Airbnb might soon follow suit. With all of those initial public offerings, workers could be in line for some windfalls. And what better way to spend all that money than on real estate?
“Some sellers have stopped putting their homes on the market because they want to wait for the supposed rush of [IPO] buyers,” Carlisle says.
Median list price: $481,600 Median list price change: -3.5%
The Kilauea Volcano spewed a miles-long lava stream through the Big Island of Hawaii last May. The news was plastered with images of magma tearing through Hawaiian homes, about 700 of which were destroyed. Recovery efforts are expected to cost more than $800 million.
It shattered the image of a Polynesian paradise for many foreign investors, wealthy professionals, and rich retirees drawn to Hawaii as a dreamy second-home destination. And in the months following the eruption, tourism dropped off—a huge deal for a market that relies heavily on the business.
Median list price: $300,000 Median list price change: -3.3%
Last year, a massive algae bloom turned Cape Coral’s 400-plus-mile canal system, the crown jewel of the city, into a stinking, toxic green waterway. That wasn’t exactly an inducement for buyers in this fast-growing retirement town, and real estate prices fell accordingly.
“It was smelly and ugly,” says Mike Lombardo, a local real estate agent at Old Glory Realty. “You couldn’t go to the beach because of all the algae. And you couldn’t go fishing because the algae was killing the fish. The whole [real estate] system here is built off people coming down here to enjoy the weather and beach.”
Median list price: $180,100 Median list price change: -2.9%
Located on the U.S.-Mexico border on the banks of the Rio Grande River, Laredo is one of America’s largest inland ports, with more than $200 billion in goods passing through every year. So why is this city packed with customs and border security gigs seeing home prices drop?
It boils down to overbuilding, particularly at the higher end of the market. There’s no shortage of new homes sprouting up here, which means existing homes competing for those buyers have to lower their prices.
“Homes for over $300,000 are on the market longer than usual,” says Sandra Mendiola Alaniz, local broker/owner of Re/Max Real Estate Services.
Median list price: $143,300 Median list price change: -2.3%
Huntington is a struggling metro that’s been badly affected by the opioid crisis. Many are leaving the city, on the Ohio River, for better-paying jobs and opportunities elsewhere. That means there aren’t exactly a lot of people clamoring to buy real estate, which keeps prices down.
Prices were low to begin with, so even a small decline can move the needle quite a bit. The median price here dropped $3,300—compared with $105,000 in San Jose.
Median list price: $275,000 Median list price change: -1.8%
When the polar vortex rolled into the Midwest earlier this year, it brought minus 20 degrees to Iowa, turning boiling water to ice in seconds. That rough winter meant the spring buying season got off to a very late start.
“People weren’t listing,” says Emily Farber, a Realtor at Lepic-Kroeger Realtors. “It was harder for them to take care of exterior maintenance because the weather was so atrocious.”
Plus, there wasn’t as much new construction in the cold. So other would-be sellers couldn’t find a new or trade-up home to buy—so they waited, too.
“It created a snowball effect,” says Farber. As it were.
Builder confidence in the market for newly-built single-family homes rose three points to 66 in May, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Builder sentiment is at its highest level since October 2018 after declines in late 2018 due to higher interest rates and concerns over slower growth. Builders are catching up after a wet winter and many characterize sales as solid, driven by improved demand and ongoing low overall supply. However, affordability challenges persist.
Mortgage rates are hovering just above 4 percent following a challenging fourth quarter of 2018 when they peaked near 5 percent. This lower-interest rate environment, along with ongoing job growth and rising wages, is contributing to a gradual improvement in the marketplace. At the same time, builders continue to deal with ongoing labor and lot shortages and rising material costs that are holding back supply and harming affordability.
Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.
All the HMI indices posted gains in May. The index measuring current sales conditions rose three points to 72, the component gauging expectations in the next six months edged one point higher to 72 and the metric charting buyer traffic moved up two points to 49.
Looking at the three-month moving averages for regional HMI scores, the Northeast posted a six-point gain to 57, the West increased two points to 71, the Midwest gained one point to 54, and the South rose a single point to 68.
