New homebuyers may be about to flood the US market for existing homes to lock in the lowest mortgage rates they can. In the past two weeks — since Donald Trump was elected president — mortgage rates jumped alongside other interest rates. This happened as investors raised their expectations for economic growth and inflation, placing their bets on Trump’s plans to spend heavily on infrastructure and cut taxes. The Bankrate.com 30-year national average rate was up from 3.5 percent on Election Day to 3.95 percent on Tuesday, the highest level since December 2015. This is still historically low. “In the short-term, some prospective buyers may rush to lock in their rate and buy now, while others — especially those in higher-priced markets — may be forced to delay as a larger monthly payment outstretches their budget,” Lawrence Yun, the chief economist at the National Association of Realtors, said in a data release on Tuesday. The NAR released its monthly report on existing-home sales, which showed that sales rose at the highest annualized pace in a decade during October. Sales increased by 2 percent at a seasonally adjusted annual rate of 5.60 million, beating economists’ consensus forecast.
Realtors say that no matter the style or size the model home, it should always be staged. It’s one of the most important steps to selling a home, says New York Realtor David.
“I’ve taken on expired listings of vacant model homes… once staged, buyers can picture themselves living in them and usually they sell in record time,” she says.
But many agents caution builders and their designers not to take staging too far because overdecorated models can look cluttered and confuse customers about what is standard and what is an upgrade. “Sometimes they are set up with lots of bells and whistles that don’t come standard, says Coldwell Banker agent Missy Stagers of San Antonio, Texas. “Make sure to clearly notate what is an upgrade.”
Models need to strike a middle ground between overdesigned and plain vanilla, says David. “It is hard for clients to walk into a fully loaded model home and picture it at the base level,” she says. “While I realize builders need to showcase their ‘best stuff,’ it would be great if there was a way to have a model with every upgrade, and also one available to see with just the basic offerings.”
Stagers has a good idea: “Offer some nice things in the basic package so everything is not an upgrade,” she says.
Being that Jurney is always looking to do more with respect to his company, he says that his employees and those closest to him sometimes ask him to slow down. But that’s just not his style. “I’m very impatient and I’ve got an aggressive personality when it comes to going into new markets and getting market share in our segment,” he says.
Rob and Dale are similar, Jurney says, and won’t advise him to slow down like some of his employees. During one of their initial meetings, it was said that Jurney’s model would work well in Texas. “Don’t give me much encouragement,” he quips after the deal is announced, “because I’ll be on a plane to Austin, Texas next week.”
With the financial backing of a public builder, Jurney says WJH will enter new markets faster than it could have on its own. He’s eyeing additional southeastern markets like Jacksonville, Orlando, and Tampa, Fla., and Greenville and Columbia, S.C. WJH will also look to compliment some of Century’s markets since the two companies sell homes at vastly different price points, for the most part.
“What we bring to the table and what they bring to the table is going to enhance what we’re already doing,” Jurney says.
He’s excited to see what the future holds for WJH. “I look forward to going out there and giving these guys (competitors) a run for their money on more of a national level,” he says.
Bernie Marcus, Contributor
Housing in the United States is increasingly unaffordable for many Americans.
According to the most recent report from the Federal Housing Finance Agency, the housing price index recently surpassed the inflated levels of the pre-Great Recession period.
With housing affordability a major issue around the country, the supply of homes should increase to meet expanding demand and drive down the prices.
However, the number of newly completed single family homes in 2015 was 648,000.
That is roughly one million fewer than the pre-Great Recession peak.
So if prices are high and the demand is present, why is there a reduction in the number of homes being built? The answer is overly-burdensome regulations.
The National Association of Home Builders estimates that 24 percent of a single family home cost is due to government regulation—14 percent during lot development and 10 percent during construction.
The average cost of building a single family home in 2016 is $348,900. That means almost $85,000 goes toward complying with government regulations.
No wonder Americans are having a difficult time keeping up with housing prices. The additional costs of excessive regulations is an unnecessary burden that keeps owning a home out of the reach for an estimated 14 million Americans.
When overly-burdensome regulations are levied onto homebuilders and contractors, the number of homes built will be reduced. From a builder’s standpoint, more regulations just mean more hoops to jump through during the construction process. And the more hoops there are, the more time and money it takes to complete the project.
Contractors, who are already working with tight budgets, have no choice but to reduce their output. So time constraints and reduced monetary incentives lead to fewer homes being built.
The supply of homes is directly correlated to the price. So when increased government regulations drive down the supply of homes while demand remains stagnant, the market corrects itself, and prices increase.
The regulatory hoops that homebuilders must jump through are numerous and confusing. For example, even before pounding in the first nail into a home in San Francisco there are three different regulatory standards the structure must pass: San Francisco municipal codes, “San Francisco’s General Plan,” and neighborhood standards.
