by Calculated Risk on 1/18/2011 06:52:00 PM

Earlier the National Association of Home Builders (NAHB) reported the housing market index (HMI) was unchanged at 16 in January. Here is the graph ...

Click on graph for larger image in new window.

This graph compares the NAHB HMI (left scale) with single family housing starts (right scale). This includes the January release for the HMI and the November data for starts (December housing starts will be released tomorrow).

This shows that the HMI and single family starts mostly move in the same direction although there is plenty of noise month-to-month. The HMI has mostly moved sideways - with some minor ups and downs - for over 2 years now at a very depressed level.

by Calculated Risk on 1/18/2011 03:15:00 PM

A few random thoughts from the apartment conference ..

• Rent growth is mostly from reduction in concessions. Not as much top line growth.

• Austin: rents are up 13%, but there is huge building boom (seems like every builder is planning or already started a project in Austin, so people are talking about the coming flood of supply)

• CAP rates look a little like a bubble ... people are buying the low 5s in some areas. There is plenty of capital flowing into multi-family.

• Greg Mutz (CEO AMLI Residential Properties) joked "Consensus has a high price"!

• Investment money is flowing into the sector.

• On submarkets: Las Vegas, Phoenix, Inland Empire, parts of Florida, Altanta were all named as disappointing.

• Everyone likes Boston, Seattle, Austin (although afraid of the coming supply) LA, Orange County ...

• Almost all areas are showing improvement.

• Several people have noted that turnover is at record lows (people aren't moving for jobs). Some people are concerned that as the economy improves turnover will increase again - and that eventually some people will choose to own.

• 2010 was beyond all expectations, and that is part of the reason for the optimism. The low level of completions in 2011 suggests the markets will be even tighter.

• Walt Smith, CEO Riverstone Residential (manages 162,000 units) said it is "Pedal to the metal" on rents.

For more, please see the previous post.

by Calculated Risk on 1/18/2011 12:44:00 PM

I am attending the NMHC Apartment Strategies Conference in Palm Springs today.

The first session asked: Is the recovery real for apartments? I'll have more later, but just a few quick notes ...

The overwhelming sense from participants is "YES" the apartment recovery is real. One data point - There are a record number of attendees this year.

The expectations are for a record low supply completed this year (as Tom Lawler and I have noted before). Some pickup in completions next year (2012), and then plenty of completions in 2013. The starts will probably pickup later this year, although I'll know more at a later session. The pickup in starts will help both GDP and employment growth this year.

The expectations are for strong rent growth over the next two years (around 5% per year) for large upper tier apartments. This will keep the vacancy rate from falling too much as owners trade off rent increases for occupancy.

Apartment market has bifurcated. Upper half of apartments are improving, regardless of geography. Lower half are struggling.

In 2010 most new households selected renting as opposed to owning. The feeling is this will continue for at least a couple more years.

I'll have more later ...

by Calculated Risk on 1/18/2011 10:00:00 AM

The National Association of Home Builders (NAHB) reports the housing market index (HMI) was unchanged at 16 in January. The consensus was for a reading of 17. Confidence remains very low ... any number under 50 indicates that more builders view sales conditions as poor than good.

Note: I'm attending the NMHC apartment conference in Palm Springs today - I'll post the graph tonight. Here is the graph from last month (Nothing has changed!)

Press release from the NAHB: Builder Confidence Remains Unchanged In January

Builder confidence in the market for newly built, single-family homes held unchanged at a relatively low level of 16 for a third consecutive month in January, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today.
...
"The HMI and its subcomponent indexes are holding steady following a below-expectations finish in 2010," noted NAHB Chief Economist David Crowe. "At this point, housing remains on the sidelines of a weak economic recovery as consumers and builders wait for clear and consistent indications that jobs and economic output are reviving."
...
While the HMI components gauging current sales conditions and sales expectations for the next six months both held steady from the previous month, at 16 and 25, respectively, the component gauging traffic of prospective buyers edged up a single point to 12 in January.

