Greenville County topped all Counties in South Carolina with House Flips

Article courtesy of the Charleston Regional Business Journal:

Last year, 3,108 single-family homes were flipped in South Carolina, encompassing 5% of all home sales during 2015, according to a report from real estate data company RealtyTrac.

Home flipping — defined as property that is purchased and then resold within a 12-month period — increased by 4% across the Palmetto State since 2014, RealtyTrac said.

The median purchase price of S.C. homes was $85,000, while the flipped price was $130,000, meaning flippers earned an average gross profit of $45,000, the report said.

Across the United States, nearly 180,000 homes were flipped last year, accounting for 5.5% of all sales, according to RealtyTrac.

“As confidence in the housing recovery spreads, more real estate investors and would-be real estate investors are hopping on the home-flipping bandwagon,” Daren Blomquist, senior vice president at RealtyTrac, said in the report. “Not only is the share of home flips on the rise again, but we also see the flipping trend trickling down to smaller investors who are completing fewer flips per year. The total number of investors who completed at least one flip in 2015 was at the highest level since 2008, and the number of flips per investor was at the lowest level since 2008.”

The average gross profit for home flipping was $55,000 nationwide, the largest amount since 2005, the report said.

“More inexperienced home flippers with a smaller financial cushion could be a sign of an over-speculative market, but the data indicates that flippers in 2015 continued to operate within relatively conservative margins,” Blomquist said in the report. “Homes flipped in 2015 were on average purchased at a 26% discount below estimated market value and resold by the flipper at a 5% premium above estimated market value.”

Home flipping data for select S.C. counties

County Aiken Anderson Beaufort Berkeley Charleston Dorchester Florence Georgetown Greenville Horry Lexington Richland Spartanburg York

Home flips 2015 120 121 206 150 338 157 54 11 463 248 184 252 212 198

% of total sales 5.3% 6.1% 4.4% 5.6% 4.7% 6.1% 4.2% 2.5% 5.8% 4.9% 5.1% 5.4% 5.8% 4.2%

Year-over-year % change 46% 20% -1% 2% 7% 17% -24% -47% 17% -18% 11% 3% -2% 31%

Home flipping gross profit 2015 $41,400 $36,800 $36,000 $46,309 $82,000 $39,000 $39,379 $65,000 $51,500 $27,600 $38,200 $50,950 $40,000 $42,250

Source: RealtyTrac

Statement from Home Builder Rick Judson, Chairman of NAHB

On August 5, President Obama delivered a speech in Phoenix, AZ, that focused on the Federal Government's housing-related policies.  Rick Judson, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Charlotte, N.C., issued the following statement in response to the president's speech:

“NAHB applauds President Obama for affirming the importance of maintaining a federal backstop as part of efforts to revamp the housing finance system and protect the 30-year mortgage. This will preserve financial stability, promote investor confidence and limit taxpayer exposure.

“The President also stressed that a healthy housing market is critical to create jobs, build a strong middle class and maintain a vibrant economy. In normal economic times, housing accounts for more than 17 percent of the nation’s gross domestic product. Constructing 100 homes creates more than 300 full-time jobs and generates $8.9 million in tax revenues that help local governments to provide essential services such as schools, roads, and police and firefighter protection.

“Among other reforms, the nation’s home builders also support strengthening the FHA to facilitate the flow of mortgage credit to qualified home buyers, cutting red tape and easing tight credit conditions that are preventing creditworthy borrowers from obtaining home loans, and supporting the Low Income Housing Tax Credit to ensure the availability of safe and affordable rental housing. This will help spur job growth, provide homeownership and rental opportunities for all Americans and boost the economic expansion.

“NAHB looks forward to working in a bipartisan manner with the White House and Congress to achieve these goals in the weeks and months ahead.”

NAHB CEO Jerry Howard testifies before Congress

The National Association of Home Builders (NAHB) told Congress today that it will work with lawmakers to make changes to the Protecting American Taxpayers and Homeowners (PATH) Act legislative proposal to ensure that it provides the federal support necessary to maintain a strong and liquid housing finance system.

Testifying before the House Financial Services Committee, NAHB CEO Jerry Howard urged the committee to modify the PATH Act to make sure that the federal government continues to provide a backstop for a reliable and adequate flow of affordable housing credit in all economic and financial conditions.

