New-Home Inventory Shrinks to Record Lows

Inventory of new homes on the market shrank to its lowest point on record in January, marking a 5.6-month supply at the current sales pace, the Commerce Department reports.
With fewer homes available, the price of new homes increased slightly last month. The median price for a new home ticked up slightly at 0.3 percent to $217,100, which is the highest level since October.
However, January sales of single-family homes mostly stayed falt in January, falling less than 1 percent last month compared to the previous month. New-home sales reached a seasonally adjusted annual pace of 321,000 units.
New-home sales were up 3.5 percent compared to the same time last year, the Commerce Department reported.
"This is indicative of the incremental, steady progress that the market is making toward recovery in conjunction with modest economic and job growth,” said David Crowe, the National Association of Home Builders’ chief economist. “Increasingly, potential buyers are feeling better about their financial situation and their ability to buy a home, but the challenges posed by tight credit conditions and appraisal issues continue to slow that process."
Regionally, the Midwest saw the biggest decline in new home sales in January, a 24.5 percent drop in sales followed by a 10.6 percent drop in sales in the West. On the other hand, the Northeast posted an 11.1 percent gain in new home sales in January, and the South saw a 9.3 percent increase.

Multifamily Housing Demand to Outpace Production

Developers of multifamily homes should be relishing in the fact that demand is incredibly strong. But in reality, developers are struggling to build new apartments because financing is so hard to come by.

The National Association of Home Builders is forecasting the construction of 208,000 multifamily residences in 2012, which is well below the 350,000 units needed to maintain balance in the market, according to Sharon Dworkin Bell, NAHB senior vice president for multifamily and 50-plus housing.

Bell, who spoke on a panel during the NAHB International Builders’ Show in Orlando last week, said that the demand for new apartments will only continue to grow as the economy improves and job seekers find employment.

What’s more, the young adult population entering the job market today is one of the largest in U.S. history, which is creating even more demand for multifamily real estate, said Ron Witten, president of Witten Advisors, a market research firm that works with multifamily developers.

“As an industry, we can’t keep up with this demand right now. This is likely to put inflationary pressure on rents, resulting in higher rents for consumers,” Witten said.

The multifamily market suffered a serious slowdown in production from 2008 to 2010, and now the lack of credit to finance the development of new apartments is likely to cause a supply and demand imbalance, according to the NAHB panelists.

“Credit restrictions are so tight that even developers with a strong balance sheet and reputation are having difficulty,” said developer W. Dean Henry, president of Legacy Partners Residential in Foster City, Calif., and chair of NAHB’s Multifamily Leadership Board.

Federal Reserve Chair Ben Bernanke also touched on credit issues during his speech at the International Builders’ Show Friday. He called on lenders to “find ways to maintain prudent lending standards while serving creditworthy borrowers.”

In a market report released in late 2011, NAR’s Chief Economist Lawrence Yun warned that if new multifamily construction doesn’t ramp up, the rise in rent costs could potentially approach 7 percent over the next two years. This creates another obstacle for renters trying to save for a downpayment to purchase a home.

In fact, between 2001 and 2009 the number of renters paying more than 30 percent of their incomes for rent and tenant-paid utilities jumped from 41.2 percent to 48.7 percent, and those paying more than half their incomes for housing climbed from 20.7 percent to 26.1 percent, according to a report released last summer by Harvard University’s Joint Center for Housing studies.

Overall, the implication of multifamily housing demand outpacing production is a continued delay of the housing recovery.

