Home Building in the South Improves

The United States Census Bureau recently released data on the number of completed, privately-owned single family housing units in the South.

Data courtesy of the U.S. Census Bureau

To read the full report, click here.

Year-over-year, completed single-family homes are up 8.7%.  This is especially good news for the long-term outlook of the real estate market returning to healthier levels.

However, short term, completed single family homes have decreased month-over-month since February.  This news is concerning if the trend continues as local housing inventory has decreased to its lowest level of the year.  As the summer selling season begins, competition for home buyers will certainly continue to rise.

The increased number of completed single family homes also shows an improvement in the home building industry from last year.  As more home are completed, the more confident builders will be to start more homes.  In fact, southern home builders have over 500,000 single-family homes in the pipeline. 

Selling Your Property in Tampa, Florida

Interested in learning more about selling your residential property or vacant residential land in the Tampa Bay area?  Watch this great video to learn more about that process.

Tampa Housing Inventory in Short Supply

A recently released report by the Greater Tampa Association of Realtors (GTAR) shows that housing inventory supply in the greater Tampa Bay area has steadily decreased every month in 2014.

To read the full report, click here.

Since the beginning of 2014, housing inventory has dropped over 60% to a low not seen since August of last year.

Essentially, with a 4.3 month supply of housing inventory (a measurement of how long all existing homes on the market would last assuming no new supply was to enter the market) the competition for home buyers will become even more competitive as the summer selling season gets underway.

These figures, when compared with other national and local economic factors, can have both a negative and positive connotation depending on which side of the real estate equation you are on.

For home sellers, having a lower monthly supply means there are fewer homes to compete against. With less competition, sellers have the upper hand - assuming, of course, there are buyers in the market looking for homes.

But, as we've seen in recent months, there are buyers in the market.  The economy is beginning to trend in the right direction.  Job growth has improved each month in 2014.  With more jobs comes more income, and with more income comes the ability to afford more homes.  Therefore, home buyers are more at a disadvantage as they are competing with more and more buyers for fewer and fewer properties.

For home builders, those left after the housing crisis and those new firms in the market, have an important role to play to increase the number of new homes for sale.  The market has shown that there are buyers willing to buy, but there are not nearly enough builders of single family homes to meet demand.

And for real estate agents, representing a seller is virtually guaranteeing a sale.  So long as a listing has everything in order, it should not stand on the market for very long.  However, for agents representing buyers, much more work needs to go into educating buyers on what the lack of inventory means and the speed in which listings will go off the market.

Typically, a more balanced market has an inventory supply of 6-7 months.

5 Things to Expect in Construction in the Second Half of 2014

The Associated Genral Contractors of America (AGC) recently released its 2014 construction hiring and business outlook. Below are the top 5 take-aways from this report:

1. Contractors are optimistic
2. Markets will expand
3. Hiring will increase
4. Credit restraints will be loosed
5. Capital spending will go up

To read the full report, click here.

Contractors are optimistic
Overall, the report released by the AGC contained relatively good news, something the construction industry has been lacking the better part of the last decade. 

Every market will grow or remain stable
The biggest increase in demand will come from construction in the manufacturing industry; the retail and warehouse sectors; the lodging sector; and hospital and higher education industries.

Hiring will increase
The double-edge sword of good news is that although many contractors expect growth in 2014, a lack of skilled construction workers in the market could present a serious problem. Owners and developers are finally investing in new construction projects; however, many contractors have slimmed down to only essential personnel over the past few years, eliminating many skilled workers. Now that demand is ramping up from developers, contractors are scrambling to hire dependable, skilled workers.

Obtaining credit will be easier
Just like the rest of the economy, the construction industry will have less red tape to cut through when applying for new credit in 2014. It makes perfect sense though, if the rest of the industries in the country are looking to expand, they will need the construction industry to meet their demands. If the construction industry does not have access to new credit, they will not be able to meet the needs of other industries.

Capital spending will go up
The expression "to make money, you have to spend money" will be evident most notably in capital expenditures budget line for construction companies. With more jobs expected to be won in 2014, contractors will need to invest in themselves to keep up with the demand. Contractors will invest not only in their people resources but also other resources, such as equipment and tools.

What does this mean for the real estate industry?
With construction production expected to increase, real estate professionals will have more inventory to manage (meaning better pricing for buyers.) However, if contractors cannot keep up with demand, inventory of new properties will remain at current low levels (meaning better pricing for sellers.) Ideally, the market will find its balance and create a more suitable market for real estate in 2014.

