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The Atlanta Fed's SouthPoint offers commentary and observations on various aspects of the region's economy.

The blog's authors include staff from the Atlanta Fed's Regional Economic Information Network and Public Affairs Department.

Postings are weekly.


November 24, 2014

Conditions Soften for Southeastern Housing

The Atlanta Fed's latest poll of regional residential brokers and homebuilders shows an increase in the number of contacts reporting softening home sales and construction activity. The two charts below show indexes near or below zero.

Oct-SE-Home-Sales

Oct-SE-Construction

This softening appears to be the result of normal seasonal factors, but even so, it seems a good time to revisit a question we posed one year earlier, where we ask builders to look ahead over the next 12 months and characterize risks to their outlook.

Interestingly, builder contacts indicated that access to development finance and lot availability continues to pose significant risks to their outlook. They also reported that land position and labor shortages have become more significant risks compared to one year ago (see the table).

Chart_nov_oct

In addition to highlighting the risks that have come into the forefront during the past year, it also seems worthwhile to point out that a few of the risks have fallen off a bit since we last posed this question. For instance, only one-third of respondents considered rising mortgage rates to be significant risk to their outlook in November 2014 compared to two-fifths of respondents in October 2013. And only one-fourth of respondents indicated that consumer confidence was a significant risk to their outlook in November 2014 compared to nearly two-fifths in October 2013.

To explore these results in more detail, or to view other results that were not discussed in this post, please visit our Construction and Real Estate Survey results web page.

Note: The latest poll results, which reflect activity in October 2014, are based on responses from 35 residential brokers and 24 homebuilders and were collected November 3–12. If you would like to participate in this poll, you may sign up here.

Photo of Jessica DillBy Jessica Dill, senior economic research analyst in the Atlanta Fed's research department

August 27, 2014

Southeast Housing Update: Exploring the Recent Slowdown

Following several months of somewhat disappointing reports on home sales and housing starts, we decided that it was time to ask the residential brokers and builders who participate in our monthly housing market poll to revisit the factors that may be contributing to slower-than-hoped-for growth.

When housing’s momentum began slowing in mid-2013, many contacts pointed to rising mortgage rates as the reason. Then in early 2014, many attributed the continued sluggishness to inclement weather. Although it seemed that weather did, in fact, play a role, our business contacts reported that less affordable buying conditions (for example, higher rates and prices) and limited inventory were greater culprits.

So what is the reason now? Our latest poll results suggest that contacts continue to believe that less affordable buying conditions and limited inventory—plus tight credit conditions—are the main factors behind the slowing activity (see the table).

Factors Influencing the Slow Growth of the Housing Market

Although the results of this special question help us as we think through what might be contributing to the weak growth, it is important to acknowledge that the incoming data (and upwardly revised data from the past few months) suggest that housing activity might not actually be slowing to the degree we previously thought. And in fact, a quick look at the latest poll results (without considering the special question) might also lead one to conclude that regional housing market conditions remain fairly positive. To explore the latest results in more detail, please view our Construction and Real Estate Survey results.

Note: The latest poll results reflect activity in July 2014 and are based on responses from 44 residential brokers and 16 homebuilders and were collected August 4–13. If you would like to participate in this poll, please consider signing up.

Photo of Jessica DillBy Jessica Dill, senior economic research analyst in the Atlanta Fed's research department


August 1, 2014

Southeast Housing Update: Building on Recent Gains

To detect emerging real estate trends, the Atlanta Fed conducts a monthly poll of southeastern broker and builder business contacts. The latest poll results suggest that housing market conditions in the Southeast remain positive.

The majority of brokers (60 percent) and builders (63 percent) indicated that home sales had increased from the year-earlier level (see the chart):

SE Home Sales versus a Year Earlier

The home sales outlook among contacts remained fairly upbeat. More than 80 percent of brokers and just under 50 percent of builders expect to see continued growth in home sales (see the chart):

SE Homesales Outlook versus a Year Earlier

More than half of the brokers and close to three-fourths of the builders reported that buyer traffic was up from the year-earlier level (see the chart):

SE Buyer Traffic versus a Year Earlier

Most brokers and builders reported that home inventory levels remained flat or were down from the year-earlier level (see the chart):

SE Home Inventory versus a Year Earlier

The majority of brokers and builders reported that home prices were up in June compared with year-ago levels (see the chart):

SE Home Prices versus a Year Earlier

More than three-fourths of builders reported that construction activity had increased from the year-earlier level (see the chart):

SE Construction Activity versus a Year Earlier

To explore these results in more detail, please visit our Construction and Real Estate Survey page.

Note: The latest poll results are based on responses from 40 residential brokers and 19 homebuilders and were collected July 7–16, 2014. Please sign up if you would like to participate in this poll.