“NAHB believes federal support is particularly important to ensure that 30-year, fixed-rate mortgages, the bedrock of the nation’s housing finance system since the 1930s, remain available at reasonable interest rates and terms,” said Howard. “As currently drafted, the PATH Act does not provide the federal support necessary to ensure a strong and liquid housing finance system, and we urge the committee to make the necessary changes.”

There are some positive elements in the PATH Act, and NAHB agrees that private capital must be the dominant source of mortgage credit, Howard said. However, ensuring the safety and stability of the housing finance system cannot be left entirely to the private sector.

“The historical record clearly shows that the private sector is not capable of providing a consistent and adequate supply of housing credit without a federal backstop,” he said.

NAHB has recommended to the committee that Fannie Mae and Freddie Mac be gradually phased into a private sector oriented system, where the federal government’s role is explicit but its exposure is limited. Federal support would be limited to catastrophic situations where carefully calibrated levels of private capital and insurance reserves would be depleted before any public funds were employed to shore up the mortgage market.

NAHB also urged House lawmakers to modify the sections of the bill outlining changes to the Federal Housing Administration (FHA).

“The PATH Act would drastically diminish FHA’s vital liquidity mission,” said Howard. “By simultaneously leaving all federal support for housing to FHA, and then by greatly reducing the overall scope and reach of FHA’s programs, the PATH Act would greatly limit homeownership and rental housing opportunities for many financially responsible and qualified Americans.”

Because there is currently a great deal of uncertainty among consumers and home builders due to the unresolved debate on reforming the housing finance system and the government sponsored enterprises, Howard urged the committee to move forward in a careful, prudent manner to provide needed assurance for the industry and consumers.

“At a time when housing is just starting to get back on its feet and provide job and economic growth, we don’t want to do anything that would reverse this positive momentum,” he said. “It’s definitely important that Congress be mindful of housing’s important role in the economy going forward.”

“NAHB looks forward to working with lawmakers to create a sustainable housing finance system that will ensure stability and liquidity in the financial system that supports homeownership and rental housing,” Howard added.

NAHB: Tax code rewrite threatens homeownership, rental housing, and home building

The U.S. Senate is considering revamping the tax code which could eliminate some or all housing tax incentives. The Senate Finance Committee recently announced it will consider comprehensive tax reform and initiate proceedings with a blank slate: no exemptions, deductions, or credits.

According to NAHB, this could harm the bottom line of all residential construction businesses, depress home values, impose a tax increase on home owners, and cause massive layoffs in housing and other industries

Many of the tax reform proposals have suggested eliminating or reducing the mortgage interest deduction, the Low Income Housing Tax Credit, the capital gains exclusion for home sales and the deduction of property taxes, among others.

NAHB has issued a Call-To-Action to HBA members asking them to contact their Senators and tell them to preserve housing tax incentives like the mortgage interest deduction and low income housing tax credit.  To act and contact your Senators, click here.

NAHB: Top 12 Accomplishments Summer 2012, Number 4: Elevating Housing Profile

Builder Review Daily is highlighting the top 12 actions taken on behalf of Home Builders so far this Spring.

Accomplishment number 4: Elevating Housing Issues in the Current Election Cycle Through Homeownership Rallies, a Nationwide Petition and Media Outreach

Highlighting the importance of homeownership to the voting public and putting housing issues in the spotlight for the November elections, NAHB has now held four successful Homeownership Rallies and has five more such events scheduled in key swing states across the country in coming weeks. These efforts, along with more positive data on the housing front, have contributed to a general improvement in the way that the media has been reporting on housing and the recognition that housing is emerging as a leading factor in the economic recovery.

NAHB has now held four successful Homeownership Rallies since the beginning of this year, the latest of which was in Detroit on July 20. Each of these events has drawn hundreds of participants and very good media coverage in their respective local markets. As part of these efforts, NAHB has also developed the ProtectHomeownership.com website, which details the threats that housing faces in the current policy debate and the need to protect homeownership incentives within our national housing policy. The site also allows visitors to sign our petition in support of homeownership. Additional homeownership rallies have now been scheduled for Kansas City, Mo., on Sept. 25; Milwaukee, Wis. on Oct. 2; Columbus, Ohio, on Oct. 9; Richmond, Va., on Oct. 11; and Las Vegas on Oct. 18.