Open House - 10511 Rochester Way, Tampa - 7/24 - 4pm-7pm

House Hunting in Tampa, Fla?  Be sure to stop by the Open House at 10511 Rochester Way, Tampa, FL 33626 on Thursday, July 24 from 4pm - 7pm.

For more information on the property for sale and the Open House, click here.

Multifamily Investment Property Growing Strong

The market for multifamily and investment properties is still going strong, particularly in the Tampa, Fla. market.

Image courtesy of IMT Tuscany Bay

According to the Tampa Bay Business Journal, IMT Capital of Sherman Oaks, Calif. bought two apartment complexes in the northwestern portion of Hillsborough Co. including the Preserve at Westchase Apartments and Tuscany Bay Apartments.  Records indicate that both properties were purchased from Archon Group in Dallas, Texas for a combined $78.2 million.

More recently, the Carroll Organization – based in Atlanta, GA and headed by M. Patrick Carroll – purchased the West Park Village apartment complex in the Westchase area.  The deal included 617 luxury apartment units for a record $122.5 million.

Although some indicators in recent weeks have shown an increase in the number of homeowners throughout the country, the market for rental, multifamily, and investment properties is a strong as ever as this deal indicates.

For property investors, the importance of maintaining a portfolio with income property in good condition and good locations cannot be overstated. Not only do these income properties provide a bump in personal or corporate assets, they provide much needed cash flow.

4 Key Qualities for Today's Real Estate Agents

The role of a real estate agent in today’s economy is markedly different than the role agents played 30, 20 or even ten years ago.

It is important for all parties involved in a real estate transaction - including buyers, sellers, renters and agents - to understand these significant changes. As a buyer or seller, you do not want to work with an incompetent agent. As a real estate agent, you want to keep your skills useful and up to date to best serve your clients.

So what exactly does it take to make a good real estate agent today? Well, here are the 4 most important qualities in today’s real estate agents.

Be a Transactional Guide

This feature was valuable in an agent 20 years ago, but is just as important - if not more important - today. In years past, agents were gatekeepers of information. Today, that information is readily available through services such as Zillow, Trulia, and Realtor.com. So instead of relying on a wealth of “hidden” information, agents must now serve to interpret this now public information for their clients.

A good transactional guide will advise clients of various mortgage and loan strategies; they will pay careful attention to the specific terms and details of all of your contracts; and they will oversee the various parties and service providers involved in the real estate transaction.

Have a Deep, Local Expertise

In the age of Big Data, there are countless sources of helpful information regarding homes, neighborhoods and cities across the country. The role of a real estate agent is to study and analyze these numbers and present it to the client in a way that reflects their needs and wants.

The website WebMd contains a plethora of information on all issues related to health. However, only a doctor should use this information to diagnose a patient. Similarly, Zillow and Trulia contain a wide range of data on the real estate market but only a real estate agent is best suited to interpret this data for the buyer or seller.

Be a Good Negotiator

Today’s real estate market is competitive. Homes sit on the market for less than a few days before receiving multiple offers. Homes receive offers that are several thousand dollars above asking price. There are fewer qualified home buyers in the market than years past. With such cutthroat conditions for buyers and sellers, how can you navigate these heady waters?

Real estate agents - good ones, anyways - are trained in the art of negotiation. They are sales professionals, and sales professionals understand the nuances of making a good deal. They also know the market better than anyone else, and have hard numbers to back up their art.

Be a Good Marketer

In the old days, a home was sold through the MLS and by placing ads in the newspaper. Today, anyone with Internet access and a Twitter account can be considered a marketer. How can you differentiate your home (or your buying prowess) to potential buyers (and sellers)?

The answer is a real estate agent who understands where buyers and sellers are looking for homes, how they are looking for homes, what type of home features sell a home, and what financial qualifications make a buyer more appealing.

Unlike the travel agents of days past, a good real estate agents will always be in high demand. While purchasing a plane ticket is a relatively frequent, standard, and inexpensive process the purchase or sale of a home is infrequent, contract-based, and often expensive. It is these qualities that make a good real estate agent desirable and it is those four important traits that separate today’s real estate agents from agents long ago.

A Real Estate Improvement Company

The real estate industry has many unique facets and players. But no matter what role you play or how what you do in the real estate market, there is one important goal that everyone should keep in mind.

When you consider real estate, you should consider it as an investment. And when you think of the criteria involved in making a good real estate investment, you must examine and analyze the utility and the value of such an investment.

Another way to look at utility is to look at usage. Is a particular property being used to its highest and best usage in accordance with all local laws and statues? In other words, can I put four different townhouses on this large residential lot on a busy street and receive more income in rent than I would be able to charge if I only had a single-family home on this property?

