The Housing Market’s New Year’s Resolutions
- Jan 01, 2008
It’s New Year’s Eve–almost–and that means it’s time for reflections–and resolutions.
We have so many memories from this year. Remember when, in September, residential building hit its lowest spending point since 2003? Or when the mortgage-related credit crisis rocked the world’s banks over the course of a few months? Or how about when the dollar became weak–and then weaker?
OK, so maybe 2007 wasn’t exactly a collection of warm, fuzzy financial housing moments. But New Year’s resolutions are all about turning things around. I’m about to make mine; and I’ve drawn up five resolutions for the multifamily housing industry.
Feel free to alter, add to these or post your own today, tomorrow–or anytime as we slide into 2008.
Resolutions for the Housing Sector in 2008
5. Move inventory. Before anything happy happens in housing, we need to downsize some of the current housing supply. Today’s National Association of Realtors’ report indicated the housing supply fell slightly–3.6 percent–but that isn’t enough. We still have more than 10 months worth of homes! Developers, offer incentives like a few free months of assessments in condos or reduced parking. Consider contributing money to throw in some free amenities in the kitchens or other areas in new homes. Do whatever you can to move those new homes that are sitting on the market. And do it before you build more! Which brings us to …
4. Build wisely. No one is saying we should stop residential building altogether; and its rate has certainly slowed already this year. But before you pick up a pen to sign that next financing deal for a new condo complex–or grab a shovel to start work on a new planned community–do your homework and make sure it’s one the market can support.
Condos have fared better than single-family homes in many regional markets during the housing slump because of their targeted appeal: Smaller and cheaper than houses, they appeal to first-time buyers (a strong market–single female homebuyers, for example, increased from 14 percent in 1995 to 21 percent in 2005, according to the National Association of Realtors) and retirees looking to downsize.
Developments that have been built downtown in cities close to public transportation have proved popular as a result. A Joint Center for Housing Studies report that said nearly a quarter of
all condos are located in the 20 highest-cost urban areas of the U.S.
According to the report, condominium
buyers tend to be older singles or retirees with higher
3. Improve current investments. Revamp outdated apartments. Single-family homeowners, remodel. Invest in the properties you currently own, and prepare to reap the benefits when the market turns around in the coming year. Some contractors are even helping people secure financing for their renovations, according to a Reuters article from today. It’s a clever way to encourage more remodeling activity during the slump–and get more work.
2. Prepare for the next housing boom. It may seems years off, but the last thing we need is a property frenzy like the one that puffed real estate prices and values up so quickly, which in part caused the housing slump. Just recall when, in 2004, Las Vegas homes rose 44 percent in value in the third quarter–Bloomberg reported in September that the area now may be seeing the largest price reductions in the nation. When things start getting better in the housing market–and they will–remember: Gradual growth is prepared growth.
1. Have hope. This one may be the hardest, after a year (heck, after a month) of particularly dour housing news. But consumer confidence is a crucial thing. Faith in the housing industry influences Americans’ perception of how much money they have in general; which helps determine consumer spending; which helps influence the economy’s growth and future. Housing is a cyclical industry. It will turn around in 2008. Estimations vary on when–and exactly how–but good things are coming. So MHN’s blog would like to wish a sincerely Happy New Year to you all.
We’ll see you in ’08!