Meanwhile, there’s been a notable increase in the number of positive media reports on housing over the past two months, and NAHB has done its part to keep the positive momentum going by reaching out to the press at every opportunity with our perspectives on the latest data. One key message on which we’ve focused is the fact that residential construction is now starting to reassume its traditional role of helping to lead the economy forward following a recession. We’ve also compiled some of the latest positive news reports on housing at www.nahb.org/goodnews and encouraged our members to use these resources to make the case to their customers that housing is on the rebound, home prices are stabilizing and now is a great time to buy a new home. 

NAHB: Encouraging Signs for Housing as Gridlock Persists in Washington

As the housing industry slowly climbs back on the road to normal following the worst downturn since the Great Depression, NAHB is working to keep housing and homeownership a top national priority during an election season marked by political gridlock in Washington, according to participants in a July 12 NAHB webinar on the mid-year outlook for housing and the 2012 elections.

Part of NAHB’s broad strategy to highlight the importance of housing is to hold a series of homeownership rallies in key battleground states between now and the November elections. NAHB CEO Jerry Howard cited the success of a Rally for Homeownership held on July 11 in Tampa, Fla. (see bullet above) that was sponsored by NAHB, the Tampa Bay Builders Association and the Florida Home Builders Association.

“The rally drew more than 600 people, including concerned citizens, elected officials and business leaders, and highlighted the importance of homeownership,” said Howard.

The next Rally for Homeownership will take place in Detroit on July 20 and subsequent rallies will be held this fall in Kansas City, Mo.; Milwaukee, Wis.; Columbus, Ohio; Richmond, Va.; and Las Vegas.

Each rally location was selected because it is a battleground presidential state or a state with a key Senate race.

By conducting homeownership rallies in these strategic states, Howard said the goal is to ensure that presidential and congressional candidates on both sides of the political aisle understand the importance of housing and homeownership and to remind them that there can be no economic recovery without a housing recovery.

In addition, NAHB has been taking this message directly to the presidential candidates. Over the past few months, NAHB has met several times with the policy staff of President Obama and the Romney campaign.

Further, NAHB will have a significant presence at the both the Democratic and Republican conventions later this summer.

Political “Silly Season”

As NAHB works to keep housing in the forefront, NAHB Chief Lobbyist Jim Tobin said there is a very polarized environment on Capitol Hill, calling this the political “silly season.”

He acknowledged that little is expected to get done in Congress between now and the November elections, as lawmakers will go on break for the summer recess in three weeks, which will be extended longer this year due to the political conventions. When Congress resumes in mid-September, the chamber is expected to adjourn in early October to focus on the elections.

Meanwhile, NAHB continues to work with lawmakers in both chambers to end the dearth of credit for the construction of new homes.

Tobin noted that H.R. 1755 in the House has more than 100 co-sponsors and Senate companion bill S. 2078 now has four co-sponsors.

“We are currently waiting to attach H.R. 1755 to a larger legislative vehicle to show regulators that there is no national housing market and that housing markets are local,” said Tobin. Many markets are on the mend, and builders need access to construction loans to meet demand and to help local economies grow, he added.

Among other legislative priorities for NAHB:

• Housing finance reform. NAHB earlier this year unveiled a white paper that provides a comprehensive framework for housing finance reform. Tobin said the plan -- which seeks to overhaul the housing finance system to ensure that housing credit is available and affordable in the future and is delivered through a competitive, efficient, safe and stable system – has received positive feedback across the political spectrum.
• Tax reform. While NAHB expects Congress to tackle this issue next year, the association has been busy developing excellent economic research detailing the importance of housing tax incentives, including the mortgage interest deduction and the Low Income Housing Tax Credit.
• Regulatory oversight. NAHB continues to work with regulatory oversight agencies to reduce the costly and burdensome regulations that are hampering the housing recovery. In addition, NAHB is urging lawmakers to co-sponsor House bill H.R. 5911 and Senate bill S. 2148, legislation that would make much-needed improvements to the EPA’s Lead: Repair, Renovation and Painting Rule. The legislation would help home owners and remodelers to better comply with the costly work practices and record keeping requirements of the rule without compromising safety standards.
• Other critical issues. These include reforming the home appraisal system, removing the 20% downpayment requirement from the qualified residential mortgage, determining the definition of the new qualified mortgage rule as required under the Dodd-Frank legislation, finding innovative ways to get foreclosed homes off the market and improving housing to stimulate job growth and the economy.

