REPOST: Homebuilder Confidence Rises in June: Is Housing Recovering?

According to a report on zacks.com, homebuilding is recovering from its funk in the past months with its improved results in the June housing market index. Read the full article below for more details.

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Image Source: toptennewhomecommunities.com

The beleaguered housing market is finally showing some signs of improvement as construction spending appears to have gained steadily over the spring and summer months.

Homebuilders’ confidence, as indicated by the National Association of Home Builders (NAHB)/Wells Fargo housing market index, rose four points to 49 in June – indicating that the builders’ expectations for the next six months have improved.

Image Source: homes.com

 The index dropped to below 50 in the past four months from 56 recorded in January, indicating increasing builder concerns about meeting ongoing and future demand due to a shortage of lots and labor. The June number is just a point shy of the benchmark of 50 which indicates good housing conditions.

The housing slowdown that began in the second half of 2013 was aggravated by harsh winter in the December quarter, delaying construction and raising serious doubts as to the strength of the housing market.

Moreover, shortage of lots and skilled labor, rising cost of materials and declining inventory of new homes were not making things easier for the builders. Also, the spike in mortgage rates and rising home prices were hurting demand. As a result, many companies witnessed declining order trends in the December quarter.

However, as the winter chill subsided and spring selling season set in, many homebuilders recorded improving order trends in the March quarter. Order trends improved sequentially for D.R. Horton Inc. (DHI - Analyst Report), PulteGroup, Inc. (PHM - Analyst Report), Toll Brothers, Inc. (TOL - Analyst Report) and Ryland Group, Inc. (RYL - Snapshot Report) (RYL - Snapshot Report). Around this time, the sector also reported some encouraging numbers indicating that the housing sector is gathering steam.

New home sales for April, as reported by the Commerce Department, rose 6.4% from March. Though sales were down 4.2% compared with the prior year, it nevertheless marks an improvement from the previous month. New home sales numbers for May are expected on later this month.

Building permits, a gauge of future construction, also bucked the previous trend. After declining for four times in five months, building permits grew 8% in April from the previous month.

Existing home sales data increased 1.3% to a seasonally adjusted annual rate of 4.65 million in April from 4.59 million in March. Existing home sales rose for the first time this year at the fastest pace since Dec 2013.

Image Source: bidorbuy.co.za

These encouraging data signal that the housing sector might be on the verge of a recovery. Though headwinds from supply shortage and rising land, material and labor costs exist, homebuilders are increasingly optimistic of improving demand in the future quarters.

Follow this Twitter page for Tom Galloway Custom Homes, a leading custom home builder in Muskegon, West Michigan, for more information on custom home building.

Tasks to accomplish before a big home remodeling project

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As with many things, home renovations start with a dream. Homeowners had a dream home in mind but due to some issues like budget constraints they’ve had to settle for something less than perfect. Jump to a few years down the road when they’ve managed to pay off their mortgage and even have a hefty sum saved up to get the home that they’ve always wanted.

Turning that dream home into a reality isn’t going to be easy, of course. It requires some careful planning, and a lot of tasks need to be done along the way. To help, here is a short checklist of the items that should be in a homeowner’s to-do list before they start with a home remodeling project.

Image Source: theurbanhousewife.com

1. Illustrate. Even a simple drawing of the dream home could help the architect visualize what the homeowner truly wants.

2. Plan ahead. Some renovation plans may actually decrease the resale value of a home and some may not fit in with other plans that the homeowner may have in mind for the future.

3. Review the budget. Home renovation projects can cost a lot more than people expect. Project estimates tend to be on the low side as well so it would help to have some backup plans for saving on costs and getting extra funds when the remodeling project does go over budget.

4. Choose qualified home builders. Finding a team of qualified, licensed, and properly insured home builders with the same vision requires some research and negotiation.

5. Apply for permits. In most cases, home renovations require permits from the city government to ensure that the project meets local building and safety regulations.

Image Source: blog.gtageneralcontractors.com

Tom Galloway Custom Homes is a leading custom home builder in Muskegon, Michigan. For more resources and tips on home renovations, follow this Twitter account.

REPOST: Rent is dead money. Or is it? Property expert Chris Gray examines being a tenant and a landlord

Property specialist Chris Gray shares the real cost of buying vs. renting in this News.com article.

To buy or rent is one of the biggest questions in real estate and it gets more difficult to answer when the option of investing is added to the equation. Image Source: news.com.au

MOST high-income earners think that renting is for those who are worse off financially and that owning your home is not only a mark of success, but it is a better long-term financial decision.

Everyone knows rent is dead money, right? But what if this long-held Australian belief was wrong? How do the numbers compare when weighing up a lifetime of renting versus buying?

Who, at the end of the day, is likely to be better off?

Consider this scenario: If you had the opportunity to borrow $1.5 million and had the choice ­between buying your own home for $1.5 million, or buying three ­investments worth $500,000 each and renting your home, which ­option would you choose?

Option one: Buying your home. To evaluate this choice we need to consider the long-term costs of ­finance. Historically, the average mortgage rate is 8 per cent.

Your $1.5 million buy equates to spending $120,000 a year.

Option two: If you chose the ­investment path and bought three properties at $500,000 each, your ­financial situation would include an estimated 4 per cent rent ­return, equating to $400 a week after expenses.