HMI scores rose by one point in the Midwest and four points in the West in January, to 14 and 15, respectively. Meanwhile, HMI scores fell two points in the Northeast and one point in the South, to 20 and 17, respectively.

by Calculated Risk on 1/18/2011 08:30:00 AM

From the NY Fed: Empire State Manufacturing Survey

he Empire State Manufacturing Survey indicates that conditions for New York manufacturers improved in January. The general business conditions index rose 2 points to 11.9. The new orders index moved up 10 points to 12.4, and the shipments index surged 18 points to 25.4. After a sharp decline last month, the inventories index rose above zero. Employment indexes also climbed into positive territory.

This was below expectations for an increase to 14.0.

by Calculated Risk on 1/17/2011 08:27:00 PM

Tomorrow I will be attending the NMHC Apartment Strategies Conference in Palm Springs.

A few of the sessions:
• Is the recovery real for apartments?
• To build or not to build: That is the question.
• Reality Check: Have valuations really firmed or are we in bubble 2.0?

I'll report on what I hear ... (I'll be posting during the day)

by Calculated Risk on 1/17/2011 03:45:00 PM

From the Irish Times: EU ministers seek rescue fund boost

Euro zone finance ministers called today for an increase in the effective lending capacity of the union's rescue fund, but Germany said there was no urgency and it would be March before a firm plan was in place.
...
"There will not be results today, the market developments in the last week have, thank God, taken any urgency out of these discussions," [German finance minister Wolfgang Schaeuble] told reporters.

The expectation is the European Financial Stability Facility (EFSF) will eventually be increased from €440 billion to €700 billion. The European financial crisis is far from over ...

Weekend:
• Summary for Week ending January 15th
• Schedule for Week of January 16th

by Calculated Risk on 1/17/2011 11:49:00 AM

A weekly update on hotels from HotelNewsNow.com: STR: US weekly results for week ending 8 Jan.

In year-over-year comparisons, occupancy increased 5.7 percent to 42.8 percent, average daily rate was up 2.0 percent to US$93.43, and revenue per available room finished the week up 7.8 percent to US$40.00.

The following graph shows the four week moving average of the occupancy rate as a percent of the median occupancy rate from 2000 through 2007.

Click on graph for larger image in graph gallery.

Note: I've changed this graph. Since this is the percent of the median from 2000 to 2007, the percent can be greater than 100%.

The down spike in 2001 was due to 9/11. The up spike in late 2005 was hurricane related (Katrina and Rita). The dashed line is the current level.

This shows how deep the slump was in 2009 compared to the period following the 2001 recession. This also shows hotels are recovering, but the occupancy rates are still below normal.

RevPAR is up compared to the same week last year, but still down from 2009.

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com

by Calculated Risk on 1/17/2011 09:03:00 AM

Writing in the NY Times, Monica Davey reviews the budget situation in several states: Budget Worries Push Governors to Same Mind-Set

In years past, new governors have introduced themselves in inaugural remarks filled with cheery, soaring hopes; plans for expansions to education, health care and social services; and the outlines of new, ambitious local projects.

But an examination of more than two dozen opening addresses of incoming governors in recent days shows that such upbeat visions were often eclipsed by worries about jobs, money and budget gaps.
...
While state revenues — shrunken as a result of the recession — are finally starting to improve somewhat, federal stimulus money that had propped up state budgets is vanishing and costs are rising, all of which has left state leaders bracing for what is next. For now, states have budget gaps of $26 billion, by some estimates, and foresee shortfalls of at least $82 billion as they look to next year’s budgets.

This is a key issue this year - these budget cuts and tax hikes will be a drag on growth and employment ...

Weekend:
• Summary for Week ending January 15th
• Schedule for Week of January 16th

by Calculated Risk on 1/16/2011 08:22:00 PM

Here is an article on housing in Spain (in Spanish): Aquí vivo solo (ht Jim)

Google translate page:

There is only life in a corner with nothing around, rather than highways, roads, farmland, a corner living Paula and Pavel and another 1,200 people. Un 4% de lo previsto. 4% of schedule. Hay muchas formas de vivir solo. There are many ways to live alone. Esta es una de ellas. This is one of them. La urbanización fue proyectada para 30.000, más de un tercio de la población de Guadalajara capital. The complex was designed for 30,000 ...

Check out the photos and captions too! The one guy has a golf course to himself ... at least the grass is green.

Earlier:
• Summary for Week ending January 15th
• Schedule for Week of January 16th