While Congress may be paralyzed on larger issues, at NAHB’s urging, lawmakers pulled together recently to pass a five-year reauthorization of the National Flood Insurance Program. Tobin noted that NAHB played a key role in helping to shepherd the bill through Congress and deleting a key provision that would have caused home owners living behind levees and dams to pay much higher insurance premiums.

A Busy “Lame Duck” Session

With Congress essentially deadlocked through the Nov. 6 elections, Tobin said that the post-election “lame duck” session will be the most “jam-packed we have seen in a long time.”

In a relatively short time frame following the November elections and before the new Congress is sworn in, lawmakers are expected to grapple with several major issues. These include extending the 2001/2003 tax cuts, the mandatory spending cuts that were part of the sequestration process as a result of last year’s debt ceiling deal, and the need to once again raise the debt ceiling in order to allow the U.S. government to continue to pay its bills without the risk of default.

NAHB will be urging lawmakers to extend the 2001/2003 tax cuts for all taxpayers and to avoid any spending cuts required through last year’s sequestration deal that would harm housing. Sequestration requires lawmakers to come up with $109 billion in spending cuts divided evenly between defense and discretionary spending programs in 2013.

Both Howard and Tobin said the race for the White House is too close to call and, while far from a certainty, they believe the House will stay in Republican control and the Democrats will maintain power in the Senate.

“No matter which candidate wins, or which party is in power in the House and Senate, NAHB has a long history of working in a bipartisan manner to push housing issues forward,” said Tobin.

Slow but Steady Growth

On the economic front, NAHB Chief Economist David Crowe expects that gross domestic product will rise 2% this year and 2.5% in 2013, which should lay the groundwork for improving housing markets.

One of the reasons why there is a slow housing recovery is “because we are not adding many jobs,” said Crowe.

He noted that for the first time in recent memory, there has been better news on the housing front than the overall economic front.

Since last September, housing permits, total housing starts, single-family housing production and new-home sales have all been rising.

“The Federal Housing Finance Agency home price index has had some gradual increase for some time,” Crowe added, “and Case-Shiller, which has been the most negative of all home price indexes, has begun to show some increase.”

Meanwhile the NAHB/Wells Fargo Housing Market Index, which measures builder confidence in the single-family market, has doubled since September and NAHB’s First American Improving Markets Index has gone from 12 in September to 84 in July.

“Eighty-four markets are over 20% of all marketplaces,” said Crowe. “This recovery is happening, it’s just happening in different places and tends to be occurring in smaller markets.”

Tight mortgage lending restrictions continue to hamper the single-family market, Crowe added. He noted that for most mortgages that are closing today, buyers have an average FICO score of 760, versus a score of 710 for loans closed earlier in the decade.

“Today, buyers with FICO scores of 730 are denied home loans,” Crowe said.

Single-family home starts are projected to climb to 519,000 units this year, up nearly 20% from 2011. NAHB is forecasting single-family housing starts will post a healthy 28.7% gain in 2013 to 668,000 units.

Multifamily production is expected to rise 25.9% in 2012, reaching the 224,000-unit level and post a more modest 6.1% gain in 2013, increasing to 238,000 units.

Residential remodeling of owner-occupied properties is operating at a healthy clip and is now back to where it was before the housing downturn, Crowe added.

A full replay of the webinar is available here.

Calculated Risk: housing inventory is down 22 percent

The media tells us that there is a glut of housing on the market.  We hear regular alarm bells about "overhang" and foreclosures sending housing prices down further.  But do the alarms match reality?

According to a report in Calculated Risk (Dude, Where's my inventory?), the inventory of housing is down 22 percent from the same time last year.  Read the entire report at Calculated Risk by clicking here.

NAHB Redefines the Quality of Existing Housing Stock

Although most Americans are likely to view housing quality as important, few would describe it as a serious problem, especially compared to other troubles housing markets are currently confronting. This view of housing conditions in the U.S. is shaped largely by the Department of Housing and Urban Development’s (HUD’s) method for measuring the quality of homes, which classifies only about 1.5 percent as severely inadequate.

