Builder uses shipping container as sales office

There's an interesting piece in yesterday's Pasadena Star News and San Gabriel Valley Tribune about BIA member City Ventures' innovative sales office strategy for its new townhouse community in Covina.

As reporter Kevin Smith reports, the Santa Ana-based homebuilder will hold a grand opening on May 14 to kick off sales of its Vintage Walk Collection, a townhome community at 615 N. Third Ave. in Covina, that will include 30 new units.

But model homes will be nowhere in sight. And the sales office? That'll be housed inside a revamped shipping container. The retrofitted container - 10 feet wide and 40 feet long - will include two office spaces, digital community maps and a 3-D system that will allow viewers to take a virtual "tour" of the various models.

Herb Gardner, president of the company's homebuilding division, described the experience this way:

You can sit in a dark room, put on 3-D glasses and visualize the floor plan as you go through it.

Gardner said the move was fueled by both economics and a desire to better utilize modern technology. By not building the model homes, City Ventures will be able to lower the price of its townhomes by about $10,000 per unit.

You can read the entire article here.

Just 24% of renters want to rent

Jon Lansner of the OC Register has a post today pouring more dirt on the conventional wisdom that everyone wants to be renters these days. He notes a recent Pew Research Center poll that interviewed both homeowners and renters found that just 24 percent of renters are doing so because they like renting; 75 percent do so because of circumstances.

In the future, just 17 percent of renters plan to continue renting, while 81 percent plan to buy a home.

You can read the entire post here.

Household formation - and housing starts - expected to climb this year

Following up on projections made at last week's Economic Outlook conference, Bloomberg reports this week that household formation is up - way up. The article predicts that between 750,000 and 1 million new households will be created in 2011, compared to just 357,000 added in the year ended March 2010, the lowest on record. Even more encouragingly, the article states that as employment picks up, new households are likely to rise above the past decade’s average of 1.3 million a year. Here's the lead:

Shelby Webb, 22, rented her first apartment three weeks ago in Chattanooga, Tennessee, after landing a job translating ads for a Spanish-language newspaper. Now, she’s paying monthly bills for electricity, cable television and natural gas for the first time and has bought new pillows from Wal-Mart Stores.

Millions of young adults like Webb are starting to leave their parents’ homes, creating households at the fastest rate since 2007. They’re helping to provide a so-called shadow supply that may boost U.S. housing starts more than 50 percent by next year and spur consumption at a rate almost double that of the past two years.

“I love my parents but I didn’t want to live with them anymore,” said Webb, a Spanish major at the University of Tennessee, who had been forced to share their home in Milan, Tennessee, after her job search stalled last year. “It was tough. I know students across the board who were in the same boat.”

In part because more people are feeling able to move out of shared quarters and onto their own, the article cites a Metrostudy forecast that housing starts will climb nationally to about 648,000 this year and close to 900,000 in 2012 from 586,800 last year.

The full article is available here.

Economist to builders: start ramping up now

There was lots of optimism this morning at the annual Economic and Real Estate Outlook conference in Santa Clarita. Economists Jerry Nickelsburg, senior economist with the UCLA Anderson Forecast, and Mark Schniepp, principal with the California Economic Forecast, agreed that while much of the economic news remains dreary today, there are also a number of positive trends emerging that should reach a tipping point this year. As Nickelsburg put it:

Things aren't as bad as they seem but we'll have to wait a little while to see that.

Here are a couple of the key points:

• The market could turn much more quickly than people (including many if not most builders) think. Schniepp said continued population growth during the past few years, coupled with the fact many people have delayed household formation due to the economy, has caused a large pent-up demand for housing. As he said:

There could be a significant breakout in housing. The longer the delay, the bigger it's going to pop.

• Job growth is coming back to the region, especially the Santa Clarita Valley, where Schniepp thinks the housing market will begin to truly rebound in the latter part of this year, with the Antelope Valley following a year or so later.

• Schniepp predicts that about 9,400 units will be built in the SCV between now and 2016, with another 13,300 units built in the Antelope Valley, with most of those homes built between 2013 and 2016.

So what about homebuilding and the housing market generally? Again, both economists were bullish.

Statewide, Nickelsburg said California needs about 11,000 new homes and apartments every month to keep up with demand caused by population growth. But how can that be with the state awash in foreclosures?

Two reasons: the loss of so many jobs, which caused per-household population to rise to a record high, and the location of the excess homes.

Nickelsburg said there are two Californias: the coastal counties, which are generally starting to show some marked improvement and foreclosures are not so prevalent, and the inland areas - the Central Valley and the Inland Empire in particular - that are so overbuilt that it may take several years before population growth comes into balance with the supply.

But job growth is beginning to ramp up, and he wryly noted that a lot of daughters-in-law living with their in-laws are itching to move back out on their own. In fact, many economic indicators, including exports, manufacturing, and truck traffic, have nearly or completely recovered. Lagging industries: housing and imports.

And both economists cautioned that we shouldn't read too much into the fact that unemployment rates will remain stubbornly high for the next couple of years. That's because accelerating job growth will be masked by the high numbers of students entering the workforce (the "echo-boom" children of the baby boomers) and discouraged workers who left the job market will re-enter it.

Nickelsburg also said the usual trend - that housing leads an economy out of recession - will happen in this recovery. As businesses are forced to hire people to cope with growing demand, that will in turn spur housing demand, "and that's when California really starts growing."

Schniepp focused on the Santa Clarita and Antelope valleys, but he put Nickelsburg's statewide comments into perspective. The state currently has about 37 million residents. By 2020, there will be nearly 43 million. "Where are those 5.4 million people going to live?" he asked, noting that homebuilders are going to have to start building again since the current housing deficit is over 135,000 units and growing every month. And he warned builders things are likely to turn around sooner than they think:

My recommendations are, no. 1, to start the process for new residential development now.

That's because the entitlement process - getting all of the government approvals to actually build a proposed housing project - usually takes years to navigate. Fortunately, northern L.A. County is in better shape than many areas as there are thousands of approved homes on the books waiting for the market to improve.

More than 8,000 homes have been approved in the Santa Clarita Valley, and more than 15,000 units are ready to go in Lancaster and Palmdale.

Realtors' report finds L.A.'s Housing Market on the road to recovery

The National Assn. of Realtors released a report that found areas generally perceived as in decline, such as Southern California and parts of Florida, are actually on the road to recovery.

" 'All real estate is local' is a truism that applies to this local market recovery we're witnessing because critical factors today restoring life to home sales vary greatly from one locale to another," according to NAR's Realtor.com website. The trade group looked at market data to identify its top turnaround cities for the spring home-buying season.

As Housingwire put it:

The Los Angeles-Long Beach metropolitan area, which was the poster child for the subprime mortgage meltdown, is poised for economic turnaround as homes fly off the market at the fifth-most rapid sales pace nationwide, Realtor.com said. Housing inventory between January and March decreased almost 8% and is up 1.17% from March 2010.

Los Angeles was the third-most searched market in the first three months of 2011.

The NAR report also listed San Diego as a recovering market.