To Fix the Economy, Fix Housing

The latest economist to weigh in on the need to fix the nation's housing sector in order to grow the economy is Mark Vitner, a senior economist with Wells Fargo Securities. Builder Magazine reported that Vitner gave his views in a webinar last Friday presented by the Shinn Group. Said Vitner:

Until housing recovers, the economy will have a hard time growing beyond 2%.

Like many economists, Vitner sees unemployment remaining stubbornly high for at least the next two years due to weak consumer demand and employers’ concerns about the economy and cost increases such as for healthcare.

However, Wells Fargo projects housing starts will rise in each of the next two years and hit 1.5 million by 2016 or 2017. As local forecaster Mark Schniepp said just last week, Vitner believes that there's a pent-up demand for housing caused by a growing population. He also doesn't think that the U.S. is becoming a nation of renters. As Builder reports,

Consequently, builders should be motivated to meet this demand with new construction because “there’s very little new inventory out there.”

You can read the article here.

To Fix the Economy, Fix Housing

In today's Wall Street Journal, economics editor David Wessel writes about the impact of lowering barriers that prevent millions of Americans from refinancing their homes. Wessel notes that on average, refinancing could save some 28 million homeowners an average of $2,600 in the first year, according to an estimate by the Congressional Budget Office.

Those savings would do two things: they'd pump billions, maybe tens of billions, of dollars into the economy as consumers would have money to spend on something other than mortgage payments, and they would allow numerous homeowners teetering on the edge of default to be able to make more comfortable payments and thus reduce the shadow inventory of homes.

The full article is available here, but if you don't have a subscription here's the bottom line:

The prolonged depression in housing is both a reflection of a lousy economy with a lot of unemployment and one of the reasons the economy is so lousy. Making refinancing easier isn't a miracle cure. But it will help, and the economy needs all the help it can get.

As we've pointed out numerous times, the economy isn't going to improve until housing - and especially homebuilding - improves. We would urge policymakers in Washington, D.C., to reflect seriously on Wessel's colum.

KB Orders Jump 40% in Third Quarter

Some good news to report this morning. KB Home announced its third quarter results and said orders jumped a whopping 40 percent in the third quarter. The news comes on the heels of Lennar's quarterly report earlier in the week which reported an 11 percent increase in orders.

CRT Capital Group analyst Michael Kim told Reuters it was the biggest jump in two years:

This is the first double-digit year-over-year growth in orders since the fourth quarter of 2009 and seems to be the bright spot in the earnings release.

Reuters said the sharp increase in orders may signal that the homebuilding sector may be recovering at long last.

You can read the Reuters article here.

More Than 21,000 Units Planned or Approved in Ventura County

New-home sales and construction in Ventura County have been at rock-bottom levels for the past several years, but there is light at the end of the tunnel, a respected economic forecaster said yesterday.

Mark Schniepp, head of the California Economic Forecast, told attendees at the 10th annual Ventura County Housing Conference that there were 21,674 homes, condos and apartments either approved or in the approval pipeline countywide.

Almost half of those units are planned for Oxnard, which has about 9,500 homes and multifamily units in the pipeline. Second is Ventura, with about 3,150 units approved or pending. The third-highest amount is in Moorpark, with about 2,375 units pending and fourth is Santa Paula with almost 1,800.

Schniepp does not expect housing construction in the county to really accelerate until 2013, but said a couple of major projects are likely to get under way in 2012.

The one thing all the projects have in common: their developers expect to begin construction on apartments first and single-family homes and condos down the line.

One of the biggest projects likely to break ground next year is Limoneira's East Area 1 development in Santa Paula. The company expects final governmental approval by next May, and hopes to begin grading in May or June. Eventually 1,500 housing units are planned for the area east of Santa Paula Creek.

Parklands, a 499-unit project in East Ventura, may get under way next year as well.

Schniepp said a number of approved projects around the county are either building one or two homes at a time as demand warrants or are on hold altogether. These projects include the Village in Oxnard, the Bridges in Fillmore, and Runkle Ranch in Simi Valley.

Down the line, several large projects are in the planning stages. The five biggest are SouthShore in Oxnard (1,545 units), Springfield in Camarillo (1,384), Teal Club and Sakioka Farms in Oxnard (1,100 and 900 respectively) and Hitch Ranch in Moorpark (755). Developers see these projects beginning to come on line in 2014 at the earliest.

Schniepp said apartments are in high demand in large part because of demographics. There are currently 5.7 million Californians between 20 and 29, which is the age when most people establish their own households. That formation has been delayed in many cases due to the recession but eventually will take place, he added.

Most of the homes in the pipeline should be built by 2020.

The Ventura County Star's Stephanie Hoops covered a lunchtime panel discussion. You can read her article here.

August Housing Starts Rebound Sharply in L.A. County

We're out with the August housing starts report and the good news is that permit activity rebounded nicely after an abnormally low July (which was caused in part by builders taking permits early because of new building code requirements).

The bad news is that almost all of the rebound was for apartments. Single-family and condo production remain at extremely low levels, and 2011 is likely to be the third-lowest year on record statewide. Chapter CEO Holly Schroeder once again urges local governments to reduce or at least defer fees as one way to help jumpstart housing construction.

Here's our release with links to L.A. and Ventura County production and statewide figures.