We’re not trying to fool anyone — especially for something as serious as having smoke detectors. This coming April 1 is the day a new law goes into effect that bans the sale or installation of any smoke detecting device that has a battery that can be replaced or removed.
The law states that, as of April 1, any new or replacement smoke detectors in the state have to powered by a non-removable battery that lasts for at least 10 years, or it must be hardwired to the home’s electricity, localsyr.com said.
New smoke detecting units have a sealed lithium battery that people cannot take out.
The upgraded smoke detectors cost more than the ones you may still have in your home, but you will no longer need to spring for new batteries, making them likely cheaper over the long run, news10.com said.
Legislators originally passed a Jan. 1, 2017, effective date for the law, but it was amended to be in force April 1, 2019.Subscribe
The New York State Association of Realtors, Inc., noted that the law does not require smoke detectors that are already in use to be in compliance, just ones that are being newly installed or replaced.
The New York State Association of Fire Chiefs said all smoke detectorsthat are more than 10 years old should be replaced, even if you think it’s still working.
Besides testing them on a regular basis, the alarms need to be cleaned to remove any dust, cobwebs, pet fur or other substances that may have made their way into the unit.
Cleaning could be as simple as using a hair dryer to blow air at the smoke alarm for a few seconds to get rid of any debris.
If you are concerned about the cost of the new smoke detectors, the Red Cross is giving some away for free as part of the Sound the Alarm program.
There will be a mega-install day in Yonkers in Westchester County May 11, according to a Red Cross spokeswoman.
To have a smoke detector installed, people can call 845-673-1198 to schedule an appointment or visit www.soundthealarm.org/mnyn and fill out the online form.
The average interest rate offered in the U.S. is 4.84 percent, according to findings from online lending exchange LendingTree. Rates tended to fall within a fairly narrow range across the country – there were no states with rates below 4.74 percent or in excess of 4.96 percent.
The average down payment across all 50 states is about $28,000, while the average loan offered in the U.S. is $224,297.
Here’s a look at the conditions prospective homebuyers are currently facing in the housing market, as compiled by LendingTree:
Highest interest rates
The states with the highest average interest rates are:
New York: Average interest rates in the Empire State are 4.96 percent, the highest in the country.
Iowa: In Iowa, residents face the second-highest interest rates, at 4.93 percent.
Arkansas: At 4.92 percent, residents in Arkansas only face slightly lower rates than Iowans.
Lowest interest rates
The states where interest rates are the lowest include:
California: The Golden State has the lowest interest rates, on average, at 4.74 percent.
New Jersey: Follows California with the second-lowest rates of 4.75 percent.
Washington & Massachusetts are tied for the third place spot, each state offering average rates of 4.76 percent.
Highest down payment
The states where consumers tend to put down the highest average down payment is New York, at $43,404.
Lowest down payment
On the flip side, residents in West Virginia typically only need to put down a little bit more than $15,000.
The state with the lowest average APR is California at 4.83 percent.
MediaNews Group/Inland Valley Daily Bulletin via Getty Images | Digital First Media | Getty ImagesWorkers install solar panels on the roofs of homes under construction south of Corona, California. The California Energy Commission in May 2018 adopted new energy building standards requiring solar panels for virtually all new homes built in the state starting in 2020.
In 2013 De Young Properties built a single-family house in central California that defied nearly three generations worth of homes the family business had constructed. It was a net-zero energy building — it had the potential to produce as much energy as it would consume in a year. De Young didn’t build another one for four years, but within that period the company refined its designs to be more energy-efficient and technology-focused and drove down costs.
“Energy bills tend to be pretty high and onerous, and you usually have to sacrifice comfort for your energy bill or your energy bill for comfort, and we saw an opportunity to advance in this realm and become a leader,” said Brandon De Young, executive vice president.
In 2017 De Young Properties started the process of constructing three communities near Fresno, California, with more than 140 single-family homes in three different communities that will have the same level of energy efficiency. So far the homebuilder has constructed half of the first community, Envision at Loma Vista, and is in the process of beginning the other two. The cost of each home is typically between $350,000 and $450,000 — and carries an additional $10,000 over the cost of De Young’s comparable non-zero energy properties.
