Tag Archive: JT Schwartz

  1. What Do Tampa, Las Vegas, & Dallas Have In Common?

    The results are in for the top selling new home counties across the country, and Texas and the Southwest dominate. The chart below shows where homes have been delivered to homebuyers in the first half of this year (the gray bars). Of the top 10 counties in the nation for closings, 50% are in Texas. When overlaying our survey of contract sales, we can forecast shifts in deliveries for builders. For example, Houston should see a resurgence in closings in the coming months based on the wide spread between contracts and closings (50% in Harris County)*. The counties with the highest YOY change in contract sales are Collin in Dallas (+28%), Hillsborough in Tampa (+26%), and Clark in Las Vegas (+16%). Our Manager of Housing Economics, Ali Wolf, connected with our regional experts to better understand the nuances driving the local housing markets.

    HIGHER DENSITY COMMUNITIES ARE RETURNING TO LAS VEGAS 

    High-density attached communities are starting to resurface in the Valley after years of stagnation. Developers are acquiring and restarting well-located, infill parcels within Summerlin, a master planned community on the western side of the MSA. These acquisitions show enthusiasm and confidence in attached housing, albeit with some differences compared to the last cycle. Unlike the mid-2000s, developers are being more selective with sites and proceeding only in Las Vegas’ most desirable and established locations. “Available land in Summerlin’s core is getting gobbled up. We are seeing communities that were stalled in the mid-2000s resurface with updated concepts,” explained JT Schwartz, our Advisory specialist for Las Vegas. The comeback of urban, low maintenance housing is fueled by some big builders in the metro:

    • Toll Brothers recently bought 10 acres of mothballed land at Mira Villa and plans to start construction in the next six months
    • Shea Trilogy (55+) is now taking reservations for attached single-story living within Summerlin in the mid-$400Ks
    • William Lyon has restarted four high-density products within Affinity selling from the mid-$200Ks (pictured below)

    JT Schwartz continued, “these parcels are ‘holes in the donut’ in the community that offer a walkable proximity to many of Summerlin’s more desired retail and entertainment nodes. The aforementioned communities are in addition to the master plan’s urban hub, Downtown Summerlin, where there will be thousands of condominiums and apartments added over the next decade or two.”


    Source: William Lyon

    RELOCATIONS CHANGE THE HOUSING LANDSCAPE IN DALLAS

    It’s no surprise North Texas has been a top relocation spot for years – job growth is tremendous (+3.3% YOY), the state is business friendly, there’s no income tax, and the cost of living is relatively affordable. “North Texas has got to the point that there are so many major employment announcements that some of them don’t even make front page news anymore,” explained our Texas Advisory lead, Scott Davis. More recently, companies looking to relocate or expand have been targeting the northeast portion of the metro, in places like Richardson, Frisco, and Plano.

    Here are just a handful of recent big employment relocations or expansions in Plano, a city 20 miles north of downtown Dallas in Collin County.

    • JP Morgan Chase plans to house 6,000 employees upon completion of their consolidation in 2019
    • Toyota North America moved its headquarters from California to Plano, bringing 4,000 jobs to the city
    • Fannie Mae is opening a new regional headquarters of about 2,000 people
    • Liberty Mutual’s new office has space for 5,000 workers
    • USAA hopes to employ an additional 850 employees by completion of a new office in 2019

    These relocations are changing the landscape of the local housing market. Between August 2015 and August 2017, the total number of active projects in Collin County grew 40%. In addition, the median single-family new home price grew 40% in Collin County since 2012 and prices are now 44% higher than the 2007 peak. For locals, these price levels are unheard of, but that’s not the case for some of those relocating. In the Toyota example, some of those employed at the new headquarters came from the former location in Torrance, California. In Torrance, the median single-family detached new home closing price is just below $700,000. The same number is $390,000 in Collin County. Besides the 44% price differential between the two locations, many of the California workers also came to Texas with equity to put towards their new home.

    Scott Davis believes the growth will continue. “Even with affordability challenges Dallas hasn’t faced before, I’m still very bullish on the market and future growth. I’d put Dallas among the top three housing markets in the country right now.”

