This evening the class discussed trends in multi-family housing, single-family housing, MFR, Appraisal and evaluation, development, and construction. We even covered the benefits (which are surprisingly large, money wise) of using iPads in construction.
We also had a valuable discussion of common pitfalls in analyzing home construction data. Given the cyclical nature of the home construction industry - with the majority of housing changing hands in the summer months - one has to be careful with period to period analysis. Comparing Summer quarter to 1st quarter sales is not revealing. Instead, same period, year over year comparisons, or even longitudinal comparisons over a long time period would be more useful for analysis.
Another note - a sad one for me - was the news of the bank taking back Valley View Center. When my family first moved to the DFW area in the early 1980's, we lived for a brief period just north of Valley View on Montfort Rd. I remember walking to Sanger Harris and watching movies at the (then) 2 screen theatre at the Mall. A victim of the overall economy and a poorer location vis-a-vis competitors, as well as a surfeit of mall competition in the north Dallas area, Valley View has been in decline for a long time. Still, its kind of wistful to see a piece of Dallas' recent past crumble. There's a great mosaic on the former Sanger Harris (now Foley's) store.
Another interesting article for this evening had to do with property losses from the BP oil spill and how to deal with them. Apparently, Charlie Crist is seeking to tap into BP to cover the losses sustained by businesses and homeowners along the gulf coast of Florida. I would wonder how much of a drop in property value could be attributed to the spill, as opposed to overall market conditions or poor management in the case of businesses. It seems like it will inevitably be a very arbitrary process. The situation does bring to mind the overall effect that the recent economic crisis, and decline in property values in general, has on local government and state government.
Another article discussed this evening dealt with real estate investment companies beginning to look into acquisition of distressed or broken multi-family projects. Some people, at least, are starting to bet that we are at or near the bottom. It will be interesting to see how that pans out, especially in light of the commercial mortgage refinancing cycle.
The discussion of a potentially growing "renter by choice" market was the most interesting portion of the evening. The transition from "the only people who rent are those who have no choice" to "renters by choice" has been ongoing for the past 20 or so years. The current economic cycle has probably reinforced the appeal of renting instead of owning one's home. The notion has been long marketed, by home builders and various government agencies, that owning a home is a sure fire investment, with a price trajectory that is always rising. Well, the recent crisis has shown that home prices can drop, and can drop quickly. So, more people are likely to view renting as a more viable alternative than buying. Also, more people have to rent right now, either as a result of lower or no income due to job loss or downsizing.
Also, more people have to rent as a result of their homes being foreclosed. In addition, there is a demographic element to the rental. As the large baby boom cohort ages into its 60's and 70's, it is likely that they will seek out living situations with less required maintenance and more convenience. Mowing the yard, fixing garbage disposal, and paying homeowner's insurance and property taxes are likely to become even less appealing to a person as they age. The challenge for real estate developers, planners, and architects is to ensure that new or repurposed multi-family properties are part of a whole community, or at least are able to serve the needs of an entire population. This "life-cycle" housing might well become very much a growth industry over the next couple of decades. This would mean viewing multi-family as part and parcel of the community, including retail, office, recreational, and medical care accessibility.
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