The homebuilder’s early investment in zero-energy construction was prescient. If you buy a new house in California within the next few years, there’s a good chance it will be built along similar lines. In December, California instituted a new requirement that calls for most new homes and multi-floor residential buildings up to three stories high to include solar rooftop panels beginning in 2020. Depending on the specifics of the design and the residence’s energy consumption pattern, solar panels could produce all the electricity needed for the home. The state’s ultimate goal is to produce net-zero energy homes that reduce the state’s carbon footprint and make buildings energy self-sufficient.
California is one of the world’s largest economies
This is the first time a state has built this requirement into its code, but similar regulations exist in cities like Tucson, Arizona, as well as the City of South Miami, the first introduced in Florida. Renewable energy mandates like residential rooftop solar come at a time when California has faced an unprecedented series of wildfires, with at least some of the natural disasters linked to more extreme weather patterns in an era of climate change.
The Net-Zero Energy Coalition estimates the U.S. has only 5,000 net-zero energy single-family homes and over 7,000 net-zero multi-family homes. That number could expand in 2020 to over 100,000 net-zero energy homes, based on the average annual new home constructions in California.
“California by itself is one of the largest economies in the world,” said Jacob Corvidae, a principal at the Rocky Mountain Institute. “What happens there has some impact, and it’s going to be an impact that has an effect on the rest of the country because they’re going to be figuring out ways to make solar cheaper and that scale will help bring down the cost.”
De Young PropertiesA home within De Young Properties’ Envision at Loma Vista community outside Fresno, California.
In 2017, the U.S. Department of Energy estimated about 39 percent of the total energy consumed in the country was in the residential and commercial sectors. A majority of the energy was produced by fossil fuels like coal, petroleum and natural gas.
Net-zero energy and zero energy-ready homes — which can be zero energy if solar panels are installed or their capacities are increased — are built to be more energy efficient than a typical building. This includes adding extra insulation, high-quality windows, LED lighting, low-flow water fixtures, heat-reflecting roof tiles and energy-efficient appliances that, when combined, reduce the amount of energy the house consumes.
On the outside, the houses are built to optimize energy efficiency with significant airtight construction and economical roofs, walls, windows and foundations, said Sam Rashkin, Chief Architect of the Building Technologies Office in the Department of Energy’s Office of Energy Efficiency and Renewable Energy. These technologies also allow for better temperature regulation, low-humidity, less noise and minimize exposure to dangerous pollutants.
Cities with the most zero-energy buildings
Number of Units
New York, NY
National City, CA
Net-Zero Energy Coalition
There is no one-size-fits-all design for zero-energy homes. In De Young’s housing market, the modern style — homes you might find on a Google search with flat walls and a box-like look — are not as prevalent, so the company configured the homes to come in an array of styles, such as cottage, modern-farmhouse, and Italian-inspired variations.
“You don’t have to do it that [modern] way. We found out that you can build a zero-energy home that looks just as beautiful as any other home,” De Young said.
Costs of going zero energy
California commissioners anticipate the new mandate will add $40 more to a monthly mortgage payment, but with an $80 return on heating, cooling and lighting over a 30-year term. The upfront cost to a single-family house will be approximately $9,500 with savings of $19,000 over 30 years.
Ann Edminster, a board member of the Net-Zero Energy Coalition and a green building consultant, argues that people shouldn’t be thinking of the upfront costs in isolation. Home buyers can make decisions in a house’s design that offset the additional costs for net zero-energy upgrades, such as sacrificing decorative housing elements.
“It’s the same thing as asking for a roof rack on your car. You’re going to pay extra,” Edminster said, referring to design choices homeowners already make which result in higher costs, and in some cases, less energy efficiency.
De Young PropertiesA net zero energy home under construction by De Young Properties. Adding solar panels to a roof will not alone get a house to net zero energy. Choices in the framing and window design are part of required energy-efficiency upgrades.
In De Young’s case, making a home energy efficient usually costs an additional $10,000 before adding solar panels, which makes the home zero energy. Purchasing a solar system outright could add between six to 12 percent to the price, De Young said. The company has a partnership with Tesla which offers zero-down leases on its solar panels, among other financing options. In 2017, 41 percent of residential solar was owned by a third-party, which includes monthly leases and power purchase agreements, or PPAs, that allow customers to pay per kilowatt-hour of generation.