    WATER STREET TAMPA HOPES TO TRANSFORM DOWNTOWN

    To round out the top three markets with the biggest YOY change in contracts, here’s our quick take on Tampa:

    • As mentioned above, contract sales are up double-digits in Hillsborough County compared to last year. Our Florida expert, Mike Timmerman, has seen Tampa change over the years as new companies expand into the market, including several high tech firms. In addition, the downtown area is in the process of a resurgence as part of the Water Street Tampa plan, which is positively impacting the local housing market.

    Contact us to discuss how we can help you grow sales in today’s competitive environment.

    Ali Wolf, Manager of Housing Economics
    EMAIL ALI  |  ALI’S PROFILE 

    *Hurricane Harvey that swept through Texas will negatively impact new home closings and deliveries in the coming months as the market deals with the immediate aftermath of the storm. We are monitoring the situation and will report implications on the regional economy and housing market as the flood recedes and the damage can be more clearly assessed.

    SEE ALL RECENT BLOG POSTS

  2. Finally! The Comeback Of The Bubble Markets

    Good and Hot. Perhaps those are two words you didn’t think you’d hear when talking about the quintessential bubble markets, but that’s what we are finally seeing. Celebrating the 8th year of the economic expansion, our Manager of Housing Economics, Ali Wolf, studied where these markets currently stand.

    RIVERSIDE IS HOT

    Looking at the Riverside, CA market from the previous peak to where we are today, it looks like the market is far from recovered. Our local expert and Senior Vice President of Advisory, Michelle Weedon, believes this can be a bit misleading. “While the chart below looks like Riverside prices are still 16% lower than the previous peak, this is largely due to changing product. In the boom years, McMansions were the name of the game, supported by investors and loose lending. What we are seeing today is smaller, high density product,” she explains. “The Riverside market is hot.”

    Fast facts:

    • A large majority of the development in Riverside is happening along the 15-corridor. Unlike the focus of “drive to qualify” during the last boom, denser product in closer-in markets have recently been selling like hotcakes. We’ve seen particular strength in Corona, the Dairylands, and Temecula/Murrieta.
    • Buyer demand in Riverside is largely fueled by locals that include a combination of first-time buyers, blue collar employees, and warehouse workers. Helping with domestic demand, about 13 mega warehouse facilities with 1 million or more square feet were built in the Inland Empire from 2010 to 2016, according to CBRE.
    • A well-executed product and price points near FHA limits can drive absorption up to 8 sales per month.

    MORE SEGMENTS ARE SELLING IN LAS VEGAS 

    The Las Vegas market had a better than expected spring selling season this year. Last year in May, the market was selling on average 3.0 sales per month for active projects. Fast forward to 2017, the market is averaging closer to 4.0 sales per month.

    Our Las Vegas specialist, JT Schwartz, explained that the hockey stick effect can be attributed to builders expanding their product offerings and taking a chance on varying market segments. “After the housing crash, product targeted towards first-time buyers seemed to keep the market running. Recently we’ve seen this shift to include more buyer types: first-time, move-up, luxury, active adult, and even some vacation home communities are now offered. This is contributing to the higher sales volume and sales rates.”

    Pulling the data in Zonda, we can easily see an example of JT’s analysis. In 2015, there was not a single actively selling active adult community in Las Vegas. By the end of 2016, that number had increased to seven actively selling product series with several more planned in 2017.

    ECONOMIC GROWTH BEHIND ORLANDO’S SUCCESS

    In a metro that is synonymous with tourism (much like Houston is with oil), it can be surprising to hear that Orlando’s diversity is a top reason for the market’s success. Local officials have worked to attract new and different industries through business incentives, and the efforts have paid off. Recently, both Lockheed Martin and Orlando Health announced expansion plans in the market.

    Our Florida guru, Mike Timmerman, said, “We are seeing both the good and the bad that comes with local growth. With increased demand comes a strengthening new home market that is also met with rising costs (labor, land, and materials). These factors have pushed prices of newly built homes up quickly. Higher new home prices help the existing market, where more buyers are regaining equity in their homes and some are moving up. But even with the rising tide phenomenon, there’s definitely sticker shock for some locals.”