At a conference hosted by HUD in 2011, NAHB introduced an alternative way to identify inadequate units. Using the same data source as HUD, NAHB defined inadequate housing in a way that not only helps explain why prices and rents are sometimes lower than expected, but also classifies a much larger share of existing homes as physically inadequate. This suggests that some Americans—particularly renters—are trading adequacy for affordability, and implies that the need for programs to support the construction of new housing, or renovate older units, is greater than many policymakers realize.

NAHB’s work on “Housing Value, Costs, and Measures of Physical Adequacy” was published in March of 2012, in HUD’s research journal Cityscape. The findings reported by NAHB in Cityscape include the following:

• Over 10 million homes in the U.S. are physically inadequate, about double the number usually reported as having even moderate problems. 
• Much of the inadequate housing stock consists of single-family and older structures. 
• Few owners and renters of inadequate units also have problems with housing affordability as conventionally defined, and therefore are a net addition to the count of Americans with housing problems. 
• A large share—over 19 percent—of vacant single-family homes are physically inadequate, and so are not ready for full-time occupancy without substantial renovation and repair. 

Click here to read the article that describes NAHB's findings and explains how and why NAHB developed the new definition of inadequate housing. Details of a more technical nature can be found in the Cityscape article.

Jack Hough: Why U.S. house prices won't recover

An article by Jack Hough at marketwatch.com opines that when taking into account the rate of inflation, U.S. house prices are at 1895 levels and will not return to pre-2008 levels.  He also reports that housing is still a good investment historically.

"But consider: After subtracting for inflation, prices are also back to 1986 levels. And 1955 levels. And 1895 levels.

"That’s because the natural rate of price appreciation for houses is zero after inflation. Prices will eventually stop falling. They’ll resume rising. But over the long term, they’re unlikely to resume rising faster than inflation.

"That’s why prospective buyers should stop focusing on the vague hope that house prices will jump from here and focus instead on the functional value houses provide for the money. In most markets, they provide enough of that to make buying a good deal."

Read the complete report by Jack Hough at marketwatch.com by clicking here.

Business Insider: Tight lending standards are #1 reason housing recovering is slow

In a report by David Zervos of Jeffries & Co., the number one reason for the continued sluggishness in the U.S. Housing Market is tight lending standards.  Specifically, in addition to very stringent credit standards, Zervos cites the larger than normal spread between what bank's pay for funds and what they charge for home loans.

Read more at BusinessInsider.com by clicking here.

The case against Case-Shiller

by Michael Dey, Executive Vice President, Home Builders Association of Greenville

While the FHFA House Price Index was reported up .3 percent in February, the Case-Shiller Index, which measures just the top 10 and top 20 housing markets in the country, was down.  According to Forbes, the Case-Shiller Index fell .8 percent from January to February.

The difference between the two indexes is considerable.  The FHFA House Price Index is a measure of all housing markets in the country based on mortgage activity backed by Fannie Mae and Freddie Mac.  The Case-Shiller Index measures just the top 10 and top 20 housing markets in the country.  Case-Shiller tracks repeat home sales over time.  FHFA is indexed to the contract mortgage amounts.

And therein lies the problem with the Case-Shiller Index; it measures just the largest housing markets, which is not a reflection of the whole country.  Most markets in the country don't come anywhere close to the 50,000 housing starts each year that were commonplace in markets like Atlanta.  And most housing markets did not experience the massive over building that occurred in many of the top housing markets, primarily because the smaller markets did not have the capacity to build on the scale that is possible in the largest markets.

Even more interesting is the fact that Robert Shiller, one of the founders of the Case-Shiller Index, was quoted by Reuters this week that the housing market will remain weak for a generation because suburban areas have lost their appeal to "walkable cities," the result of high gas prices.  Gas prices may be a factor if you live 30 miles from work in suburban Atlanta, but compact markets like Greenville will not be impacted by gas prices in the same way that a sprawling top 20 market is impacted.

Also consider that many of the top housing markets are in states that have been shedding population and jobs since long before the recession.  Much of that population and jobs have relocated to smaller markets in Southern and coastal states.

The continued reliance on data from the top 10 or 20 markets in the country as a barometer for the whole housing market provides a false sense of what is happening in the rest of the country.  For example, in Greenville building activity is up 60 percent in the last year.  And bear this in mind: just like the Case-Shiller Index provides an incomplete measure of housing today, it also provided an incomplete measure of housing seven years ago when those top 20 markets were red hot.  Could reliance on incomplete data have contributed to the overheated housing market of the recent past.  Is incomplete data contributing to the current overbearing regulation of housing activity today, particularly in smaller prospering markets like Greenville?