Charles Kibert, a professor at the University of Florida’s College of Design, Construction and Planning, said there are some drawbacks to relying on solar. The panels require ample roof space, a certain orientation that allows for optimum energy production and consistent weather conditions.
“All those factors put together and my experience is that you have to try really hard to have a net zero home,” Kibert said, adding that how people manage their home is a big factor. “Living behavior every day drives energy consumption pretty reliably.”
Problems with the grid
The issues go beyond individual homes to the grid itself.
Kibert said there are two methods for reducing the carbon footprint beyond zero-energy homes: a low-carbon grid and better renewable energy storage. The current method of generating energy for most grids still depends on fossil fuels, but he said a few have moved to renewable energy like hydropower. California is far ahead of many U.S. states with its utilities already producing between 30 percent to 40 percent of energy from renewable sources.
Storing produced renewable energy remains costly, which is why people remain connected to the grid.
“If you had storage in your home and you were careful about your energy consumption, you would be effectively off the grid,” Kibert said. “You wouldn’t have to worry about it, but storage is expensive.”
Tesla’s Powerwall home storage solution has a cost of roughly $7,000 per unit. Tesla recommends two units for a home to be powered 100 percent with renewable energy and have at least 24 hours of power during a utility outage, which brings the total cost to over $14,000 — excluding installation costs that range from $1,000 to $3,000, according to the company.
Edminster said it is clear that the grid will not be disappearing anytime soon. The California mandate only requires homes to meet a higher level of efficiency and use solar, but that doesn’t mean residents won’t be able to use gas from the grid — it only offsets electricity use.
She said we are much further along in building energy-efficient homes than energy-efficient grids. “The efficiency side is pretty dialed in so that if someone felt like being zero-net energy by placing solar panels on their roof they probably would be pretty close to being zero-net energy.”
Zero-energy homes highlight a commitment to efficiency and the effort to reduce individual energy consumption. Ultimately, the objective is to find a healthy, reduced level of energy consumption. “What we really want is at the level of the social fabric to have our energy consumption to be met by renewable sources,” Edminster said. “That’s the big goal.”
The boxer and his wife bought the house in 1979 and lived there until 1986.
The nine-bedroom home, which dates back to 1916, sits on 1.5 acres in Fremont Place, a gated community known for its historic mansions.
It hit the market on what would have been Ali’s 77th birthday.
The former home of celebrated boxer Muhammad Ali is for sale in Los Angeles for $16.999 million.
The nine-bedroom mansion sits on 1.5 acres in the Hancock Park neighborhood in a gated community called Fremont Place, which is known for its historic mansions, according to The Wall Street Journal. It’s listed by Douglas Elliman.
The current owners of the home bought it for $2.5 million in 2001, the Journal reported.
The house, which is more than 100 years old, hit the market on January 17, 2018, which would have been Ali’s 77th birthday. He died in 2016.
Here’s a look inside.
A mansion in Los Angeles that once belonged to Muhammad Ali has hit the market for $16.999 million.
Wall Street rating agencies gave a collective thumbs-down to Westchester County this week, downgrading its bond rating, based on its past two years of deficit spending and the use of the county’s reserves to balance its budget.
Whether the downgrade will drive up borrowing costs — and higher county spending — will be determined by market conditions when the county sells $200 million in bonds next week.
But one agency warned it could drop the rating several notches more if the county continues its practice of including phantom revenues in the budget and raiding its rainy day fund at year’s end to erase the red ink.
The downgrades by S&P Global Ratings and Fitch Ratings come as the county Board of Legislators reviews County Executive George Latimer’s 2019 budget, which would be balanced by having a county-affiliated agency borrow $22 million in a one-shot deal to pay for day-to-day expenses.
It’s not exactly the sustainable revenue stream that S&P was looking for to assure municipal bond investors.
For Latimer, and for homeowners, it is a case of pick your poison.
Go with his complex parking-lot deal to glean the $22 million one-shot, or increase county property taxes by 6 percent this year to pay the bills, and cover $98 million in new spending.