    WE CAN FINALLY CALL PHOENIX’S HOUSING MARKET “GOOD”

    2017 marked a shift in Phoenix’s housing market. Our Managing Director and authority on Phoenix, Steve LaTerra, explained, “The strength in Phoenix is no longer just the city center and infill. The sales pace in the periphery is also good. This is the change we’ve been waiting for.” Steve is encouraged by this trend, because now it makes sense for production builders to move further from the core. “We have had very few lots developed over the past 10 years in the periphery,” he continues. “While we recognize the peak was an exceptional time in Phoenix’s history, single-family permits are down 70% from that level.”

    The dearth of new development in Phoenix has contributed to price appreciation (remember when you could buy a house in Phoenix for $150K?) and a mismatch between supply and demand. Phoenix is now at full employment and continues to add jobs at a 2.4% annual clip. The economy is strong enough to absorb additional supply.

    Contact us to discuss how we can help define the best markets for your operation.

    Ali Wolf, Manager of Housing Economics
    EMAIL ALI  |  ALI’S PROFILE 

    SEE ALL RECENT BLOG POSTS

  3. The High End Market In Vegas: From Long Shot To Winner

    Builders and developers are getting creative with higher end residential and commercial developments that are enhancing the greater Las Vegas Valley. Economic and housing market fundamentals are also improving in Las Vegas. Employment growth increased for the fourth straight year in 2014, and foreclosures and notices of default (which prolonged the market stagnation) are at a fraction of the peaks from 2009 to 2011. This stabilization has afforded the resurgence of the move-up and luxury housing and retail markets. Our Senior Manager of Advisory JT Schwartz outlines four trends worth monitoring:

    1. The move-up and high end for-sale market is back, spearheaded by Howard Hughes’ The Paseos and The Ridges, in Summerlin. The Paseos are a series of move-up-focused subdivisions in Summerlin that have been heavily coveted by builders, with nearly every major Las Vegas builder either actively building (eight active projects today) or actively pursuing a neighborhood in this community. In addition, William Lyon Homes has had incredible sales success at Sterling Ridge, part of The Ridges neighborhood (see image below). In a little over one year, William Lyon sold 95 luxury homes with base prices currently ranging from the mid $800,000s to over $1,300,000. In fact, available home prices in their larger Premier series increased by +/-50% since opening in November 2013.

    2. There is a limited supply of move-up and high end for-sale housing in Las Vegas. Summerlin and a restructuring Lake Las Vegas will be at the top of a short list of move up and high end supply options in the near term, particularly as Southern Highlands and Anthem reach their build out. While there are multiple other large-scale master plans on the horizon such as Cadence, Park Highlands and Skye Canyon, these will likely focus on the conventional market and will succeed master plans like Mountain’s Edge and Providence.

    3. Higher end, luxury apartments are also starting to make their way to the market. Amenity-rich, higher end communities such as The Lennox (see image below), The Gramercy, Constellation at Summerlin and Elysian at The District (Green Valley Ranch) are making their way into the market at rents above $1.50 per square foot. We are monitoring the lease-up success of this new rental wave.

    4. Commercial development in Las Vegas has been elevated with the opening of Downtown Summerlin. World class dining, shopping and recreation are offered as an alternative to commuting to other areas of the Valley for a similar experience (The Strip, Downtown, Henderson). When walking through this destination lifestyle center it is apparent that Howard Hughes carefully created a complete Las Vegas experience at Downtown Summerlin for both locals and tourists. It is a seamless complement to the neighboring Red Rock Resort and Casino (see image below).

    From 2008 to 2012 entry level housing dominated the Las Vegas housing landscape as the move-up and high end residential market virtually disappeared. Today’s resurgence of luxury housing and commercial development is a sign of pent-up demand that will likely be present for the long term.

    Contact us to help you with your Las Vegas development questions, and/or how we can assist in your market.

    JT Schwartz, Senior Manager of Advisory San Diego
    EMAIL JT | JT’S PROFILE

     SEE ALL RECENT BLOG POSTS

    Source_Sterling_Ridge

    Sterling Ridge by William Lyon Homes, image source www.summerlin.com

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