And, as the properties would be investments, you would get a tax rebate on any losses. Still needing a place to live, you then decide to rent a $1.5 million property. At that price the demand for properties is lower than average, given they are beyond the price range of most people.

It’s likely you would pay only an estimated 2 per cent in rent. Taking this into account, it might cost $30,000 a year to rent and your ­financial position would be as shown at the top of the table above.

These figures reveal that by choosing to buy three investment properties and rent a $1.5 million property, your total annual spend would be about $60,000. Remember, if you chose to buy the $1.5 million home, it would be $120,000. This example shows that while both options allow you to live in a $1.5 million property, in the long term, renting (while investing in property) will cost less.

Additionally, by having investment properties you gain the benefit of tax deductions now, instead of waiting for capital gains tax free status when you sell your own home in retirement (which may never happen). But you can do better than living in a $1.5 million home. You could stretch the renting scenario further and rent a $4.5m property while investing in three properties worth $500,000 each — all for the same cost as buying one home to live in worth $1.5 million.

Look at the lower part of the table. While the numbers add up, it is worthwhile considering the disadvantages of renting. Security comes first to mind. You may be forced to move from one property to another every few years at the whim of your landlords. The second biggest drawback is decorating. You may not be as free to style your home as you prefer.

But most landlords will let you do anything as long as it increases the value of their property. But then again, some are set in their ways. I recently discovered an unrenovated property in Sydney’s Point Piper worth $7-$8 million for rent. The owners were asking $3000 a week (2 per cent). I offered them $2000 a week (1.35 per cent), and ­offered to fully renovate the two bathrooms, repaint and lay new carpet throughout.

My advantage was my ability to renovate at wholesale prices, and the home would be to my preferences, while still saving money. But the owners renovated the house themselves. The property has been vacant for six months and the rent dropped to $2800 a week. Renting may not be for you, but if you can do away with what you think are the hallmarks of success, your property investment strategies might just benefit.

Galloway Custom Homes is a leading builder of classic homes in the Lakeshore area in Michigan. To know more about the company, visit this Facebook page.

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.

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).

Discover more home design ideas by visiting this Galloway Custom Home Twitter page.

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.

Home building and design trends for 2014

A heavy emphasis on art was one of the biggest trends in home building and design in 2013. From warm and organic home kitchens to bright painted walls, homes took on very interesting aesthetics.

This year, however, the market is shifting toward something “bigger.”

Based on a Bloomberg Businessweek report, these galloping trends will shape the home building and design industry in 2014:

Image Source: decisivemagazine.com

The return of McMansions. Hummer houses will relive their glory after a heavy decline during the 2008 economic recession. According to the latest government data, a newly built U.S. single family home is 2,505 square ft., which is about 50 percent larger than an average American home back in the 70s. Furthermore, typical new home buyers want residences that are 17 percent bigger than their current ones.

More rooms for families. Over 40 percent of the newly constructed home market have four bedrooms, providing more room for more relatives and kids moving back home.

Image Source: centennialcourtuta.com

More storage. Scott Tomas, an architect from one of the largest home building firms in the country, revealed that about half of the square footage on homes built by his company in the past decade has gone to storage.


Back to black. From bathrooms and kitchens to interior doors and exterior sliding, black will be the new color for 2014 as a way of modernizing new and old homes.

Image Source: living.msn.com

With its mission to provide clients quality and comfortable homes, Tom Galloway Custom Homes has successfully positioned itself as one of the most trusted builders of custom homes in Muskegon, West Michigan. For updates about the company and its home designs, visit this blog.

Energy-efficient building materials for houses

Image Source: inhabitat.com

Energy-efficient houses are environment friendly and economically sustainable. Although they may initially dictate higher costs, energy-efficient materials can help home owners recover easily as they provide improvements in electricity, water heating, or space heating and cooling. Experts in energy conservation agree that investing on these materials will yield good returns.

For those who plan on building or renovating their homes for energy efficiency, below are some materials to consider:

Straw Bales. A byproduct of the grain industry, studies show that Straw Bales, if kept dry, can last for thousands of years and provide good insulation.

Cool roofing. Designed to reflect more sunlight and absorb less heat than a standard roof, cool roofing can help homeowners reduce energy bills by decreasing air conditioning needs. Moreover, it also improves indoor comfort for spaces and decreases roof temperature, which may extend roof service life.

Image Source: greenupgrader.com

Recycled wood and plastic composite lumber. Adding extra strength to houses, studies show that a 50-50 combination of wood fibers and waste plastics is more durable and less toxic than conventional treated lumber.

Plant-based Polyurethane Rigid Foam. Manufactured using foam from materials such as bamboo and hemp, this type of material possesses higher moisture and heat resistance, which are excellent acoustics and protection against mold and pests. Furthermore, it also has a higher thermal resistance and insulates better than other conventional materials.

Image Source: ecobuildingpulse.com

With its mission to provide clients quality and comfortable homes, Tom Galloway Custom Homes has successfully positioned itself as the leading homebuilder on the Lakeshore at the People’s Choice Awards for the impeccable attention to detail the company’s artisans have given to every project. For information about the company, visit this website.