Federal regulators, banks, Congress, the White House, and the media would be better served to evaluate housing market-by-market, rather than rely on an index that is limited to just 20 out of the 270 markets in the nation.  Even though Case-Shiller says it measures 75 percent of the housing activity in the country, it still only measures 7 percent of the individual housing markets.

NAHB: Our housing stock is getting older

The American owner-occupied housing stock is growing older. And this fact may signal future increased demand for both remodeling and new home construction over the long-term.

Data from the Department of Housing and Urban Development American Housing Survey (AHS) reveal that the median age of an owner-occupied home in the United States was 34 years old as of the 2009 survey. This is 11 years older than the median age reported by the 1985 AHS (23 years old).

Read the entire report at Eye On Housing by clicking here.

HousingWire: Housing inventory at its lowest level since 2006

According to an article on HousingWire.com, the inventory of of new and existing homes for sale are at their lowest levels since 2006.  HousingWire reports that the inventory or existing homes will take just 6.1 months to turn over, and the inventory of new homes is just a 5.6-month supply.

Read the entire report at HousingWire.com by clicking here.

NAHB Chairman Barry Rutenberg on the importance of Home Building to the economy

The following editorial appeared Wednesday, February 22, 2012, in the Washington Times

A plan to end government support for homeownership ("Get the Fed out of the housing market," Commentary, Friday) is a recipe for economic disaster that would surely throw the economy back into recession.

Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA) currently guarantee or insure more than 90 percent of all home mortgage activity. Even those arguing to abolish Fannie Mae and Freddie Mac admit this would need to be a years-long transition because the private market is not operating today. Private lenders have shown little inclination to step up to the plate and fill the void that would result if the government backstop essential to ensuring liquidity and stability for homeownership were abruptly halted.

Housing is the key to long-term prosperity. Residential construction usually accounts for 5 to 6 percent of total economic output, yet it stands at a meager 2.5 percent today. We don't have an excess supply of housing; we have record-low new home inventories and a dearth of housing demand resulting from high unemployment, stagnant income growth and a drop in household formations.

The Federal Reserve is offering ideas to stimulate demand because Fed policymakers understand that there can be no sustainable economic recovery without a housing recovery. Building 100 homes generates more than 300 full-time jobs and $8.9 million in federal, state and local tax revenues that sustain local schools and communities across the land. New homes are needed in scores of markets that are experiencing renewed growth and confidence, but this demand is going unmet because of a lack of credit for homebuyers and homebuilders alike.

Maintaining a federal role for housing and providing credit for qualified homebuyers and builders with viable homebuilding projects is a necessary first step to restore the health of the housing market, create jobs and to keep the economic expansion moving ahead.

BARRY RUTENBERG
Chairman
National Association of Home Builders
Washington

High-end home features lose their appeal with home buyers

According to The Wall Street Journal, these 10 once-popular features in homes are losing their appeal as home buyers become more cost and energy conscious:

1. Outdoor kitchen
2. Outdoor fireplace
3. Sun Room
4. Two-story Family Room
5. Media Room
6. Two-story Foyer
7. Master-planned developments
8. Luxury Master Bathrooms
9. Formal Living Room
10. Whirlpool Bathtubs

Read the entire report at Market Watch by clicking here.

NAHB: Housing Starts Rise 1.5 Percent from Upwardly Revised Numbers in January

Building on significant upward revisions to numbers for the previous two months, nationwide production of new single-family homes and apartments increased 1.5 percent to a seasonally adjusted annual rate of nearly 700,000 units in January, according to newly released figures from the U.S. Commerce Department. This marks the second-best pace of overall housing production since October of 2008.

“Today’s solid housing starts report indicates that builders are putting more of their crews back to work, and adds to the growing field of evidence that the overall housing market is gradually but consistently moving in the right direction,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. In addition to today’s numbers, recent builder surveys have indicated steadily increasing optimism regarding market conditions while the number of improving housing markets nationwide has grown substantially over the past six months, he noted.

