Showing posts with label real estate. Show all posts
Showing posts with label real estate. Show all posts

Tuesday, January 13, 2015

Continued improvement of the housing market seen in 2015

Image Source: titlesource.blogspot.com

2014 proved to be a good year for the housing market, with the steady path to recovery opening. The activity in the market is considered to be the best it has ever been since the crash almost a decade ago and the positive trend is expected to continue well into 2015. With a return to a balanced state, the housing market is now expected to benefit both buyers and sellers.

To start, experts expect a stronger job market, continued economic growth, and increasing home prices to improve existing home sales by 7.4 percent. More and better paying jobs should also affect the millennials, especially the older ones who are now getting married and starting families. They are now expected to join the market and make up for a significant portion of new home purchases in the next five years.

Image Source: mortgagecalculator.org

However, millennials could also encounter some obstacles to home ownership. Financing is still difficult to obtain with the strict mortgage qualifications. This could prevent many millennials from buying the house that they want. Additionally, mortgage rates are still rising.

Image Source: bndcreations.ws

Meanwhile, builders focused more on multifamily homes in 2014. This year, they are expected to build more single-family homes. Experts predict healthy growth in single-family starts, which will only be limited by the supply of labor and materials. The foreclosure crisis is also expected to end this year as the number of foreclosures should return to a normal level. These factors could significantly normalize the housing market.

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Tuesday, March 25, 2014

REPOST: The real estate update: Opportunities in the homebuilding sector


Opportunities in the building sector is getting bigger. Read more in this MarketList.com article.


There are two major stories happening with the builders, and those are the dearth of homebuilding since the real estate bust as well as low household formation numbers and low building that have created a lot of pent-up demand for new homes. Low household formation numbers were not driven by fertility rates 30 years ago. They were driven by the lousy economy. The important thing to remember is that even in lousy economies, people still get married, have kids, and ditch the roommates. So, if you look at the drop in household formation numbers, remember the drop represents people who do want to buy a home but aren’t in a position to, at the moment. That will change.

Housing Starts - LT
Image Source: marketrealist.com


The U.S. recently hit 1.1 million housing starts (which is an annualized number). This is a big number compared to the past few years, but it’s not big historically. The U.S. averaged about 1.5 million units a year since the 1950s. During recoveries, we’ve seen years where starts were above 2 million a year and averaged 924 last year. Given how much the builders have underbuilt, there’s a secular (long-term) story that should buoy the builders for several years.

If the economy recovers and the first-time homebuyer returns to the market, we should see housing starts at least approaching average levels if not spiking like they have in prior recoveries. KB Home’s stock price is probably priced for another 1 million year in housing starts. If starts improve, KB Home’s earnings will improve—even if margins fall.

The cyclical side is different—the builders are very cyclical stocks. This means when times are bad, they trade at very high multiples. When earnings are great, they trade at single-digit multiples. So an investor could get it right about earnings only to see multiple compression offset the earnings. While KB Home (KBH) could experience high earnings growth, it’s not a “growth stock” the way Twitter (TWTR) is, and it will never command the type of multiple that Twitter will (when it eventually earns money). This same analysis applies to other builders like D.R. Horton (DHI), Lennar (LEN), PulteGroup (PHM) and Toll Brothers (TOL).

Investors that are interested in investing in the homebuilding sector should take a look at the S&P SPDR Homebuilder ETF (XHB).

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Friday, February 21, 2014

REPOST: The Power of Sticker Shock

This NewYorkTimes.com article shares the neighboring homes that offers privacy, and stops traffic too with the help of sticker shock.

Image Source: nytimes.com



The idea of wrapping a house in giant graphic stickers, like the ones used for ads on city buses, appealed to Eric Chu the moment his architect suggested it.

But then, Mr. Chu, 38, rarely shies away from trying something new. After starting a computer hardware and software business when he was barely 20, Mr. Chu, who was born in Taiwan, owned a restaurant, invested in real estate and designed furniture that he welded himself.

As he put it, “I definitely approach life with a ‘why not?’ philosophy.”

Like many Los Angeles homeowners whose property is zoned R-2 (or two-family), Mr. Chu had decided to replace the single, modest home on his lot with two houses — one to live in and the other to rent out. But as spacious backyards throughout the city give way to revenue-earning second units, the land between the front and back houses can be odd territory, where privacy is elusive.

