Builder confidence highest since June ’06
Q: Allison, What is the status of new construction in the country? That’s a good question. Buyer demand boosted home builder confidence five points in February to its highest level in eight months, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) which can be found at www.nahb.org/hmi.Based on a monthly survey that measures builder perceptions and expectations for home sales, the index climbed to 40 in February from a reading of 35 in January. An index rating above 50 indicates that more builders view sales conditions as good, while a rating below 50 indicates that more builders view conditions as poor.”Builders are still cautious as they continue to manage their inventory, but their assessments of the demand side of the single-family market are improving,” said NAHB President Brian Catalde, a home builder from Playa del Rey, Calif. “Every component of the February HMI — present home sales, sales expectations for the next six months and buyer traffic — showed a significant positive uptick in February.”Lower energy prices, favorable mortgage rates and solid growth in employment and household income have all contributed to the recent stabilization of home-buyer demand, said NAHB Chief Economist David Seiders. “In addition, builders continue to offer substantial sales incentives to move their product and limit cancellations, which has helped to firm up buyer demand.”All three component indexes registered improvement in February, with the index gauging current single-family home sales rising six points to 42 and the component measuring the traffic of prospective buyers gaining five points to 31. Of particular note, the index gauging sales expectations for the next six months jumped over the 50 threshold for the first time since last June, posting a seven-point gain to 55.The HMI rose in all four regions in February, with the Northeast posting the biggest gain of eight points to 46. Five-point gains were registered in the Midwest and South, to 29 and 46, respectively, while the West moved up two points to 35.”Builders are becoming increasingly convinced that the abrupt downslide in home sales is in their rear view mirrors and they see better times as they look at the road ahead,” Seiders said.A Look Ahead for Real EstateQ: What is the forecast for Real Estate in 2007?A: According to the Wall Street Journal, looking at the year ahead, caution likely will be the name of the game as far as the commercial and residential property markets are concerned. Still, real-estate investment will remain high; a recent survey of 1,000 real-estate investors commissioned by National Real Estate Investor and Marcus & Millichap found that 60 percent of investors planned to increase their stakes in U.S. real estate this year, down from 70 percent last year. The office sector was one of last year’s top performers; and it looks to continue its sizzling pace in 2007, with such previously laggard markets as Boston and Chicago likely to post solid gains. SNL Financial’s Keven Lindemann says, “There’s nothing to suggest there’s a slowdown coming in terms of demand for office space.” Although the East and West coast markets did well last year, other markets could excel this year, particularly Chicago and Boston, says Robert Bach of Grubb & Ellis. He says, “Those markets turned around in 2006, but you will see them escalate up the scale in 2007.” However, landlords should be aware that new development in some markets could slow rent hikes. Looking at single-family homes, the worst of the housing slump seemed to be easing as 2006 drew to a close; but the sector’s direction this year will hinge on whether mortgage rates stay low and whether the economy remains relatively healthy. Finally, regarding the nation’s apartment sector, Reis forecasts that national rent growth will hit 3.6 percent in 2007, as the condo-conversion craze continues to slow and more multifamily projects are added to the market. For answers to your real estate questions, call Allison at (970) 468-6800 or (800) 262-8442. Email at Info@SummitRealEstate.com or visit their web site at www.SummitRealEstate.com. Allison is a long time local in Summit County. Summit Real Estate The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field. Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours. For answers to your real estate questions, call Allison at (970) 468-6800 or (800) 262-8442. Email at Info@SummitRealEstate.com or visit their web site at www.SummitRealEstate.com. Allison is a long time local in Summit County. Summit Real Estate The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field. Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.
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