“The fact that the three-month moving average for housing starts has now increased for nine consecutive months and is approaching the 700,000 mark for the first time since October of 2008 is indicative of a solid recovery in housing activity stemming from recent firming in employment and consumer confidence measures,” agreed NAHB Chief Economist David Crowe. “That said, housing production is still far from what would be considered normal in a healthy market, and many challenges remain for home builders in terms of tight credit conditions, difficult appraisals and the continued flow of foreclosed properties on the market – all of which are certainly slowing the pace of improvement in both housing and the overall economy.”

Following significant upward revisions reported for both November and December, single-family starts held virtually flat in January with a 1.0 percent decline to a 508,000-unit rate. Together with the revised December number, this is the best pace of single-family starts since April of 2010, when the home buyer tax credit was active. Meanwhile, single-family building permits, which can be an indicator of future construction activity, also held virtually unchanged, with a 0.9 percent increase in January to 445,000 units – again, the best pace since April of 2010.

The multifamily segment also continued to display greater strength in January following a 55 percent increase in starts activity in 2011 that was attributed to rising demand for rental apartments. While multifamily starts rose 8.5 percent to a seasonally adjusted annual rate of 191,000 units for the month, permits edged up 0.4 percent to 231,000 units.

The South, which is the nation’s largest regional housing market, posted the biggest gain in housing starts in January with an 18.3 percent increase, while the West and Northeast also posted significant gains of 11.9 percent and 7.9 percent, respectively. The Midwest was the exception to the rule, posting a 40.7 percent decline that partially offset a dramatic gain in the previous month.

The South also posted the largest gain in permit issuance in January, with a 10.1 percent increase. Permits also rose by 4.2 percent in the Northeast, but declined 3.7 percent in the Midwest and 18.2 percent in the West.

CNN: Census Bureau Reports New Home Starts Up

As reported in a story on CNN, the U.S. Census Bureau reported that housing starts rose to an annualized rate of 699,000 in January, up 1.5 percent from December and up 10 percent compared to a year ago.

Read the complete article from CNN by clicking here.

Charles Schwab: Housing Is Becoming "Local" Again

According to Liz Ann Sonders, Chief Investment Strategist for Charles Schwab & Co., Inc., housing appears to have hit bottom and there are signs that it is beginning to improve again.  More importantly, Sonders says, "housing is becoming 'local' again."  In addition, Sonders points out that renters are driving the recovery, not buyers.

"During the real-estate bubble's inflation and subsequent bursting, housing could be analyzed nationally and somewhat monolithically. The rising tide was lifting all (house) boats, and when the tide went out, it took everything with it. But what we're beginning to see is a broadening of conditions, with a widening spread between the have and have-not regions of the country. Another theme of the real-estate recovery is rent versus own, with a sharp bias recently toward the former."

"There are many reasons for my budding optimism about housing:

Read Sonders' entire report on housing at schwab.com by clicking here.

NAHB Analysis Debunks Misleading Stereotype of the Large Suburban Home

A new research study from NAHB Economics finds there is considerably more to the story of the stereotypical large home in the suburbs than what appears in the misleading and misguided criticism often leveled against it.

The authors of the study, “The Geography of Home Size and Occupancy,” concede that there is an element of truth in the observation that owner-occupied homes are smaller in downtown areas and inner suburbs and larger in the outer suburbs.

But this characterization “overlooks how many people actually reside in these homes,” write NAHB economists Robert Dietz and Natalia Siniavskaia.

“That is, it is incorrect to claim that those larger homes mean more ‘housing space’ for people who live outside central cities,” they say, because those homes in outlying areas tend to be occupied by larger households.

Data from the biennial American Housing Survey for 2009 show that roughly three-fourths of the nation’s 76 million owner-occupied homes are located inside metropolitan areas.

Of the homes in metro areas, those in central cities account for a 22% share of the nation’s owned homes, or 17.2 million; those in urban or “inner” suburbs have a 36% share, or 27 mllion; and the homes in further out, less dense suburbs are 17% of the owned housing stock, or 13 million.

The remaining one-quarter of owner-occupied homes — or 18.9 million — are located outside metro areas.

Survey results also confirm, in part, the stereotype that owner-occupied homes grow in size as they push out from the central city to the suburbs and rural parts of metro areas.

Nationwide, the median square footage of an owner-occupied home is 1,800 square feet.

Homes in the central city are about 7% smaller on average, at 1,678 square feet.

The median size climbs to 1,800 square feet in urban suburbs and 1,900 square feet in the rural reaches of metro areas.