July 7, 2014

To Buy or Not to Buy, That Is the Question (for Millennials)

In the last month, the South Florida Business Journal reported on the announcement of at least three new apartment projects:

  • June 18: Developers plan 300 apartments in Midtown Miami
  • June 19: Lennar plans 229 apartments in Boca Raton after $7.5M purchase
  • June 23: Broward commissioners to vote on 400-apartment project

Data from the real estate analytics firm REIS indicate that 2,425 new apartment units were completed in Miami in 2013. Not only is this noteworthy because this represents the most units delivered per year since 1991 but also because nearly all of the units were absorbed. More than 600 units have been delivered so far in 2014, and close to 3,000 units remain under construction. Despite this comeback in Miami apartment construction, the apartment vacancy rate ended the first quarter at 3.8 percent and is expected to remain at this low level for an extended period. Is apartment construction heating up in South Florida as a result of a change in fundamental beliefs of the rising generation?

According to an article featured in the latest issue of the Atlanta Fed's EconSouth, the generation known as the millennials is showing signs of veering from established patterns, particularly when it comes to milestones like moving out of the parents' house, getting married, and buying a home. Many experts, including Atlanta Fed economist Tim Dunne (who has written extensively on the topic, including this article), acknowledge that economic conditions are partly to blame for these delayed decisions.

But are these decisions only being delayed, or have preferences changed? Reports from some Atlanta Fed business contacts suggest that attitudes and preferences may in fact be changing. Some business contacts report that, unlike previous generations, millennial employees are often unwilling to commit long term to one organization, preferring instead nonmonetary perks such as flex time over higher pay, and they place great value on work-life balance. Moreover, real estate business contacts in South Florida have noted that millennials prefer the "experience" that often comes with high-end apartments, such as amenities including dining and shopping, rather than a traditional home in a suburban setting.

More than shifting preferences may be at work, though. According to Fannie Mae’s national housing survey, conducted in May 2014, potential first-time homebuyers are facing several challenges that inhibit their ability to purchase a home. Although the survey does confirm that the number of renters has increased on a national basis, and the number of homeowners has declined, since the financial crisis, the survey's findings indicate that potential homebuyers are not renting by choice but rather by necessity. Higher credit standards and increasing home prices have hindered potential homebuyers. The survey results suggest that younger renters aspire to own but feel pessimistic about their ability to get a mortgage, perceiving down payment and credit score requirements as obstacles. The survey also reported that young renters aspire to own for financial and lifestyle reasons, although a smaller share of respondents (versus last year) reported that their primary reason for renting is to prepare them for homeownership.

For the rental market, the question remains whether that segment's growth is a permanent shift by millennials or merely a bridge until this generation is better prepared to become homeowners.

By Marycela Diaz-Unzalu, a Regional Economic Information Network analyst in the Atlanta Fed's Miami Branch

November 24, 2014

Conditions Soften for Southeastern Housing

The Atlanta Fed's latest poll of regional residential brokers and homebuilders shows an increase in the number of contacts reporting softening home sales and construction activity. The two charts below show indexes near or below zero.

Oct-SE-Home-Sales

Oct-SE-Construction

This softening appears to be the result of normal seasonal factors, but even so, it seems a good time to revisit a question we posed one year earlier, where we ask builders to look ahead over the next 12 months and characterize risks to their outlook.

Interestingly, builder contacts indicated that access to development finance and lot availability continues to pose significant risks to their outlook. They also reported that land position and labor shortages have become more significant risks compared to one year ago (see the table).

Chart_nov_oct

In addition to highlighting the risks that have come into the forefront during the past year, it also seems worthwhile to point out that a few of the risks have fallen off a bit since we last posed this question. For instance, only one-third of respondents considered rising mortgage rates to be significant risk to their outlook in November 2014 compared to two-fifths of respondents in October 2013. And only one-fourth of respondents indicated that consumer confidence was a significant risk to their outlook in November 2014 compared to nearly two-fifths in October 2013.

To explore these results in more detail, or to view other results that were not discussed in this post, please visit our Construction and Real Estate Survey results web page.

Note: The latest poll results, which reflect activity in October 2014, are based on responses from 35 residential brokers and 24 homebuilders and were collected November 3–12. If you would like to participate in this poll, you may sign up here.

Photo of Jessica DillBy Jessica Dill, senior economic research analyst in the Atlanta Fed's research department

August 27, 2014

Southeast Housing Update: Exploring the Recent Slowdown

Following several months of somewhat disappointing reports on home sales and housing starts, we decided that it was time to ask the residential brokers and builders who participate in our monthly housing market poll to revisit the factors that may be contributing to slower-than-hoped-for growth.

When housing’s momentum began slowing in mid-2013, many contacts pointed to rising mortgage rates as the reason. Then in early 2014, many attributed the continued sluggishness to inclement weather. Although it seemed that weather did, in fact, play a role, our business contacts reported that less affordable buying conditions (for example, higher rates and prices) and limited inventory were greater culprits.

So what is the reason now? Our latest poll results suggest that contacts continue to believe that less affordable buying conditions and limited inventory—plus tight credit conditions—are the main factors behind the slowing activity (see the table).

