April 20, 2024

Surprise U.S. Housing Demand Catches Industry Off-Guard

“In my 27 years I’ve never seen inventories this low,” said Kurt K. Colgan, a broker with Lyon Real Estate here in the Sacramento metropolitan area, where the share of homes on the market has plummeted by one of the largest amounts in the nation. “I’ve also never seen a market turn so quickly.”

The housing turnaround seems to have caught almost everyone in the business by surprise. As desirable as the long-awaited improvement may be, the unusually low level of homes for sale is creating widespread problems for buyers and sellers alike, leading to bidding wars and bubblelike price jumps in places that not long ago were suffering from major declines. In the Sacramento area, where the housing bust took an especially heavy toll, the median list price has surged 35 percent over the last year, according to Zillow.

Nationwide, prices rose 7.3 percent over the course of 2012, according to the Standard Poor’s Case-Shiller index, ranging from a slight decline in New York to a surge of 23 percent in Phoenix. Tracking more closely with the national trend were cities like Dallas, up 6.5 percent; Tampa, which rose 7.2 percent; and Denver, which gained 8.5 percent. In many areas, builders are scrambling to ramp up production but face delays because of the difficulty of finding construction workers and in obtaining permits from suddenly overwhelmed local authorities. At the same time, homeowners — many of them lifted above water for the first time in years — often remain reluctant to sell, either because they want to wait and see how much further prices will climb or because they are afraid of being displaced in the sudden buying frenzy.

“You see a home go for sale and within a couple days there are three, four, six offers,” said Carrie Miskawi, a mother of three young children who has been looking for a new home for the last six months with Mr. Colgan’s help. She and her husband have decided not to put their current home on the market because they fear it will be snatched up before they have a chance to successfully bid on a new one.

“It’s kind of a Catch-22,” Mr. Colgan said. As long as large numbers of people are hesitant to put their own homes on the market because so few other homes are available, he said, there won’t be many homes available.

Across the country, the raw number of homes for sale is at its lowest level since 1999, according to the National Association of Realtors. In the Sacramento metro area, home listings were down 60 percent in January from a year earlier, compared to 23 percent for the country over all, according to Zillow.

Inventories have been whittled down largely because new construction ground to a standstill for several years. Investors large and small have also scooped up most of the backlog of foreclosures and short sales; about 40 percent of all homes bought in Sacramento County over the last year were purchased by owners who currently live at a different address, according to county records and title data provided by the Fidelity National Title Insurance Company.

But steady job growth has put more people back to work, and families that put off moving because they couldn’t afford it are finally ready to do so. “Distressed” sales are down and conventional sales are up.

Extraordinarily low mortgage rates don’t hurt, either.

“The recovery is real,” said John Burns, chief executive of John Burns Real Estate Consulting. “But the pace of the recovery has an artificial component to it.”

Some real estate agents here, like Tom Phillips, have resorted to knocking on doors in desirable neighborhoods to see if the owners might, if asked nicely and promised a healthy gain, sell to one of his clients. One couple he represents, Darcey and Jason Schmelzer, just moved into a yearlong rental with their two boys because they sold before they could find a new place. They received four offers on the first day they put their home on the market, with the winning bid about $10,000 above asking price.

For the builders who survived the collapse, the tight market is a signal to get back to work.

Monthly permits for single-family homes in the Sacramento area more than doubled from January 2012 to January 2013, though are still only a quarter of the level they reached during the bubble. Nationally, the construction industry added 48,000 jobs in February, the biggest increase since 2007.

The housing upturn looks set to continue, finally adding a crucial element of support to the slowly improving economy. The government reported Tuesday that housing permits, while far below their peak, surged in February to their highest level since June 2008, an increase of nearly 34 percent from a year earlier. But it will still be many months before new homes now going through the approval process will be ready to move in.

Article source: http://www.nytimes.com/2013/03/21/business/economy/in-us-surprise-housing-demand-catches-industry-off-guard.html?partner=rss&emc=rss

Room For Debate: Double Dip? Not in Washington D.C.

Introduction

Arlington, Va.Michael Reynolds/European Pressphoto Agency Washington and suburbs like Arlington, Va., are going strong.

“The economic recovery is faltering, and Washington is running out of ways to get it back on track,” The Washington Post said in its lead story on Thursday.

But you might not know this if you’re a well-educated resident of Washington D.C. — the metropolitan area, that is — where the economy is thriving, not faltering. It is the only metro area in the United States where housing prices have risen in the last quarter, according to Standard Poor’s Case-Shiller index. Some employers are even reportedly paying closing costs to lure talented employees to the area. The unemployment rate, at 5.4 percent, is well below 9.1 national average reported today.

