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Supply of existing homes falls seven months straight

Posted by nahetsblog on February 27, 2013

USA TODAY REPORTS

Across the country the supply of existing home sales is at an eight year low after seven straight months of declines.Competing bids on the same house is driving up prices.Unfortunately at least 25% of the home owners cannot sell yet because they are still underwater,if they sold at current values their would be no money left after paying closing costs for a down payment on the next home.Another change that is helping the prices is the number of short sales is decreasing. Their was a seven percent increase in prices last year with half the cities seeing nine percent or better,Phoenix,AZ led the way with 24% then San Fransisco,CA at 14% then Detroit,MI at 13% and fourth was Las Vegas,NV at 12.3%.

The Economy
The United States economy continues to grow at a moderate pace despite facing various hurdles, many of them created by the politicians in our nation’s capital. The most immediate hurdle to overcome is the March 1 sequestration (an across-the-board reduction in spending for most areas of federal government) unless an agreement is reached over the federal budget. There is already a drag on economic growth as various federal agencies adjust their spending in anticipation of sequestration. The negative effects of threatened spending cuts will be limited if an agreement over the budget appears near.

The other major politically created risk is the federal debt ceiling. Legislation temporarily increased the debt ceiling until May 18 when it expires. Hitting the debt ceiling would mean that the Treasury would have to delay various federal payments, including Social Security and Medicare, federal payrolls, reimbursements to contractors, tax refunds, and debt payments. Not meeting debt payments would be a technical default of U.S. government debt and undoubtedly mean a downgrade of the U.S. debt rating, with negative fallout for many U.S. companies — most notably financial institutions.

Other, though lesser risks include possible sovereign debt default by one or more European countries, one or more countries abandoning the euro or total dissolution of the euro, and a significant and prolonged increase in energy prices. In spite of all these challenges, we expect the economy to continue to grow at an acceptable, if unspectacular, rate.

On the positive side, low interest rates and the reviving housing market are providing a much needed lift to the economy.

Risks to the Economy and the Forecast
As just noted, major risks to the economy include the following:

  • Sequestration
  • Allowing the temporary increase in the federal debt ceiling to expire without a more permanent solution or another temporary increase in the ceiling (a less desirable outcome)
  • Sharp cutbacks in government spending over the near term rather than phasing them in over a few years (possibly a result of a budget agreement to prevent sequestration or an agreement to raise the debt ceiling)
  • Sovereign debt default by one or more European governments
  • One or more European governments abandoning the euro
  • A sudden, significant jump in oil prices (50% or more) for a prolonged period (two months or more)

If one or more of these risks occur then economic growth will be lower than forecasted with negative fallout for commercial construction and would increase the possibility of a recession.

The Forecast
The Reed Construction Data forecast assumes that the outlined risks do not occur. Total construction spending is forecasted to grow 8.5% this year and 9.3% in 2014.

U.S. Total Construction Spending

(billions of U.S. current dollars)

Actual Forecast
2009 2010 2011 2012 2013 2014
New Single-family 105.3 112.6 108.2 129.2 156.5 181.1
Year-over-year % Change -43.3% 6.9% -3.9% 19.4% 21.2% 15.7%
New Multifamily (1) 35.9 24.1 22.6 27.2 34.4 39.3
-30.0% -32.9% -6.0% 20.3% 26.5% 14.1%
New Residential (2) 141.2 136.7 130.8 156.4 191.0 220.3
-40.4% -3.2% -4.3% 19.6% 22.1% 15.4%
Residential Improvements (3) 112.7 112.5 114.9 127.0 143.7 155.2
-6.6% -0.2% 2.2% 10.5% 13.2% 8.0%
Total Residential (4) (5) 253.9 249.1 245.7 283.4 334.7 375.5
-29.0% -1.9% -1.4% 15.4% 18.1% 12.2%
Nonresidential Building 375.7 290.4 283.1 298.9 311.1 337.2
-14.2% -22.7% -2.5% 5.6% 4.1% 8.4%
Heavy Engineering (Non-Building) 273.5 265.0 249.4 267.9 276.6 295.1
0.5% -3.1% -5.9% 7.4% 3.2% 6.7%
Total (5) 903.2 804.6 778.2 850.2 922.4 1,007.9
-15.4% -10.9% -3.3% 9.2% 8.5% 9.3%
(1) New Multifamily = New Private Multifamily + New Public Multifamily – Public Improvements
(estimated by Reed Economics)
(2) New Residential = New Single-family + New Multifamily
(3) Residential Improvements include remodeling, renovation and replacement work.
Number also includes RCD estimate of improvements to public housing.
(4) Total Residential = New Single-family + New Multifamily + Residential Improvements.
(5) Total may not equal the sum of its components due to rounding.
Source: Census Bureau, U.S. Department of Commerce. Forecast: Reed Construction Data.

