Tag Archives: real-estate
US home builders using new data analysis to decide where and what to build
A proliferation of data and new data analysis methods are changing the way builders in the United States buy, sell and develop vacant land, according to experts. Builders are cautiously optimistic that easier credit and more flexibility will help the new homes market rebound in 2015, according to experts at a building and building products symposium in New York. The state of the land market, a key factor in determining what kinds of housing gets built, where and at what price, was a common theme throughout the various discussions. ‘The real opportunity of land goes beyond the land itself. Builders are looking at land as much more than a piece of dirt now,’ said Steve Benson, chief executive officer of Phoenix based land banking and advisory firm Community Development Capital Group. Landowners and buyers alike are using multiple data sources to examine what is being built in other areas, which designs work best for certain parcels and which builders are best suited to maximize certain features of a given piece of land, Benson explained. Rather than building a certain set of homes on a given piece of land, developers today may be more apt to sell their land to a different type of developer rather than undergo a project themselves, or choose to build a different type of home than they normally would, based on data, he pointed out. ‘Real estate has always been about location, location, location. But with land especially, it’s future location, future location, future location. Today, data helps inform that equation for builders much more than in the past,’ he added. High land costs, and perhaps unrealistic value assessments by landowners, are a big reason why developers are having difficulty developing more entry level, lower cost communities and homes, according to Greg Vogel, chief executive officer of the Land Advisors Organization, an Arizona based land brokerage. Developable tracts of land appreciated very quickly in value during 2012 and 2013 in anticipation of a building boom in 2014 that largely has yet to materialise, he explained, adding that strong recent years have convinced today’s land owners that their land may be worth more than it is. As a result, builders are increasingly forced to put higher prices homes on developments they do control in order to recoup their higher land acquisition costs. This will create challenges for larger builders looking to cater to lower end and first time buyers, who are expected to enter the market in higher numbers in coming years. ‘Most observers agreed that it’s just a question of time until we see millennial demand pick up. If the entry level buyer does come back, I’m not sure there will be a lot of opportunities to develop those kinds of communities right away,’ Vogel said. Beyond the kinds of large, multi acre sites on the edge of cities and towns favoured by big, publicly traded home building companies, smaller lots located in downtowns and established communities also represent… Continue reading
Prime property prices in central London rise for first time in five months
Prices in prime central London rose for the first time in five months in February, boosted by price growth in markets with a higher proportion of properties that would not be subject to a proposed mansion tax. It saw a marginal increase of 0.1%, the first since September 2014 but annual growth slowed to 4%, which is half of the 2014 average of 8.1%, according to the latest report from Knight Frank. The firm says that it is a market where activity has been kept in check by the potential of a mansion tax on properties worth more than £2 million after May’s general election. Stronger performing markets included Islington and the City and Fringe in the eastern area of prime central London, where prices grew by 1.3% and 1% respectively in February. Both recorded annual growth of 9.1%. The Riverside market, which was included in the index six months ago to reflect the high quality of developments in areas like Battersea and Vauxhall, has also risen 0.4% this year. Elsewhere, there were declines in more traditional prime markets with higher value properties, including a fall of 0.8% in Chelsea, a drop of 0.2% in Notting Hill and a fall of 0.2% in South Kensington. The existence of a two speed market was underlined by the fact values for properties worth in excess of £5 million and £10 million declined by 0.1% in February. Meanwhile, prices in the £1 million to £2 million price bracket grew 0.4% in February, up 6.8% in the last year. ‘We estimate that 46% of £2 million-plus properties are located in the prime central London boroughs of Westminster and Kensington and Chelsea. However, eight out of 10 properties on the £2 million mansion tax threshold would be located outside the two boroughs in areas of suburban London and the Home Counties,’ said Tom Bill, head of London research at Knight Frank. ‘Though any tax would be lower in value and there is more clarity on the potential levy for properties worth between £2 million and £3 million, it underlines the mistaken belief the mansion tax would start to bite in prime central London,’ he added. Continue reading
Rate of home ownership in England at lowest level for 30 years
After rising almost continuously over the course of the twentieth century, the rate of home ownership in England has been declining steadily since 2003, the annual housing survey shows. The report published by the Department of Communities and Local Government shows that in 2013/2014 home ownership fell from 65.2% to 63.3% and is now at its lowest rate for almost 30 years. Indeed it is some 8% below the all-time high of 70.9% in 2003 and among owner occupiers, the proportion of people owning their home outright overtook the proportion owning with a mortgage in 2013/2014. The data reveals a sharp decline in the proportion of younger people owing their own home, particular those aged 25 to 34 who are traditionally first time buyers who are vital to the housing ladder. But the number of this group owning their own home fell from 59% in 2004 to just 36% in 2014. Over the same period, the proportion renting, either privately or through a local authority or housing association, increased from 41% to 64%. For 16 to 24 year olds, the proportion renting increased from 76% to 91%. The increase has occurred in the private rental sector, which currently houses 19% of total households in England, the highest share since the 1960s. Indeed, over the last decade the number of privately rented households has nearly doubled to 4.4 million, while the percentage of households in social rental properties has declined from 18% to 17%. The survey suggests that 25% of people in social housing and 61% of those in the private rental sector expect to be able to buy their own home in future. However, this remains a longer term aspiration, with around half of renters expecting it to take five years or more to take their first steps into the housing market. The survey lays bare the generational divide in housing with older households continuing to benefit from the growth in home ownership and accumulation of equity in the second half of the 20th century, with younger households suffering from a lack of access to home ownership in the 21st, according to Lucian Cook, head of residential research at Savills. ‘We urgently need a co-ordinated, long term response to the housing crisis rather than short term populist policies that only address a few of the symptoms. A new government will need to front up to the need to provide a bigger, better private rented sector and find ways to encourage the recycling of existing housing wealth so younger households can get on and trade up the housing ladder,’ he said. Savills forecasts that number of private rented households will continue to rise, while levels of owner occupation will continue to slide as higher interest rates, greater mortgage regulation and an acute housing shortage further reduce access to mortgaged home ownership. The firm estimates that by the end of 2019 there will be more… Continue reading