What is driving this growing housing and job market disparity between Washington and the rest of the country? If the federal government is facing cuts, why are people still flocking to Washington and committing to buying homes? What other forces are at work inside this economic beltway?

 Read the Discussion »

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Topics: Economy, housing

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Article source: http://feeds.nytimes.com/click.phdo?i=2b314f4c4520e060492eeb9a6e790f9a

Economix: The Census Surprise in New York

Today's Economist

Edward L. Glaeser is an economics professor at Harvard and the author of “Triumph of the City.”

One of the biggest surprises from last week’s release of Census data was that New York City’s population appears to have grown by only 2.1 percent in the last decade, or about 167,000 people. The city’s overall population, 8.175 million, is 200,000 less than the Census Bureau had estimated for 2009.

Unsurprisingly, Mayor Bloomberg is challenging the Census figure and demanding a recount.

The crucial question is whether the Census missed significant numbers of immigrants in Brooklyn and Queens. If the Census total were left unchanged, New York’s population growth rate would have fallen significantly between the 1990s and the 2000s.

At first blush, this decline would seem quite surprising. After all, the city has continued to surge economically. Between 2000 and 2008 (the latest year available from County Business Patterns) payroll per worker in Manhattan increased by 35 percent (7.8 percent in real terms — that is, after adjusting for inflation) to $102,000. Over the same period, national payroll per worker increased by 25 percent (for no real gain) to $42,000.

You might have thought that robust increases in earnings in the economic heart of the city would have pulled in plenty of people.

Moreover, the high prices that persist in New York City suggest that the demand for city living isn’t falling. Case-Shiller data, which captures the metropolitan area rather than the city, shows that the New York area’s prices have risen by 67 percent since 2000 (32 percent in real terms), more than any metropolitan area in the sample except Los Angeles.

We don’t have comparably reliable figures for the city itself, but most data seems to show increases over the decade, as well.

In national perspective, New York’s limited growth is also somewhat surprising. A new policy brief of mine shows that people are moving disproportionately back to areas close to our old ports and to areas that had high wages as of 2000.

But the combination of economic strength and high prices need not lead to population growth if an area doesn’t build many more units. In that case, high housing demand leads only to higher prices — not more people.

The Bloomberg administration has long pushed for more building permits, and there were years during the middle of the last decade when the city was permitting construction of more than 30,000 units annually.

I had thought that all that building activity would lead to a significant increase in the housing stock of the city, but the city ended up adding only 170,000 units over the decade, a 5.3 percent increase.

Typically, population increases by a few percentage points less than the housing stock increases because of shrinking household size, so perhaps we shouldn’t be shocked that New York City’s population grew by only 2.1 percent.

For example, Boston’s population growth of 4.8 percent, the first time the city had grown more quickly than the state since the 1870s, was made possible by an 8.2 percent increase in the housing stock.

The growth of New York’s housing stock in the 2000s was not greatly lower than in the 1990s, when the city added about 200,000 housing units. But during that decade, the population increased far more quickly, in large part because of increased crowding in the outer boroughs.

During the 1990s, New York City’s population increased by 690,000, while Manhattan’s population rose by 50,000. The population of Queens increased by more than 10 percent during that decade, 280,000 people, although the number of occupied housing units increased only by 60,000.

The current 2010 Census doesn’t show a similar surge in the population of the boroughs outside Manhattan, and New York’s growth during the 2000s seems to have been more closely in line with what we should expect from the growth in the amount of housing.

Moreover, the city’s measured vacancy rate increased to 7.8 percent in 2010 from 5.6 percent in 2000, which means 80,000 fewer units being occupied. Increased vacancies meant that the number of occupied units grew less than 90,000, or under 3 percent, which makes 2.1 percent population growth completely understandable.

But this vacancy rate is far higher than the 2.7 percent vacancy rate reported by the 2008 New York Housing and Vacancy Survey, which is one reason why it will surely be part of the dispute between the city and the Census. One question is whether the Census takers made sure that seemingly empty units were actually empty.

One hypothesis is that the immigration-led growth of the 1990s was much slower during the 2000s. The other hypothesis is that the Census managed to miss large numbers of immigrants in the outer boroughs. If there is a recount, we may see which hypothesis is correct.

In either case, the Census count of the number of total housing units is likely to be correct, and that count shows relatively modest growth. Those boom years during the middle 2000s did not expand the city’s housing enough to make the city much more affordable and inclusive, especially in its most attractive neighborhoods.

The Bloomberg administration has worked hard to allow more building, but the recent Census numbers seem to suggest that a combination of slow growth and continuing high prices implies that New York’s barriers to building, such as a complex zoning code and ever more Historic Preservation Districts, are still shutting out families that would like to move to the city.

Article source: http://feeds.nytimes.com/click.phdo?i=ce34b5ce516a1561187a54f312459034