Twenty major upcoming California and Florida construction projects – February 2013

02/21/2013

The accompanying tables show 20 of the largest upcoming California and Florida construction projects. They are all in the planning stage and are mainly new projects, but may also involve additions and/or alterations.

Shopping centers, hotels, office buildings, medical buildings, educational buildings, libraries and museums, sports and entertainment complexes, industrial projects and government buildings will all be covered on a rotating basis.

There are several reasons for highlighting upcoming large projects. Such jobs have often received a fair amount of media coverage. Therefore, people in the industry are on the lookout for when job-site work actually gets underway. And, as showcase projects, they highlight geographically where major construction projects are proceeding.

Finally, total construction activity is comprised of many small- and medium-sized projects and a limited number of large developments. But the largest projects, simply by their nature, can dramatically affect total dollar volumes. In other words, the timing and size of these projects have an exaggerated influence on market forecasts.

Ten of the largest upcoming California construction projects

Project Title and Owner/Developer Location Current
Stage
Project
Value
U.S. $
millions
FSP TRANSBAY TRANSIT CENTER PHASE 1
San Francisco Transbay Joint Powers Authority San Francisco, CA Working Drawings $4,000
SAN DIEGO USD PROPOSITION Z
San Diego Unified School District San Diego, CA Proposal $2,800
BOYLE HEIGHTS (WYVERNWOOD APARTMENTS) PHASE 1
Fifteen Group Los Angeles, CA Masterplanning $2,000
HYATT REGENCY CENTRURY PLAZA HOTEL REDEVELOPMENT & MIXED USE
Woodridge Capital LLC Los Angeles, CA Conceptual Drawings $1,500
HOLLYWOOD PARK CASINO
Hollywood Park Inc Inglewood, CA Working Drawings $1,000
MILLENNIUM HOLLYWOOD
Community Redevelpment Agency Los Angeles Hollywood, CA Conceptual Drawings $1,000
CHAFFEY JOINT UNION HIGH SCHOOL DISTRICT MEASURE P
Chaffey Joint Union High School District Ontario, CA Proposal $848
WEST LA VA MEDICAL CENTER ESSENTAIL CARE TOWER & SEISMIC
US – Veterans Affairs Facilities Dept Los Angeles, CA Masterplanning $800
SAN DIEGO CHARGERS STADIUM
San Diego Chargers San Diego, CA Proposal $800
UC LAWRENCE BERKELEY NATIONAL LABORATORY SECOND CAMPUS
University of California Richmond, CA Proposal $718

Ten of the largest upcoming Florida construction projects

Project Title and Owner/Developer Location Current
Stage
Project
Value
U.S. $
millions
RESORTS WORLD MIAMI MIXED USE
Genting New York LLC (Resorts World Casino NYC) Miami, FL Masterplanning $3,000
FRUITVILLE RD MIXED USE
Sarasota Co-Commissioners Sarasota, FL Proposal $1,000
FRANCHISE HOTEL & CONVENTION CENTER
City of Miami Beach Miami Beach, FL Masterplanning $650
PALM BEACH COUNTY SOLID WASTE ENERGY FACILITY
Palm Beach County Solid Waste Authority West Palm Beach, FL Design Development $650
ZENA TIME SHARE RESORT
Northern Stary Realty Orlando, FL Masterplanning $500
GOAA SOUTH AIRPORT APM COMPLEX
Greater Orlando Airport Authority Orlando, FL Proposal $470
RAYS BALLPARK
Tampa Bay Rays St Petersburg, FL Proposal $450
MIAMI DADE WEST WTP DORAL
Miami Dade Water & Sewer Authority Doral, FL Schematics $400
CRAWFORD DIAMOND INDUSTRIAL PARK
TerraPointe LLC Nassau County, FL Proposal $400
SOUTHGATE OFFICE TOWER & HOTEL
Trammell Crow Co Tampa, FL Masterplanning $300

Construction Spending Ends 2012 on a High Note

02/26/2013 by Bernard M. Markstein

Total Construction Spending and its Major Components
The U.S. Census Bureau reported that total construction spending advanced 0.9% in December to $885.0 billion at a seasonally adjusted annual rate (SAAR), its ninth consecutive monthly increase. Spending numbers for October and November were revised up $8.0 billion and $11.0 billion, respectively. The November revision changed a 0.3% decline into a 0.1% gain. For the year, construction spending increased 9.2% over 2011.

