Thursday, August 27, 2015

Top Ten Lists - Again

Every once and a while I take a few minutes and peruse the top ten list of this and that. They are always interesting. Mostly because of the compilers themselves (What were they thinking?) than the list itself. Best places to live, cities with the best grade schools, and those that have the best chain restaurants are fun to read but I can assure you that no one will move just to be on one of these lists. But, it does give a resident of “The best college town in America,” some self-satisfaction knowing someone out there validates their choice.

So here are few to ponder:
America’s Most and Least Expensive College Towns  (CLICK HERE)
I was not surprised that Berkeley Cal was number one. No one can afford to live in the Bay Area. But why Stanford isn’t on the elite list leaves one to wonder about the list's authenticity, housing in Palo Alto is totally insane. The least expensive is Muncie, Indiana. Yes, Muncie. I’m going to Google Earth and find it, I do remember the name from my youth.

America’s Most and Least Expensive Affordable Areas to Raise A Family. (CLICK HERE)
This is an in depth article about living costs in American cities. Interesting for data geeks. But I was shocked to see that New York was listed as the most expensive, shocked I say. What this does show is that where you live does matter. California needs to work on getting to the top of this list.

Here’s a list of the Top 25 Private Home Building Companies. (CLICK HERE)

Where are the healthiest housing markets? (CLICK HERE)
According to this list and the article, out of the top fifteen, seven are in Texas, four in Colorado, and only two in California—the Bay Area to be exact. What is more interesting is the Affordability Rank—why anyone would think of moving to California is beyond me. But for those of us here, have pity, we feel trapped in a gilded prison of drought and Coppertone.

Outside magazine took a pole of its readers and came up with The 16 Best Places to Live in America – 2015. (CLICK HERE)
The list certainly grabs your attention from Chattanooga, Tennessee to Lake Placid, New York. Note: there are no California cities listed – just saying.

And one last fun one:
California finally tops the list, The 10 Most Polluted Cities in America. (CLICK HERE)
In California’s defense, the Fresno-Madera, Ca. region sits in a bowl and with agriculture dominating the economy you get dust and all the usual mix of agricultural byproducts. The rest of America must have its veggies.

Stay Tuned . . . . . . . .

Tuesday, August 11, 2015

Are We Overbuilding Senior Housing?

This article in the Wall Street Journal (GO HERE) got me thinking about a number of things senior related. While housing is the most important – where, how much, equity, etc. – a number of other issues also come into mind, such as health, mobility, travel, and family. The focus on the WSJ article was on the businesses building housing for the older and more challenged seniors – most of whom are NOT baby boomers.

Senior assisted living properties coming on to the market today serve residents that are at least 75 years old and older. The first Boomers are now 69ish and even though maybe 10,000 of us do turn 65 each day is the magic number is age 66. I know there’s Medicare but it’s the SS check that really counts. And THAT is the problem: managing assets, health, properties, time, bucket lists, and family. So the issue of senior assisted living for most Boomers is irrelevant – and too soon. Now the businesses that are building these facilities need to be careful, true; but they will be ready (and if they survive) for the real press and need in about fifteen years.

The issue that I see confronting most of us in the over 65 crowd (and those soon to join us) is time, health, and equity. There are hundreds of experts out there willing to share their opinions on how to stretch your savings until your last breath—pleasant thought, eh? Nevertheless, it’s true, many of us have been successful in life, done right by ourselves and for their families and want, while still healthy, to climb to the top of the Duomo in Florence, see Antarctica, do a photo shoot in Africa or Alaska. And most want to see their grandkids get married – something that today is a far greater chance than ever. We are healthier, richer, and often, wiser.

The senior housing (assisted, resort, second home) market is incredibly diverse. By far the majority of Boomers will age in place. Their home is literally their castle. They will stay until they can’t or won’t take care of it. That will be a wrenching moment, we have all been there, or will be, with our own parents when they/we are forced to find other housing. The difficulty of planning for that day is hard. Too many variables, too much emotion, and too much history. But we get through it and more often than not, end up better in the end.

The most critical issue is the equity in our properties—how do you cash it out and use it to live. Sure Social Security is there, but hardly enough to travel on and maintain the life you’ve grown accustomed to. So we look to our savings (equities, bonds, and assets) and how to meter their returns and their decline. Should we sell the home? And when? Should we reverse mortgage (and how do you really do that?)? What are our renting options? And where? Too many options—and so much time.

