New home lot supply drops to cycle lows
Jul 26, 2017
Housing Trends
Meyers Research has partnered with HomeAid America to shine light upon and rally more support for building shelters in communities around the country. Last week’s Housing Market Outlook event hosted by Meyers Research raised $30,000 with combined ticket sales and sponsorships for HomeAid America, a leading national non-profit provider of housing for today’s transitionally homeless. To date, we’ve raised $500,000 in proceeds for HomeAid America. The organization builds and renovates multi-unit shelters for America’s homeless families and individuals (more than one million of whom are children) while the residents rebuild their lives. Help us spread the word and invite your colleagues to join as well in change making.
Economic Session
Presented by Ali Wolf, Manager of Housing Economics at Meyers Research
Ali kicked off the event by covering the elephant in the room – the length of our current economic expansion and how long the strength will last. Luckily, baring some unexpected economic or geopolitical shock, the overall fundamentals support continued growth. For example, we’ve never had both the unemployment rate and mortgage rates be this low simultaneously. This combination helps explain the 9% YOY increase in national new home sales. The strong annual clip in sales is great for the overall economy since the housing industry’s multiplier effect creates additional spending once the consumer purchases the property. Recent homebuyers spend more money at places like Home Depot, Target, Amazon, and Wayfair than those that don’t move.
Capital Session
Moderated by Jeff Meyers, President at Meyers Research
Panelists:
Joel Kaul, Regional President at Mountain Real Estate
Rodney Montag, CEO and Managing Principal at RAM Real Estate Capital
Robert Springer, Senior Vice President at Bank of America
The length of the cycle discussion resonated with the capital partners, who are acting more “cycle aware.” With that mindset in mind, members on our panel said they are carrying on business as usual. The panelists believe consumer fundamentals are solid across most markets in the country, but, supply is still a top concern. For example, in Denver, the months of resale supply is below 2.0, far from the 6.0 equilibrium level. The panelists explained that some master plans are accelerating their phasing to help bring more supply to the market now. They’ve seen increased appetite of more segmentation within communities, including villas, townhomes, and single-family detached.
It’s hard to be in Denver without a discussion of condo development. There’s a huge opportunity in the condo business for Denver because of the price point, but there’s also many headwinds. Condo deals in Denver appear too risky for some investors as the risk of litigation persists. Our panelists also believe that rising costs, in some cases, make providing this product at an attainable price unrealistic. For the experts to seriously consider condo development, they’d want to work with partners that specialize in the space. If they don’t feel the expertise is there, they’d rather work on higher priced single-family detached projects.
Homebuilding Session
Moderated by Mike Rinner, Senior Vice President at Meyers Research
Panelists:
Liesel Cooper, EVP and Western Regional President at Century Communities
Chetter Latcham, President at Shea Homes Colorado
Jeff Willis, Principal at Berkeley Homes
The builder panel inadvertently highlighted the need for consumer research on a local level by going back and forth on providing amenities within new home communities.
The pro-amenity argument: sense of community
The anti-amenity argument: costs