Factors Influencing the Slow Growth of the Housing Market

Although the results of this special question help us as we think through what might be contributing to the weak growth, it is important to acknowledge that the incoming data (and upwardly revised data from the past few months) suggest that housing activity might not actually be slowing to the degree we previously thought. And in fact, a quick look at the latest poll results (without considering the special question) might also lead one to conclude that regional housing market conditions remain fairly positive. To explore the latest results in more detail, please view our Construction and Real Estate Survey results.

Note: The latest poll results reflect activity in July 2014 and are based on responses from 44 residential brokers and 16 homebuilders and were collected August 4–13. If you would like to participate in this poll, please consider signing up.

Photo of Jessica DillBy Jessica Dill, senior economic research analyst in the Atlanta Fed's research department


August 1, 2014

Southeast Housing Update: Building on Recent Gains

To detect emerging real estate trends, the Atlanta Fed conducts a monthly poll of southeastern broker and builder business contacts. The latest poll results suggest that housing market conditions in the Southeast remain positive.

The majority of brokers (60 percent) and builders (63 percent) indicated that home sales had increased from the year-earlier level (see the chart):

SE Home Sales versus a Year Earlier

The home sales outlook among contacts remained fairly upbeat. More than 80 percent of brokers and just under 50 percent of builders expect to see continued growth in home sales (see the chart):

SE Homesales Outlook versus a Year Earlier

More than half of the brokers and close to three-fourths of the builders reported that buyer traffic was up from the year-earlier level (see the chart):

SE Buyer Traffic versus a Year Earlier

Most brokers and builders reported that home inventory levels remained flat or were down from the year-earlier level (see the chart):

SE Home Inventory versus a Year Earlier

The majority of brokers and builders reported that home prices were up in June compared with year-ago levels (see the chart):

SE Home Prices versus a Year Earlier

More than three-fourths of builders reported that construction activity had increased from the year-earlier level (see the chart):

SE Construction Activity versus a Year Earlier

To explore these results in more detail, please visit our Construction and Real Estate Survey page.

Note: The latest poll results are based on responses from 40 residential brokers and 19 homebuilders and were collected July 7–16, 2014. Please sign up if you would like to participate in this poll.

July 7, 2014

To Buy or Not to Buy, That Is the Question (for Millennials)

In the last month, the South Florida Business Journal reported on the announcement of at least three new apartment projects:

  • June 18: Developers plan 300 apartments in Midtown Miami
  • June 19: Lennar plans 229 apartments in Boca Raton after $7.5M purchase
  • June 23: Broward commissioners to vote on 400-apartment project

Data from the real estate analytics firm REIS indicate that 2,425 new apartment units were completed in Miami in 2013. Not only is this noteworthy because this represents the most units delivered per year since 1991 but also because nearly all of the units were absorbed. More than 600 units have been delivered so far in 2014, and close to 3,000 units remain under construction. Despite this comeback in Miami apartment construction, the apartment vacancy rate ended the first quarter at 3.8 percent and is expected to remain at this low level for an extended period. Is apartment construction heating up in South Florida as a result of a change in fundamental beliefs of the rising generation?

According to an article featured in the latest issue of the Atlanta Fed's EconSouth, the generation known as the millennials is showing signs of veering from established patterns, particularly when it comes to milestones like moving out of the parents' house, getting married, and buying a home. Many experts, including Atlanta Fed economist Tim Dunne (who has written extensively on the topic, including this article), acknowledge that economic conditions are partly to blame for these delayed decisions.

But are these decisions only being delayed, or have preferences changed? Reports from some Atlanta Fed business contacts suggest that attitudes and preferences may in fact be changing. Some business contacts report that, unlike previous generations, millennial employees are often unwilling to commit long term to one organization, preferring instead nonmonetary perks such as flex time over higher pay, and they place great value on work-life balance. Moreover, real estate business contacts in South Florida have noted that millennials prefer the "experience" that often comes with high-end apartments, such as amenities including dining and shopping, rather than a traditional home in a suburban setting.

More than shifting preferences may be at work, though. According to Fannie Mae’s national housing survey, conducted in May 2014, potential first-time homebuyers are facing several challenges that inhibit their ability to purchase a home. Although the survey does confirm that the number of renters has increased on a national basis, and the number of homeowners has declined, since the financial crisis, the survey's findings indicate that potential homebuyers are not renting by choice but rather by necessity. Higher credit standards and increasing home prices have hindered potential homebuyers. The survey results suggest that younger renters aspire to own but feel pessimistic about their ability to get a mortgage, perceiving down payment and credit score requirements as obstacles. The survey also reported that young renters aspire to own for financial and lifestyle reasons, although a smaller share of respondents (versus last year) reported that their primary reason for renting is to prepare them for homeownership.

For the rental market, the question remains whether that segment's growth is a permanent shift by millennials or merely a bridge until this generation is better prepared to become homeowners.

By Marycela Diaz-Unzalu, a Regional Economic Information Network analyst in the Atlanta Fed's Miami Branch