Soar like an Eagle

No one can make you serve customers well....that's because great service is a choice. Harvey Mackay tells a wonderful story about a cab driver that proved this point. He was waiting in line for a ride at the airport.  When a cab pulled up, the first thing Harvey noticed was that the taxi was polished to a bright shine.  Smartly dressed in a white shirt, black tie, and freshly pressed black slacks, the cab driver jumped out and rounded the car to open the back passenger door for Harvey. He handed my friend a laminated card and said: 'I'm Wally, your driver. While I'm loading your bags in the trunk I'd like you to read my mission statement.' Taken aback, Harvey read the card.  It said: Wally's Mission Statement: To get my customers to their destination in the quickest, safest and cheapest way possible in a friendly environment....This blew Harvey away.  Especially when he noticed that the inside of the cab matched the outside.  Spotlessly clean! As he slid behind the wheel, Wally said, 'Would you like a cup of coffee? I have a thermos of regular and one of decaf.'  My friend said jokingly, 'No, I'd prefer a soft drink.'  Wally smiled and said, 'No problem.  I have a cooler up front with regular and Diet Coke, water and orange juice...'Almost stuttering, Harvey said, 'I'll take a Diet Coke.' Handing him his drink, Wally  said, 'If you'd like something  to read, I have The Wall Street Journal,  Time, Sports Illustrated and USA  Today..' As they were pulling away, Wally handed my friend another laminated card, 'These are the stations I get and the music they play, if you’d like to listen to the radio.' And as if that weren't enough, Wally told Harvey that he had the air conditioning on and asked if the temperature was comfortable for him. Then he advised Harvey of the best route to his destination for that time of day. He also let him know that he'd be happy to chat and tell him about some of the sights or, if Harvey preferred, to leave him with his own thoughts...'Tell me, Wally,' my amazed friend asked the driver, 'have you always served customers like this?' Wally smiled into the rear view mirror.  'No, not always.  In fact, it's only been in the last two years.  My first five years driving, I spent most of my time complaining like all the rest of the cabbies do.  Then I heard the personal growth guru, Wayne Dyer, on the radio one day. He had just written a book called you’ll see it when you Believe It. Dyer said that if you get up in the morning expecting to have a bad day, you’ll rarely disappoint yourself.  He said, 'Stop complaining! Differentiate yourself from your competition.  Don't be a duck.  Be an eagle.  Ducks quack and complain.  Eagles soar above the crowd.' 'That hit me right between the eyes,' said Wally. 'Dyer was really talking about me.  I was always quacking and complaining, so I decided to change my attitude and become an eagle.  I looked around at the other cabs and their drivers.  The cabs were dirty, the drivers were unfriendly, and the customers were unhappy.  So I decided to make some changes. I put in a few at a time. When my customers responded well, I did more.' 'I take it that has paid off for you,' Harvey said.’It sure has,' Wally replied.  'My first year as an eagle, I doubled my income from the previous year.  This year I'll probably quadruple it. You were lucky to get me today.  I don't sit at cabstands anymore. My customers call me for appointments on my cell phone or leave a message on my answering machine.  If I can't pick them up myself, I get a reliable cabbie friend to do it and I take a piece of the action.' Wally was phenomenal.  He was running a limo service out of a Yellow Cab. I've probably told that story to more than fifty cab drivers over the years, and only two took the idea and ran with it. Whenever I go to their cities, I give them a call.  The rest of the drivers quacked like ducks and told me all the reasons they couldn't do any of what I was suggesting. Wally the Cab Driver made a different choice.  He decided to stop quacking like ducks and start soaring like eagles. How about us?  Smile and the whole world smiles with you

The ball is in our Hands!

500 More Jobs in the North to Come!

WINDSOR - Halliburton Co. is moving into the Windsor area, building a sand terminal within the 1,800-acre Great Western Industrial Park and bringing more than 500 jobs to the area.

The facility will serve energy production demand in the Denver-Julesberg Basin and the Niobrara oil play.

The move was lauded by Gov. John Hickenlooper.

"Colorado's economy continues to see the benefits of the early and continued commitment to encouraging safe and responsible energy development," Hickenlooper said. "Halliburton's announcement today is a reminder to new energy companies and those already doing business here that Colorado is on the country's leading edge of this economic sector."

One of the world's largest providers of products and services to the oil and gas industry, Halliburton will set up shop on 54 acres south of the Front Range Energy facilities, making use of the Great Western Railway within the industrial park.