Stay tuned . . . . . . .

Monday, July 20, 2015

The Reality of Pent Up Demand

What if you threw a party and everyone shows up. On Saturday (July 18th) I was shocked. To be honest it was more than a shock, it was a total smack upside the head. For those who have doubted the reality of the marketplace and the demands that high prices and low production have on housing, only had to be with me at the Trilogy Vineyards community in Brentwood, California. What happened Saturday was more than just an open house, it was a full-fledged storming of the castle and taking siege.

Trilogy at the Vineyards (GO HERE) is a resort type active adult master planned development about forty miles east of San Francisco. It sits near the Sacramento River (five miles north), within the eastern hills below Mt. Diablo, and is about an hour and a half from Sacramento, and an hour from Stockton. My land planning and landscape architecture firm has been working with Shea Homes (parent of the Trilogy brand) for more than ten years on the project. The community’s market is about fifteen million people that stretches from Santa Clara County to Sacramento County (and in reality, much farther). The community has a first class clubhouse and recreation facility, great tracts of vineyards that roll right up to the back doors of the homes as well as extensive olive groves – one could believe they are in Tuscany.

The Opening
For the last three months Trilogy Vineyards (Go HERE) has been marketing their new models (at least five new plans designed around the active adult market)—single story with a master down, high-end fixtures and appliances, well decorated, and considering the Bay Area market – very reasonable ($650,000 to $900,000). Extensive on-air radio time was purchased and even Masterpiece Theater on Sunday evenings was not missed.

I don’t have the final numbers but by the time I arrived at 12:15 Saturday more than 1500 people had arrived (or more) and my guess is that more than 4,000 prospective buyers or interested parties walked through the complex that afternoon. It was also an event that showed off Brentwood, the medical clinics and emergency services, restaurants, local cultural, to dispel the rumors about living out in the far reaches of the Bay Area. A first class job all around.

The active adult (over 55 but really over 65) is a rich market both literally and figuratively. We/they are all in the same boat: How do I get the equity out of my home and still remain in the region and not be required to live in some dumpy little 1,200 s.f. apartment with a bunch of whiney thirty-somethings living next door. We/they deserve better and this is the type of project that may appeal to us/them. The turnout seemed to prove this. While the conversion rate may be low, the exposure is unbelievable.

The active adult residential market that is in dire need of expansion and growth. The impact of the these types of projects roll through the residential marketplace, these projects usually free up housing stock that is closer to jobs and urban centers. This market—the baby boomer—has longs legs and will be growing for the next ten to fifteen years. It’s time that more builders get on board.

Stay Tuned . . . . . . . . . . .

Sunday, July 5, 2015

Just Another Brick In The Wall

Construction is changing, especially in the housing industry. There so many technological advancements it’s hard to stay ahead of what idea is next, which one works, and where they will lead.

This article (posted in Gizmag viaBuilder Magazine – HERE) shows the recent development of a brick laying machine that can speed the construction of a home’s basic construction by almost 20 times. Hydraulically enabled and laser controlled the machine can build continuously without coffee and lunch breaks. Of course the real issue is human capital—what is the impact. My guess minimal. There are fewer and fewer people going into the construction industry (no matter what the wages), the physical impact on the human body and the often cyclical nature of the job, makes the decision to be a brick layer or framer or even a roofer, very difficult. Many, after a certain age opt out, or as was found in the last downturn, returned to Mexico (taking their skills with them). The new employee, now with a gaming and technological skills and years playing SimCity, may find these machines to be the answer.

We’ve had machines that build roads for years, this is a quick video to give you an idea as to how fast these things can work.
You want it in Brick?

3D Print Your Home
The future may be to 3D print your new home. Here are a couple of videos to give you an idea of what is coming.

The home building industry has tried for years to develop affordable manufactured homes. The idea, since the turn of the 20th century and catalog kit homes, was to pre-make the house and send it to the job site. Every idea has been tried, from complete modular homes, panel construction, component (pre-built bathrooms and kitchens), and now 3D printing. Costs and profitability will drive the direction of these technological changes. Concrete seems to be the primary building material (it can be easily extruded), but considering the exploding robot technology it can be assumed that, in time, a load of lumber (pre-cut and bar coded) will arrive on a job site, the robot will scan the lumber and building components, align and then manufacture a balloon frame house. Easy-peesy.