When we talk about value, we think of cost and we think of price. Can you sell a particular property for a price more than the purchase cost? If so, your property has positive value. If not, you property has decreased in value.

The goal of a real estate improvement company is to maximize both the utility and value of a property. We can do this through investing, managing, developing, and marketing a particular property.

To take our previously stated example of the townhouses, we will take a look at the utility and the value. With regards to utility, we have certainly increased - or improved - its utility. We now house four different families, versus just one previously. When looking at the value, we have increased the net operating income of a property thereby increase its value.

But just how much did we increase the utility and the value? This is where a real estate improvement company will come in hand to determine just how much utility and value this project provided versus other similar (or different) projects.

When looking at a piece of property, think about what the best usage of that property could be. Then, think about if that type of project is feasible on that property. If you have mastered those concepts and kept those goals, you have yourself a real estate improvement company.

Business Outlook Positive for Job Growth in 2014

BMO Harris recently released its 2014 U.S. Business Outlook report, containing some interesting opinions and facts regarding businesses throughout the county.

Image courtesy of BMO Harris

To read the full report, click here.

The two useful bits of information stemming from this report are the survey results for the outlook of businesses in 2014 as well as the self-reported data of those same businesses in 2013.

The first stat (the chart above) is especially good news for the state of Florida as 96% of businesses polled in the state expect their business to either increase or remain the same.  Of that 96%, over half expected their business to grow.  This is especially welcoming news as two of the most important factors when it comes to an increase in homeownership are job creation and access to capital.  With business owners expecting their business to grow, more jobs will be created and more people will have more access to capital.

The other telling stat from the report comes from the year-over-year data for companies, as 84% of companies either grew or remained the same from 2012 to 2013.  This bit of data is certainly an affirmation that companies are bouncing back from the economic downturn and expect continued growth this year as well.

For those in the real estate industry, knowing that businesses are expected to improve their performance will increase the performance of the real estate industry as well.

Jobs in Technology, Energy Pave the Way for Housing in Florid

The Milken Institute recently released their findings on the Best Performing Large Cities in the United States.  Although the state of Florida did not have a particularly strong showing, the Tampa/St. Petersburg metropolitan area ranked second overall in the state of Florida.

Courtesy of the Milken Institute

To view the full report, click here.

The Milken Institute is a nonprofit, nonpartisan economic think tank whose mission is to improve lives around the world by advancing innovative economic and policy solutions that create jobs, widen access to capital, and enhance health.  What professionals in the real estate and construction industries should pay particular attention to in the M.I.’s mission statement is its particular focus on helping to create jobs and gain access to capital – the two most critical pieces of advancing the housing industry.

Overall, the state of Florida did not compare well to other states throughout the country like Texas, Colorado and California.  These states are leading the charge in the energy and technology sectors.  These sectors are especially important for both job creation and access to capital.  As previously mentioned, job growth and access to capital are the two most important pieces to improve the housing market.

Not to be outdone, Tampa did rank in the Top 40 in the country for number of high tech industries last year, as well as the Top 75 in the country for concentration of high technology jobs.  Again, the concentration of jobs in the technology industries is especially important because they provide an increase in job creation as well as further access to capital.  With both of these two criterias filled, the housing market in the Tampa area will continue to show signs of improvement.

Number of Homeowners on the Rise

Wells Fargo, the largest producer of mortgages in the United States, released its most recent earnings statement.  As the country’s largest originator of residential mortgages, it can be a useful barometer for the current state of the housing market.

Image courtesy of Wells Fargo

The graph above outlines the previous five quarters of residential mortgage production and servicing for Wells Fargo.  The two most important take-aways from this graph can be found in the fourth quarter of last year.

The bad news: mortgage originations were down $30 billion from the third quarter in 2013 and down $75 billion from the fourth quarter of 2012.  Some of the loss from quarter to quarter of last year can be attributed to seasonal adjustments (i.e. fewer homes are sold every winter, every year).  Also, some of the decline from year over year can be attributed to Wells Fargo releasing over 1,000 full-time employees in their residential mortgage department.

The good news: the number of mortgage originations on new purchases accounted for a full two-thirds of Wells Fargo residential mortgage production.  This is especially good news for real estate agents, real estate brokers, and real estate investors looking for more buyers.  If more unique mortgages are produced, one can infer that there are more unique homeowners.  With more unique homeowners comes the prospect of more prospects.

In the upcoming year, keep a close eye on not only the dollar amount created from mortgage originations, but keep an especially close eye on the number of mortgages stemming from new purchases.  This could be an early signal for a successful 2014.