However, not only do homes grow in size when one moves away from the central city to suburbs, the NAHB economists say, “but households grow in size as well.”

The average number of people per home increases from 2.6 in central cities to 2.7 in urban and rural metro areas, the report finds.

“Furthermore, metropolitan families choosing larger houses outside of central cities are more likely to have school-age children,” the study says.

Families in the urban or rural suburbs of metro areas are likely to have more children than households in other areas.

Of the 26 million households nationwide with children under the age of 18, more than half reside in metropolitan suburbs — 39% in inner suburbs and 18% in rural suburbs. Only 22% of home owners with children live in the central cities.

Looking at the locations of homes as they are related to household size “challenges the stereotyped view of large homes in the suburbs," the study concludes.

Nationally, the median square footage per person in owner-occupied homes is 800 square feet, which is exactly the same size as for the urban and rural suburbs in metropolitan areas and areas outside metro areas.

Median square footage per person is somewhat smaller for central cities, but only by 4%.

Among other findings presented in the study:

• A household with two persons is the most common household, accounting for 36%, or 27.6 million, of home owners. But its share of home owners is only 34% in central cities and urban suburbs. 
• The combination of larger household types — of three, four or more persons — adds up to a 42% share of home owners, or 32 million. 
• In metro areas, these larger households are much more commonly found outside of central cities. 
• For example, four-person households account for almost 18% and 17% of home owners in urban and rural suburbs of metro areas, respectively, while their share in central cities is only 14%. 
• Single-person households are more densely concentrated in central cities. They account for 22% of all home owners in the U.S., but their share in central city locations is close to 26%. 
• In rural parts of metro areas, single-persons are less than 18% of home owners. 
• In the Northeast, homes tend to be smaller and homes in the South tend to be larger than the national median. 

In the Northeast, homes in central city areas have a median of 667 square feet per person, 15% below the national median of 767 square feet. Central city homes in the South have a median of 850 square feet per person, which is 27% higher than the national median.

These regional differences are partly explained by the age of the housing stock. The median age of an owner-occupied home in the Northeast is 51 years, compared to 31 years in the South. Newer homes are larger on average.

Setting the Record Straight About Housing

By Earl McLeod

As the debate over tax reform and the regulatory structure of the housing finance system intensifies, misconceptions about housing and finance are proliferating. Following is the truth about some of the most widespread inaccuracies. 

Misconception: Only the wealthy benefit from the mortgage interest deduction. 

This pervasive fiction is a commonly cited reason for justifying elimination of the mortgage interest deduction. 

Income tax deductions for mortgage interest and real estate taxes primarily benefit middle-class taxpayers with incomes between $50,000 and $200,000. And among first-time home buyers, 68 percent of households earn less than $80,000. First-time home buyers benefit most from the mortgage interest deduction because more of their mortgage payment is applied to interest. 

Misconception: In the wake of the recession and housing market downturn, Americans have become disenchanted with homeownership and it is no longer a part of the American Dream. 

Not so, according to a March 2011 study by the Pew Research Center. Among the more than 2,100 people surveyed, 81 percent agreed that homeownership is the best long-term investment a person can make. That sentiment even held true among those who said their homes lost value during the recession; 82 percent of that group indicated that homeownership is the best long-term investment a person can make. 

Misconception: Eliminating government sponsored enterprises like Fannie Mae and Freddie Mac would have no effect on rental housing. 

Investing in new and existing rental housing requires access to affordable financing. In the wake of the financial crisis, Fannie Mae and Freddie Mac, along with the Federal Housing Administration (FHA), have become the primary sources of financing for rental properties of all types. In considering whether the government should continue to guarantee mortgages through Fannie Mae and Freddie Mac or some other mechanism, policymakers should keep in mind their importance as a stable, long-term source of financing for rental as well as owner-occupied housing, according to the Joint Center for Housing Studies of Harvard University. 

Misconception: Homeownership advocates say everyone should own a home.

Homeownership isn’t for everyone, but everyone should be able to choose a home that meets their needs, whether they rent or buy. And government policies, such as the proposed Qualified Residential Mortgage standard, should not limit homeownership opportunities unnecessarily.

Earl McLeod is Executive Director of the Greater Columbia Home Builders Association and a member of the South Carolina Home Builders Housing Hall of Fame.