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. 

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.