Nonresidential building construction rose 1.0% to $301.0 billion (SAAR) in December following a 1.4% drop in November. October spending was revised up $3.0 billion and November was revised up $2.2 billion. For the year, spending was up 5.6% from 2011.

Heavy engineering (non-building) construction spending was the one area of weakness in December, falling 0.5% to $269.4 billion (SAAR) after jumping 1.1% in November. November’s number included a $2.3 billion upward revision. Despite the cutbacks in public financing for heavy engineering projects, spending was up 7.4% for the year.

Total residential construction spending, which includes improvements, continued its upward march, increasing for the ninth consecutive month, jumping 2.1% to $314.6 billion (SAAR) in December after increasing 0.7% in November. New residential construction spending, which excludes improvements, rose a healthy 1.4% after increasing 1.6% in November. For 2012, total residential construction spending was up 15.4% from 2011 while new residential construction was up 19.6% from 2011.

Total public construction spending fell for the fourth month in a row, down a seasonally adjusted (SA) 1.4% in December after slipping 0.1% in November. For 2012, public construction spending decreased 2.7%. Total private construction spending shot up 2.0% in December, its tenth consecutive monthly increase, after rising a more modest 0.2% in November. For the year, private construction spending increased 16.1% over 2011.

U.S. Total Construction Spending

(billions of U.S. current dollars)

Current Monthly 3-Month Moving Average Year-to-Date (NSA)
Oct-12 Nov-12 Dec-12 Oct-12 Nov-12 Dec-12 Jan-11 to
Dec-11
Jan-12 to
Dec-12
New Single-family 141.5 143.7 144.8 136.5 140.5 143.4 108.2 129.2
Month-over-Month % Change 3.8% 1.5% 0.8% 3.5% 3.0% 2.0%
Year-over-year % Change (NSA) 29.7% 30.6% 29.0% -3.9% 19.4%
New Multifamily (1) 29.6 30.2 31.6 28.7 29.4 30.5 22.6 27.2
4.0% 2.2% 4.5% 2.2% 2.5% 3.6%
29.7% 30.4% 34.3% -6.1% 20.3%
New Residential (2) 171.1 173.9 176.4 165.2 170.0 173.8 130.8 156.4
3.8% 1.6% 1.4% 3.3% 2.9% 2.3%
29.7% 30.5% 29.9% -4.3% 19.6%
Residential Improvements (3) 135.1 134.3 138.2 132.1 133.8 135.8 114.9 127.0
2.2% -0.6% 2.9% 2.4% 1.3% 1.5%
16.9% 12.3% 17.4% 2.2% 10.5%
Total Residential (4) (5) 306.2 308.2 314.6 297.3 303.8 309.7 245.7 283.4
3.1% 0.7% 2.1% 2.9% 2.2% 1.9%
23.3% 22.2% 24.2% -1.4% 15.4%
Nonresidential Building 302.3 298.1 301.0 300.7 299.4 300.4 283.2 298.9
1.5% -1.4% 1.0% 0.5% -0.5% 0.4%
5.1% 1.7% -0.2% -2.5% 5.6%
Heavy Engineering (Non-Building) 267.8 270.7 269.4 266.7 268.6 269.3 249.4 267.9
0.1% 1.1% -0.5% 0.0% 0.7% 0.2%
5.3% 3.7% 0.9% -5.9% 7.4%
Total (1) 876.2 876.9 885.0 864.8 871.8 879.4 778.3 850.2
1.6% 0.1% 0.9% 1.2% 0.8% 0.9%
11.1% 8.8% 7.4% -3.3% 9.2%
Monthly levels are seasonally adjusted at annual rates (SAAR figures).
(1) New Multifamily = New Private Multifamily + New Public Multifamily – Public Improvements (estimated by Reed Economics)
(2) New Residential = New Single-family + New Multifamily
(3) Residential Improvements include remodeling, renovation and replacement work.
Number also includes RCD estimate of improvements to public housing.
(4) Total Residential = New Single-family + New Multifamily + Residential Improvements.
(5) Total may not equal the sum of its components due to rounding.
Source: Census Bureau, U.S. Department of Commerce.

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