Applying colorful, blown-up photos to the exterior glass walls — allowing daytime views out, but not in — was the unconventional solution proposed by Mr. Chu’s architect, Whitney Sander, who runs Sander Architects with his wife, Catherine Holliss.

For a lot nearly 150 feet deep but little more than 40 feet wide, Mr. Sander designed two three-story houses — Mr. Chu’s 2,200-square-foot unit and a slightly larger one behind — separated by a drive-in courtyard.

Mr. Sander was planning to use translucent acrylic panels for the two walls that face each other when he chanced upon something much better: a perforated, adhesive-backed film, custom-printed by Astek Wallcoverings, which was suitable for floor-to-ceiling windows. A close-up photo Mr. Chu had snapped of a sapling, and then computer-manipulated, became the wrapping for those two facades.

Suddenly, they could have it all: daylight, views out and privacy. (The sustainability-minded architects were also pleased to discover that the film offered another benefit: a 50 percent reduction in sun infiltration.)

For the other facades, the designers chose a different strategy, veiling them in a sunshade of diagonal aluminum angles. But long before the building’s skin went up, the skeleton was stopping traffic, Mr. Sander said: “People would pull up in their cars and ask, ‘What’s going on?’ ”

Passers-by were curious about the diagonal screen, as well as the quickly assembled structural-steel frame. Common to much of Mr. Sander’s work, it is a custom-modified prefab system of recycled-metal components typically used in pre-engineered warehouses or agricultural buildings.

One of those who stopped was Lucas Ma, an architect-turned-real-estate-investor, who was eyeing the rental unit. After it was completed two years ago, he and his wife, Joyce Wong, moved in with their young daughter. Mr. Chu now lives in the two-bedroom front house with his longtime girlfriend, Katie Freeman, 29, a massage therapist; one of the bedrooms is his office.

The paired townhouses, which cost about $1.4 million, share a material and stylistic sensibility, with rooftop decks, floors of concrete, hardwood or bamboo, vivid ceramic tile, raw-steel stairways and professional-grade appliances. But they differ in layout: While the soaring, double-height main space in the tenants’ unit is a kitchen-and-dining area, it’s a living room in the owner’s home.

“The front house feels very well suited to my needs,” Mr. Chu said. But since moving in, he added, he has learned at least one surprising thing: During the day, light-colored graphics offer more privacy than dark ones.

Still, “that’s an easy fix,” he said. “We could swap the image. Maybe next time, it’ll be a photo of dandelions.”

Galloway Custom Homes understands each client’s demands when it comes to building their dream home. For more information about the company, visit this Facebook page.

Thursday, November 14, 2013

Old property: To renovate or to rebuild?

Image Source: coffeecrazie.blogspot.com


Property owners often wonder what to do with an aging property on a good location. They have vastly different options.

The choice to demolish and then rebuild from scratch is more popular among people with properties in high-value areas. They can afford to take on the extra costs of rebuilding and expect to recover from the extra expenses with the lease or the high resale value of the property.

Meanwhile, other people go with simple renovations for practical reasons. They may not have the time or extra money to spare for the destructive and costly do-over but they know that they can still build the home of their dreams a home improvement at a time.


Image Source: champion.ca


Of course, there are other factors that come into play. There are times homeowners’ dream homes do not agree with reality, so rebuilding becomes absolutely necessary. Meanwhile, others may find that the existing structure can work give or take a number of renovations, making a vastly improved structure at a lower cost come to life.

For those still stuck at the crossroads of this decision, experts suggest first examining the type of property that currently stands. Post-war construction bungalow types, for instance, are better off demolished and replaced with a structure with better features.

After that, analyzing the costs is the next logical step. While costs of renovations may seem more manageable, builders often use the difference in rates for new-builds and renovations as a strong argument for going with the ‘demolish and rebuild’ option. Doing research on the tax rates in their area can help the property owner determine if the difference in costs between the two options is truly significant.
 

Image Source: springfieldmortgageonline.com


Galloway Custom Homes aids property owners in Muskegon, Michigan in transforming their property and building their dream homes. For more information about the company’s services, visit this Facebook page.