Highest New Home Inventory in 5 Years

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News from the National Association of Home Builders (NAHB) is that new home builders are looking for and buying lots and getting building permits, but new home inventory of homes not yet started is still strong because it is possible that these builders are waiting on buyers (pre-solds) before beginning construction.  There is much good news coming out about new home building permits for single-family homes, new home inventory, and new home sales.Lot 59 Bedico Creek

Single-family home building permits were up 2.4% in October, 2015.  Overall, single-family new home building permits are up 8.6% for the year 2015.  Single-family home starts are up year-to-date as well with a slight dip in October due to storms in the Gulf Coast and Southern regions.  Because building permits and starts are up for the year, new home construction of single-family homes is also up across all regions nationally.

New home inventory stands at the highest level since March, 2010, and increased overall in 2015 1.3% to 226,000 available homes.  If homes continue to sell at their current pace (and no new homes were built), all homes would be sold off in 5.5 months.  Inventory for new homes not yet started is the strongest it has been since the end of 2008, right before the Recession.  Builders are looking for lots and labor as the housing market returns in force.  There is simply not enough land for sale or sub-contractors to build new homes to support the amount of inventory coming out of the ground – which is good news for the real estate industry.

In addition to the high amount of new home inventory, new home sales are also thriving to increase 10.7% to 495,000 in October compared to September’s numbers.  The total number of new homes sold has increased 15.7% year-to-date.  The NAHB is predicting an overall sales pace of 511,000 new homes in 2015, and October’s numbers seem to show that it will happen by end of year.

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Three Rivers Art Festival Huge Success in St. Tammany

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After narrowing down the field of prospective participating artists for the Three Rivers Art Festival from 400 to 200, 3 judges spent countless hours evaluating and viewing with unbiased eye the artwork of these 200 talented artists that were part of the festival on November 14th and 15th.  Judges were Cindy Pulling, executive director of the St. Tammany Art Association, STAA board member Jessica Danby, and STAA Advisory Council member Sarah Sparkman-Boyd.

“The goal is that all the artists feel heard and seen,” said Peggy Schoen Des Jardins, the festival’s coordinator for jurying and judging.

The first day of the Three Rivers Art Festival was spent visiting each artist to go over the presentation of their booth Three Rivers Art Festivalsetup and then to judge their artwork for its creativity, craftsmanship, and concept, and how the artist “tied it all together.”  The 2nd day of the festival, the judges were tied up themselves using a computer program to assign a score to each artist.  Artists were scored on a scale of 1 to 10 for multiple categories.

Winners included artists from all genres from jewelry making, to sculpting, to metalwork, to painting.  There were 5 main awards including the Best of Show and City of Covington Awards.  The Best of Show Award went to Susan Elnora of Minneapolis, MN, who presented her jewelry and metalsmith skills.  The City of Covington Award went to Katie Burckel, a sculptor who constructs sculptures using different items that have been discarded or donated to thrift stores.  Ethan Lillemoe of Norcross, Ga., won the Three Rivers Award for his unique sculpture. Jessica Stoddart Ladd of Cookeville, Tenn., garnered the St. Tammany Award for her colorful paintings in distinct stainless steel frames, and James Bird won the Bogue Falaya Award for his colorful photography.

In addition to the main awards, there were 15 Awards of Distinction given out during the Three Rivers Art Festival. Artwork from students from the Center of Performing Arts were also displayed – approximately 400 pieces, and the St. Tammany Art Association’s gallery exhibitions as well as local galleries were also available for visitors to peruse.  For more information on the Three Rivers Art Festival, visit www.threeriversartfestival.com.

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Average Size of the New, Single-Family Home is Above Average

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The majority of home buyers interested in building a new, single-family home or new, custom home remain 2nd, 3rd, and fully custom home buyers.  The re-entry of the 1st time home buyer to the real estate market has not yet begin post-Recession. While the housing market has been recovering on a slow and steady pace since 2012 when house pricing started to really climb, it has not recovered enough to allow qualification of credit for first-time home buyers.  The number of approved FHA loans – loans typically offered to 1st time home buyers – has remained 1-545 Bedico Parkway Front Exteriorstagnant for many quarters in a row.  Even with the lowering of the down payment cost from $5,000 to $3,000, there has not been a great surge of first-time home buyers into the housing market.

Because of these statistics, the average size of a new, single-family home has remained above average compared to the years just before the Recession.  Historically, it is typical for home buyers with more security, fewer credit problems, and a larger investment to be able to build and afford “more home,” so the larger square footage of homes is not unexpected coming out of the Recession.  However, for the 2nd quarter of 2015, the median square footage of new homes built dropped slightly and then remained the same for the 3rd quarter.  During the 2nd quarter of 2015, the living square footage of new, single-family homes dropped from 2,478 to 2,445.  Total square footage dropped from 2,704 to 2,653.

Historically, total square footage during the 2nd quarter of 2015 was up by 13%, and the living square footage amount was up by 17%.  The cost of building these square footages is on-average – $468,318 for a new home built on 1/2 acre of land.  Of that cost, 61.8% was construction costs, lot cost was 18.2%, builder profit was 9%, and overhead was 5.6%.  The remaining percentage of the cost to build and buy a new home included Realtor commission, financing and marketing.  These costs are not dissimilar from 2013’s numbers, so the percentage breakdown of the cost of building a new home have not changed much in the last two years.

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Consumer Credit Expands – Lending Standards Tighten

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For the economy, surprising, debt can be a good thing.  Surveys show that consumer credit expanded and lending standards tightened in the 3rd quarter of 2015.  Whether it is a construction or land loan, an auto loan, a student loan, a mortgage, or even credit card debt, the expansion of credit overall shows that the economy is on an upward trend for consumer and business credit.  Consumer credit grew 8.5% and 7.5% in the 2nd and 3rd quarters of 2015.  What accounted for most of this debt was non-revolving credit such as mortgages, auto loans, and student loans.  This non-revolving credit rose 7.9% in the 3rd quarter.  Revolving consumer credit also grew by 6.5%, and credit limits have been on the rise for all of 2015.  Total credit limits have increased by 5.1% since the 1st quarter of 2014.

On the flip side, credit requirements have continued to be challenging for builders and developers alike while banks are constantly adhering to new lending standards issued by the federal government including the latest release of the Closing Disclosure which has now replaced the traditional HUD-1 Settlement Statement typically used in all real estate closings.

Lending restrictions by the 20 largest documented banks have actually eased more than credit restrictions of smaller banks.  This would be excellent news except that the large banks do not hold a big majority of real estate loans – only 33% over the last 7 years.  The senior loan officers of other banks that do hold the majority of land loans, loans, and construction loans were surveyed to find out if lending had eased on these types of loans.  6.7% of loan officers said that restrictions had tightened compared to 2.7% of loan officers at the larger banks.  According to the survey, overall 4.4% of loan officers surveyed said that lending standards had tightened.  However, there was a big discrepancy between the answers of those surveyed, and the conflicting answers showed that many senior loan officers felt that standards had actually eased during the third quarter of 2015.  Regardless, lot sales and construction loans have increased over the past 3 years, and builders and developers are now having a hard time with finding sub-contractors to build their houses – a good problem to have!

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