From Wells Fargo Economics Group
Even though 2014 proved to be a disappointing year for home sales and new single-family construction, there are several reasons to be optimistic about the housing sector in the New Year.
• Most importantly, job growth has improved to the point that household formations are rising again.
• State-to-state migration has also improved, reflecting more boomers moving into retirement and an increase in corporate relocations.
• Mortgage rates have also come back down, with the rate on conventional 30-year fixed mortgages falling below four percent.
• When coupled with easing credit standards and more moderate gains in home prices, the pieces all appear to be in place for a more meaningful recovery in home sales.
We have slightly raised our forecast for 2015, reflecting stronger household formations.
We recognize that we may be a little ahead of the pack in raising our outlook, even if it is only slightly. Most of the housing data ended 2014 on a soft note and finding bright spots in the single-family market are still much more the exception than the rule. The clearest areas of improvement have been in clearing the excesses from the prior decade’s boom years.
• The overhang of foreclosures has largely been cleared.
• Vacancy rates for rental properties and for-sale housing have fallen back to their historical norms and home prices have rebounded to the point that just 10.3 percent of homeowners with a mortgage owe more on their mortgage than their home is worth, down from a peak of 26 percent in 2009.
• Supplies of homes are actually tight in markets where jobs are growing rapidly.
The absence of negatives is comforting but what the housing market has really been missing is some sort of positive catalyst. That positive catalyst may finally be taking shape in the form of stronger job and income growth. Employers added a monthly average of 246,000 jobs in 2014, marking the strongest growth in 15 years. Not only has the pace of overall job growth improved but the breadth of the increases has improved considerably across industries and metropolitan areas.
Considerable Underlying Support Is Now in Place
With 3.0 million net new jobs added in 2014 and the unemployment rate falling to 5.6 percent, there has finally been enough improvement in the labor market that we now believe that there is significant support in place to generate a self-sustaining rebound in for-sale housing.
We noted in earlier reports that the number of full-time jobs is still some 1.7 million below its pre-recession level. The mix of jobs has improved, however, with a larger proportion of jobs created during the past year being full-time rather than part-time.
With employment conditions improving, we are finally beginning to see an increase in household formations. We published a report on this earlier this week and noted that the pace of household formation appears to have picked up to 1.2 million households in 2014 and appears set to rise to 1.5 million in 2015.
The rise in household formations has cut into housing vacancy rates and kept inventories of unsold homes near record lows. Total housing starts in 2014 were just around 1.0 million units, so inventories will likely tighten even further next year even if construction picks up significantly from current levels.
From a purely fundamental standpoint, 2015 looks like it will be a great time to buy a home.
• After recovering much of their losses, home price appreciation has moderated in recent months as investor buyers have pulled back from the market.
• Mortgage rates have fallen and credit standards continue to loosen up on an overall basis. The latest Federal Reserve Senior Lending Officers Survey shows that lenders are easing underwriting criteria modestly for prime mortgage borrowers.
The FHA has also recently lowered down payment requirements for purchasing homes with FHA loans and the Obama Administration has just announced plans to reduce mortgage insurance premiums for FHA loans by 50 basis points.
These moves should provide some incremental support to home sales this year and may boost first-time home purchases, particularly since these changes are being enacted at a time that housing demand is already likely to see some positive momentum.
The apartment market has been strong for quite a while, with some 260,000 units delivered over the past year and another 453,000 currently under development. The apartment boom has received a great deal of attention because it is so visible and plays into one of the most widely watched themes of this decade, the emergence of the Millennial generation.
This generation, which largely came of age during the housing bust and the rising use of mobile devices, is widely believed to put a high premium on mobility and desires to live closer to the center city or near key transit hubs. Transit-oriented development has been one of the clear winners during what has been a disappointing past few years for housing.
With the leading edge of the Millennials now in their mid-thirties, more are coming to the point in their lives that they are forming families and looking to buy homes. We expect to see multi-family development shift more toward townhome and condominium development but still hold on to its transit-oriented, city-centric growth model.
Brown Jordan Outdoor Kitchens, the nation’s premier stainless outdoor kitchen manufacturer, today launched its newly redesigned website to further meet the needs of architects, landscapers, designers and consumers who want to create their ideal outdoor living paradise. The redesigned website includes new features and enhanced functionality to improve the overall online experience.
The new site incorporates a photo gallery section that serves as a “visionary” page to help both trade professionals and homeowners gain a better sense as to the myriad of outdoor kitchen design styles available for residential and commercial applications. It also includes a new “Design” tab equipped with a simple drawing program that allows users to create their own outdoor kitchen based on cooking and design preferences.
“Our goal is to have the website be user-friendly as well as informative and engaging,” says Mitch Slater, president of Danver Stainless Outdoor Kitchens, exclusive licensee of Brown Jordan Outdoor Kitchens. “It is specifically designed with not only the homeowner in mind but also hospitality and design-build professionals alike.”
Brown Jordan Outdoor Kitchens’ redesigned website also hosts dedicated pages for trade professionals and unique features for the hospitality industry. The trade professionals section caters toward builders, remodelers, architects, landscape architects, interior designers, as well as outdoor room designers. The site provides industry influencers with helpful information and downloadable literature to help simplify the decision-making process.
The dedicated hospitality industry page provides hoteliers and their design-build partners with the necessary tools and material selections to gain a better understanding of Brown Jordan Outdoor Kitchens’ extensive, high-end product offerings.
To view the newly enhanced website and learn more,
visit the Brown Jordan Outdoor Kitchen website