Just to keep track of compliance checkpoints adds a significant burden to the homebuilder, not to mention the actual cost of complying. Building codes elsewhere aren’t much more encouraging. Minute details in floor structure design, for example, depend on the specific type of wood being used. Heaven forbid a builder mistakenly uses “spruce-pine-fur” instead of “southern-pine.”
It could be the difference between a beautiful new home or a big waste of time and money. The low supply of new housing is coming at a time when it is easier to get a hold of building materials than ever before.
The modernization of supply chains and development of large distribution centers—like the one I founded, The Home Depot—have helped to achieve that. Because of this, new homes have the potential to be built cheaply and efficiently.
But excessive government regulation has limited the potential.
The good news is there are reforms that could be implemented to help reach that potential. One example is limiting land use regulations. Land use rules come in a variety of forms—everything from mandating the minimum lot size to creating boundaries for urban housing developments.
These laws attempt to control population density. But in turn they increase the price of housing by limiting the supply.
Some sensible regulation is needed in the housing industry, but excessive mandates only burden main street America—contractors and home buyers alike. They reduce the supply of homes, which leads to the unaffordable housing problem we have today.
Bernie Marcus is the co-founder and retired Chairman of The Home Depot and co-founder of the Job Creators Network.
This is an editorial. The opinions and conclusions expressed above are those of the author.
HomeAdvisor was out Monday with its annual report on Aging in Place. What it found is not surprising: many baby boomers do not think of themselves as old and pay little heed to the notion of aging, wherever that may happen. But there is good reason for them to do so, and builders can play a role in informing them. It’s good business, because, as bank-robber Willie Sutton once said, that’s where the money is.
Among the key findings of the report:
Baby Boomers Hesitant to Invest in Aging-Related Home Upgrades
With 61% of homeowners over the age of 55 planning to stay in their homes indefinitely, it’s surprising that few older homeowners are investing in aging-related improvements. In fact, 65% believe their home’s layout is adequate without any aging-related improvement, and over three-quarters of homeowners (78%) have never completed an aging-related renovation.
Older Homeowners Want to Thrive in Place, Not Age
There is a disconnect between the perception of aging in place—adding grab bars and installing wheelchair ramps—and the reality: that many design features can enhance the livability of a home for all ages. Among homeowners who’ve never considered an aging-in-place renovation, 40% say it’s because they don’t have a physical disability that requires it; 20% say they don’t consider themselves old enough yet for such a project.
Smart Home Technology Increases Safety and Livability
Smart home technology can provide solutions for homeowners looking to increase their safety, accessibility and easy of living. Two-thirds (67%) of homeowners over age 55 believe smart-home technology could help them age in place, yet fewer than 1 in 5 (19%) have actually considered installing it for such purposes.
The North Carolina Home Builders Educational & Charitable Foundation’s (NCHBECF) Board of Trustees on Friday approved the establishment of the Hurricane Matthew Disaster Relief Fund to raise money to benefit NCHBA members and their families affected by the storm, which has ravaged eastern North Carolina. An allocation of $20,000 was made by the Board to kick off this fundraising campaign.
“For many of our members, the recovery is just beginning,” said Mike Carpenter, NCHBA Executive Vice President. “There’s a long road ahead, and we want to be able to help. We’re pleased to announce this $20,000 contribution to ‘prime the pump’ to provide assistance to our members who’ve been hardest hit by the massive flooding.”
“We anticipate surveying our affected locals to identify needs once the flood waters recede,” Carpenter added. “Once that is done, our NCHBECF Board of Directors will develop a game plan. In the meantime, we encourage our members to be generous in their contributions so that we have sufficient resources to be effective.”
Contributions to the Relief Fund may be made by check at this time. Checks should be made payable to the “NCHBA Educational & Charitable Foundation, Inc.” On the memo line, please specify the Hurricane Matthew Disaster Relief Fund. Checks should be mailed to the North Carolina Home Builders Association, PO Box 99090, Raleigh, NC 27624. Contributions to the North Carolina Home Builders Educational & Charitable Foundation, Inc. are fully tax deductible.
Frisco, Texas has the largest homeownership gap between education levels
Ashley Christensen, acclaimed chef and restaurateur (and NC State alumna), visits the Hunt Library to discuss her debut cookbook, Poole’s: Recipes and Stories from a Modern Diner. Christensen will be interviewed on stage by NC State’s Dr. Cat Warren, who was Christensen’s former English professor. They will talk about recipes from the book, Christensen’s commitment to the revitalization of downtown Raleigh, and her philosophy of building community through the shared experience of food.
The event is free and open to the public, but registration is required. Click here to register.
The cookbook Poole’s: Recipes and Stories from a Modern Diner will be available on-site for purchase from Quail Ridge Books.
This event is co-presented by the NCSU Libraries and the NC State Alumni Association.