There’s also a possible move in Albany to seek an increase in the county sales tax.
Westchester County Executive George Latimer, left, speaks with Leslie Gordon of Feeding Westchester, John Ravitz, Executive Vice President of the Westchester Business Council, and Susan Fox of the Westchester Institute for Human Development during the annual breakfast of the Westchester Business Council at Tappan Hill in Tarrytown Nov. 28, 2018. Latimer was the guest speaker at the breakfast. (Photo: Seth Harrison/The Journal News)
The downgrades are the results of seven years of tax austerity under Latimer’s predecessor, Rob Astorino, who held the line on the county property tax-levy from 2011 through 2017. Latimer’s response to the Astorino era, however, has caught the bond rating agencies’ eye as well.
During his first year in office, Latimer settled the Civil Service Employees Association contract, to which no funds were appropriated in the 2018 budget. So the county expects to dip deeply into its reserves to pay for the labor settlement.
“The honeymoon is over,” declared Joe Markey, market president of KeyBank, at Wednesday morning’s Business Council of Westchester breakfast at Tappan Hill in Tarrytown.
How low can Westchester’s rating go? Certainly much lower than the AA+ rating issued on Tuesday, and the negative outlook issued by S&P. Moody’s Investor Services that downgraded Westchester in 2017.
Lower bond ratings can raise the interest rates because the investment is seen as riskier. Higher rates drive up borrowing costs on obligations that remain on the backs of taxpayers for 20 years.Exactly how much a lower bond rating increases rates depends on market conditions at the time of issuance.
“We remain concerned over the county’s ability to sustainably align revenue and expenditures and rebuild reserves to a level consistent with that of similarly rated or higher-rated peers,” the report said.
In other words, Westchester’s rating could go lower if it continues to rely on speculative revenues, and then is forced to backfill the shortfall with reserves.
Here we go again
That could happen again in Latimer’s first budget.
It remains to be seen whether the Democrat-controlled county board will back Latimer’s one-shot sale of several acres of land, located in the Bronx River Parkway Reservation, Westchester County’s first park. Latimer wants to sell the parking lots that serve patrons of the park’s Westchester County Center and provide spaces for White Plains commuters.
The Westchester County Local Development Corporation would pay $22 million for the park’s parking lots, which generate $2.5 million a year in county revenue. The LDC would sell tax-exempt revenue bonds to raise the $22 million.
It seems certain that the deal won’t be concluded by year’s end. The county has yet to make an application to the LDC for the sale. The LDC needs to change its charter to allow the deal, which requires approval by the state Attorney General. And the parkland sale must be first recommended by the Westchester County Parks, Recreation and Conservation Board, which meets Thursday to discuss the issue.
The Latimer administration wants to remove the parking lots at the Westchester County Center from a county park, and sell them to a public nonprofit. (Photo: David McKay Wilson/The Journal News)
S&P warned that including the park sale in the budget could create problems if the Board of Legislators fails to approve the final deal.
“Should this transfer not occur as planned, management may be required to fill the gap with expenditure reductions, an additional property tax increase above the planned 2 percent, or fund balance,” the report stated.
The report also warned about the Latimer administration’s rosy forecast for a 5 percent increase in sales tax revenues for 2019.
Latimer has so far said he’s not willing to raise property taxes more than 2 percent for 2019.
Sales tax could be next to go up
The S&P report notes that the county plans to seek an increase in the county sales tax during the 2019 session, though no revenue from the increase was included in Latimer’s budget plan.
The county’s sales-tax rate, which is now 1.5 percentage points – is part of the combined sales tax that’s charged in Westchester. The overall sales-tax rate includes New York state sales tax of 4 percent, 0.375 percent for the Metropolitan Transportation Authority; 2.5 percent for the cities of Mount Vernon, White Plains, and New Rochelle; and 3 percent for Yonkers.
Winning an increase in Albany could provide a revenue stream big enough to right Westchester’s fiscal ship and return S&P’s outlook to stable. But if that doesn’t happen, and Westchester does another year of deficit spending, the outlook could grow even dimmer.