"Working with companies like Halliburton, we're able to bring solutions to the energy services sector, originating sand from around the country and transporting it by rail," said Rich Montgomery, vice president of Great Western Development Company, an affiliate of The Broe Group, an affiliate of The Broe Group, based in Denver, Colorado.

"This new terminal in the Great Western Industrial Park will help create good-paying jobs. It will serve Colorado's booming oil and gas industry and underscore the competitive advantages of rail service and innovative supply chain management."

Construction is expected to begin this quarter and be complete by summer 2012. The jobs -- more than 500 -- will be in oil-industry support positions.

Houston-based Halliburton consists of a drilling and evaluation division and a completion and production division. Together, these divisions generated $18 billion in revenue in 2010. The company employs nearly 70,000 people worldwide.

"With increasing interest in horizontal well development in the DJ Basin, we have seen more exploration and production by some of our key customers," said Rick Grisinger, Halliburton's senior region vice president, US Northern and Canada. "In preparation for this market growth, Halliburton continues to evaluate plans for expansion and increasing its business presence."

Halliburton also operates a facility along U.S. Highway 85 between Brighton and Fort Lupton, drawn by the activity created by the Niobrara oil play, a shale formation that covers much of Weld County.

Halliburton has operated in Colorado since 1935, and employs more than 1,600 employees at the moment.

Erasers

Today as I walked to pick up my kids from school I knew I was leaving behind footprints in the snow. I was running late so I didn't look behind at them. I was a little curious however what they looked like, partially because I was going the opposite way than the only other prints in the snow and because they were new shoes and I was curious what my footprint looked like. Again I was running late so didn't bother to look behind me. After I picked up the kids my son asked "What's for dinner?" this is his regular question he asks me... as if the entire day I spend planning for dinner. I responded my usual "I have no idea". As we all walked back home I wanted to look for my footprints however my eldest led the way and some how stepped in each print enough to diminish the difference between what was mine and what was his. As the temperature dropped our walked turned into a sprint as they all raced ahead. I found myself lost in thought, I realized our kids are erasing our footprints in more than the fresh snow. They are making their own, and along they way they may step in ours but ultimately they are only leaving behind theirs. This is what we want however. As parents we only hope that their footprints have deeper and more meaningful impressions. That our Legacy in their lives is enough so that their Legacy is more profound.

Job Market

According to NCBR Employers in Colorado added 4,500 nonfarm payroll jobs from May to June, according to the latest survey of business establishments by the Colorado Division of Labor and Employment.

The government sector declined by 2,600 payroll jobs and the private sector added 7,100 during the month. The largest private sector job gains were in leisure and hospitality, financial activities, and professional and business services. The largest decline was in manufacturing.

That pushed the statewide unemployment rate down by two-tenths of a percentage point to 8.5 percent, based on household survey results. This is the fourth consecutive monthly decline in the unemployment rate.

However, in March, April and May the decline was due to an increase in total employment. In June, the state's labor force decreased by 10,500 and total employment decreased 5,800, causing the number of unemployed to drop 4,800 and the unemployment rate to decline.

The statewide unemployment rate is down three-tenths of a percentage point from 8.8 percent in June 2010. The number of Coloradans participating in the labor force declined 7,700, total employment increased 1,800 and the number of unemployed decreased 9,600.

In Larimer County, the unemployment rate for June, not seasonally adjusted, was 6.9 percent, up from 6.6 percent in May, but down from 7.3 percent in June 2010.

In Weld County, June's rate of 10.1 percent is up from May's 9.3 percent but down slightly from last year's 10.2 percent.

Seasonally adjusted figures are scheduled to be released by the CDLE in about two weeks

The national unemployment rate declined from 9.5 to 9.2 percent from June 2010 to 2011, but increased from 9.1 to 9.2 percent between May and June, according to the U.S. Bureau of Labor Statistics.