We are at the beginning of a new and dramatic shift on home construction, the bigger issue will be local approvals and the weight that the building trades can bring to bear on the these politicians—politicians who are already stressed under the pressure for more affordable housing (see subsidized) and the needs of the public. It will be a bumpy ride.

Stay Tuned . . . . . . . .

Thursday, June 18, 2015

I'll Have the Tutti-Frutti, Please!

My (our) first home Park Forest, Illinois
Sixty years ago my father and mother bought their first home—a brand spanking new one. It had two bedrooms, one bathroom, a living room, a large kitchen and dining alcove, and a utility room. It was, at most, 1,350 square feet on a 70’x120’ lot. The house was located in the most written about post-war community in America on Chicago’s south side, Park Forest, Illinois. Its most important and valuable amenity was a furnace. In fact that, and the water heater, may have been all the tech amenities it had. It did not have a garage, just a carport. And, they were thrilled. (See current photo)

The housing industry is in hog heaven right now. Too many buyers and not enough product—and this includes the rental markets as well. Sure, there may be a few sane parts of America, maybe Iowa and Kansas, where there is some balance, but not around most urban areas and suburbs. Here, “it’s squeeze ‘em for everything they got.” In the SF Bay Area, townhomes that would sell in Orlando for $250,000 sell for $700,000 or more and are bid up and up (info, go here)

Builders update their price sheets weekly to adjust for the demand. Starter homes are now over 1,800 square feet and are more often at 2,400 square feet. In fact the average new home last year was 2,679 square feet (avg.) and the median was 2,491 square feet. Three bedrooms are a minimum, four are now typical. If one thing has changed in the Bay Area is that the single family lot has dramatically dropped in size; in fact most detached lots are now in the 2,800 to 3,200 square feet size, you can literally stand between them and touch both homes (traditional lots in the last housing bubble were minimally 60’x100’ – 6,000 square feet).

However, these are just numbers that react to markets, demand, interest rates, demographics, and governmental controls. While the rental market is hot again (due, in part, to the lack of ready cash by Millennial buyers), even it can’t cover the demand. And now many apartments are being designed to intentionally keep out children and extended family. While they can’t legally be excluded, just tweaking the design and layout does exclude families. And the rents are so high it takes multiple wage earners (married, partners, friends, desperates) to afford them.

Now back to the tutti-frutti. The buyer wants and expects (while bitching about the price) that their new home has everything. Here are the most of the top amenities that buyers want:
Walk-in closets (in fact, his and her walk-ins)
Luxurious laundry rooms (TVs, skylights, high-end appliances)
Extreme energy efficiency (beyond double glass, insulation, and Energy Star)
Great rooms (an open mix of kitchen, dining, family, and entertainment space)
Taller/higher first floor ceilings (9 foot plus)
Smart-er Homes (highest tech, fiber-optics, Wi-Fi, LED lighting, security cams and such)
Home Office (in the case of some, two home offices)
Hardwood Floors (They are back, no wall to wall carpets, sustainable bamboo is so nice!)
High-end finishes (Granite or other quality in kitchen and baths – especially marble baths)
Storage, closets, and even more storage
Minimum two-car garage, bike parking, (urban sites need to have more on-site parking)
Fireplaces (even though in California wood burners will probably be outlawed – gas is the alternative)

When luxury becomes necessity:
We went from fireplaces to central heating (look at the stacks on pre-1900 homes), to all-inclusive systems (HVAC) and now mandatory air conditioning. We are now installing solar systems for electrical support, and extreme high-end data and entertainment systems as standards. Kitchens look like they could be sets for the Food Channel, bathrooms fitted like a Four Seasons hotel spa, and garages are now operating rooms with tile floors. And all this at a cost.

While the yard is much smaller (smaller lot – less veggies, less maintenance = more free time; yeah, sure), the buyer wants a community that has nearby recreation, services, and restaurants. If possible, especially for the Boomer market, they want to live in a resort (they feel they earned and deserve it).

To be honest, these desires and residential needs are the same in Florida and California; it’s the vagaries of markets and governmental controls that separate the two price-wise. But the other significant impact to price is all the tutti-frutti (that I would not give up myself) that goes into these new homes. Now I ask you, don’t you want warming draws, wine fridge, outdoor kitchen, man-cave, home-theater, Amazon rainforest shower, gym, coffered ceiling in the bedroom, shoe racks for 200+ pairs, pet enclosure, a smart house that knows who you are, super-duper air and water purification, and of course a live-in maid. Just saying.

Stay tuned . . . . . . . .