“Should the aforementioned risks to the fiscal 2019 budget materialize and reserves continue a downward tend, providing limited cushion to insulate the financial position from disruptions related to tax reform or economic downturn, we could lower the rating, potentially by multiple notches,” the report said.
After several years of solid acceleration, annual growth in national home improvement and repair spending is expected to soften in 2019, according to the Leading Indicator of Remodeling Activity (LIRA) released today by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. The LIRA projects that year-over-year increases in residential remodeling expenditures will reach a decade high of 7.7 percent this year and then start to drift downward to 6.6 percent through the third quarter of 2019.
“Rising mortgage interest rates and flat home sales activity around much of the country are expected to pinch otherwise very strong growth in homeowner remodeling spending moving forward,” says Chris Herbert, Managing Director of the Joint Center for Housing Studies. “Low for-sale inventories are presenting a headwind because home sales tend to spur investments in remodeling and repair both before a sale and in the years following.”
“Even so, many other remodeling market indicators including home prices, permit activity, and retail sales of building materials continue to strengthen and will support above-average gains in spending next year,” says Abbe Will, Associate Project Director in the Remodeling Futures Program at the Joint Center. “Through the third quarter of 2019, annual expenditures for residential improvements and repairs by homeowners is still expected to grow to over $350 billion nationally.”
The Leading Indicator of Remodeling Activity (LIRA) provides a short-term outlook of national home improvement and repair spending to owner-occupied homes. The indicator, measured as an annual rate-of-change of its components, is designed to project the annual rate of change in spending for the current quarter and subsequent four quarters, and is intended to help identify future turning points in the business cycle of the home improvement and repair industry. Originally developed in 2007, the LIRA was re-benchmarked in April 2016 to a broader market measure based on the biennial American Housing Survey.
The LIRA is released by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University in the third week after each quarter’s closing. The next LIRA release date is January 17, 2019.
The Remodeling Futures Program, initiated by the Joint Center for Housing Studies in 1995, is a comprehensive study of the factors influencing the growth and changing characteristics of housing renovation and repair activity in the United States. The Program seeks to produce a better understanding of the home improvement industry and its relationship to the broader residential construction industry.
The Harvard Joint Center for Housing Studies advances understanding of housing issues and informs policy. Through its research, education, and public outreach programs, the center helps leaders in government, business, and the civic sectors make decisions that effectively address the needs of cities and communities. Through graduate and executive courses, as well as fellowships and internship opportunities, the Joint Center also trains and inspires the next generation of housing leaders.
Total housing starts posted a decline in September due to flat conditions for single-family construction and a pullback for apartment development. Total starts declined 5.3% in September but are 6.4% higher for 2018 on a year-to-date basis, according to the joint data release from the Census Bureau and HUD.
The pace of single-family starts was roughly flat in September, decreasing 0.9% to a seasonally adjusted annual rate of 871,000. Slight gains off the summer soft patch for single-family mirror a minor uptick of the NAHB/Wells Fargo Housing Market Index, now registering a score of 68. While builders are benefitting from recent declines in lumber prices (at least relative to spring and summer’s elevated levels), they continue to report concerns about labor access issues.
On a year-to-date basis, single-family starts are 6% higher as of September relative to the first nine months of 2017. Single-family permits, a useful indicator of future construction activity, were up slightly (2.9%) in September and have registered a 5.6% gain thus far in 2018 compared to last year.
Multifamily starts (2+ unit production) pulled back in September to a 330,000 annual rate. After a strong start to the year, multifamily development is moving closer to our forecast of leveling-off conditions. On a year-to-date basis, multifamily 5+ unit production is 7.3% higher thus far in 2018, while multifamily 5+ unit permitting is trending lower with just a 0.8% year-to-date increase relative to 2017.
With respect to housing’s economic impact, 54% of homes under construction in September were multifamily (607,000). The current count of apartments under construction is down slightly from a year ago. In September, there were 522,000 single-family units under construction, a gain of more than 9% from this time in 2017.
Regional data show – on a year-to-date basis – mixed conditions. Single-family construction is down 1% for the year in the Midwest and flat in the Northeast. Single-family starts are up in the larger building regions of the South (4.9%) and the West (14.6%).