MESSENGER POST MEDIA

plus

BOOMERS

WHATS
BUILDERS CATER TO
STRONG SEGMENT

A NEW LOOK

AHEAD
TECH TRANSFORMS
HOUSE HUNTING

IN THE MARKET
THE FACTORS
DRIVING THIS YEARS
HOUSING OUTLOOK FACTORS SHAPING 2017S MARKET
ADVERTISING SUPPLEMENT TO THE DAILY MESSENGER FOR APRIL 23, 2017
REAL ESTATE OUTLOOK ADVERTISING SUPPLEMENT FOR APRIL 23, 2017 PAGE 2
Sellers market to continue
F
ueled by a growing economy
and solid employment gains, the
National Association of Home
Builders estimates that single-
family home construction will
gradually increase in 2017 but still be faced
with challenges.
While positive developments on the
demand side will support solid growth in
the single-family housing sector in 2017,
builders in many markets continue to face
supply-side constraints led by the three Ls
lots, labor and lending, said Robert Dietz,
chief economist, National Association of
Home Builders.
Inventory is adequate but does tend to be
on the low side, said Daren Blomquist, senior
vice president, ATTOM Data Solutions, a
leading provider of real estate and property
data. The proof is in the pudding: 2016 saw
a 10-year high in the number of sales, and
that indicates that supply is adequate. The
National Association of Realtors estimates
that theres currently a five-month supply
(of single-family homes listed for sale),
which is on the low side. A six-month supply
is considered balanced, Blomquist said.
PRESSURE ON PRICES
Prices of single-family homes and condos
have risen quickly, up 60 percent since 2012,
while the average weekly wage has gone up
only 6 percent in that same time, according
to the Bureau of Labor, Blomquist said. That
means its a sellers market.
Sixty vs. six. Thats quite a disparity.
Thats making affordability an issue in an
increasing number of markets, Blomquist
said.
Things are getting back to normal, historic
levels though, as the housing supply
increases, he said: More homes are being
built so there will be more supply in 2017.
THE SUPPLY CHAIN
Homeowners who bought during the last
bubble were stuck in their homes when they
lost value during the economic downturn.
Now, theyre finally regaining equity and
can afford to move up. By selling, theyre
producing more inventory for first-time
home buyers, Blomquist said.
 REAL ESTATE OUTLOOK ADVERTISING SUPPLEMENT FOR APRIL 23, 2017 PAGE 3

IN THE
MARKET
The factors driving this years housing outlook
BY MELISSA ERICKSON | MORE CONTENT NOW

T
ime will tell the impact of President Donald Trump, a real estate tycoon, on The overall health of the economy affects the value of the real estate market as well.
the future of the real estate market, but many other high-level factors are in Job and income growth lead to people purchasing homes. If the economy is doing
play now. One thing is a fact: The rate of homeownership, which is the share well then more people will purchase homes, causing a higher demand for new-home
of Americans who own their homes, has been in decline for the past 12 years. construction that leads to an increased demand for labor, land and construction
The 2016 U.S. homeownership rate of 63.4 was the lowest since 1965 when it was 63 material, etc., that is a positive for the economy, Torres said.
percent, according to the U.S. Census Bureau.
Interest rates have a major impact on the real estate market, and theyre on the rise. CONCERNS
As inflation rises so will nominal interest rates, said Luis Bernardo Torres, a research One troubling question is whether home prices will continue to outpace inflation and
economist at Texas A&M Universitys Real Estate Center. Increasing interest rates are wages. That depends on the region and that in turn depends on the regions economy,
expected to create some roadblocks, but theyre still at low levels. A 75-basis-point as well as supply constraints and labor shortages, Torres said.
increase roughly adds $80 to the monthly principal and interest payment to the typical If the demand is strong that would lead to home-price appreciation, he said.
homebuyer.
Another concern is whether the supply constraints in home construction will be
GROWTH FACTORS eliminated, leading to a decline in home affordability especially for building homes
Demographics, or data that describes the composition of our populations age, gender, below $250,000, Torres said.
race, income and more, are often overlooked but do significantly influence the housing Credit for commercial loans for land development has been constrained, affecting the
market. One population that cant be ignored is millennials, the largest generation in availability of land to build new homes, Torres said.
American history. Texas is a clear example of this, where demand for new homes has been strong but
Millennials are getting older. They are beginning to reach an age at which major supply has not caught up with demand, causing strong home price appreciation.
lifetime events such as marriage, purchasing a home and having a child are more likely Given land costs due to the lack of the supply of developed lots, it has become very
to occur, Torres said. This shift will lead to modest improvement in 2017 for first-time difficult for homebuilders to construct a home below $250,000 even with the presence
homebuyers. The number of millennial home buyers will increase, which is good for of strong demand, Torres said. For profit reasons homebuilders are building more
the market. Tempered growth. expensive homes, causing a decline housing affordability.
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A COMPLETE
LOOK
Tech is changing how agents market homes

BY MELISSA ERICKSON | MORE CONTENT NOW

T
he real estate market is undergoing a tech
transformation, and forward-looking real estate
agents are embracing things like drones and
virtual reality home tours.
While relatively new outside of the gaming industry
and yet to hit the mainstream, virtual reality real estate
technology is a burgeoning industry, said Bill Brown,
chief executive officer of Matterport, a 3-D home tour
provider and virtual reality pioneer. Virtual reality could
transform the real estate fields days of open houses and
blueprints into a future of more efficiency and ease.
The company allows agents and developers to take
their own photos inside a property and upload them
into Matterports software, which automatically
transforms the pictures into lifelike 3-D models of the
homes. Then users can connect virtual reality headsets We were able to see each detail of the house
to the models, plunging them inside and allowing without ever stepping inside. It is so realistic that
prospective buyers to interact with a house the same
way they would in real life, Brown said.
many actually reached down to hold the railing
So how is virtual reality house hunting different from as they virtually walked down the steps.
being there in person? MIKE CRIMALDI
People have learned to mistrust staged home
photographs over the years because they are only
showing the homes best features, Brown said. Virtual traditional open house. This type of exposure is critical. drones for commercial purposes, and manufacturers making
reality tours are also available 24/7, and not limited to a the technology easier and more accessible than ever, I think
few hours over the weekend. Wearing a slightly silly-looking virtual reality mask, viewers
were able to walk through the home. well see a lot more people using drones and the aerial
BRINGING HOMES TO YOU perspective to enhance their real estate marketing, said
We were able to see each detail of the house without ever Natalie Cheng, director of communications, Autel Robotics, a
Recently Anthony Colantuono and Mike Crimaldi, stepping inside. It is so realistic that many actually reached drone and camera company. In June 2016, the federal agency
sales associates with Coldwell Banker Hunter Realty down to hold the railing as they virtually walked down the cleared the commercial use of unmanned drones as long as
in Brecksville, Ohio, co-listed a $1.65 million property steps, Crimaldi said. Its a game-changer for real estate they meet certain standards, including weight requirements,
in Moreland Hills, a suburb of Cleveland. Instead of agents who potentially can use the technology to see dozens and operators pass testing.
hosting a traditional on-site showing for area real estate of listings in one sitting and provide even greater value to
agents, the pair invited brokers to tour the home in their clients. The aerial perspective can be great for showing large
virtual reality at a restaurant 20 miles away and closer properties, neighborhoods or other nuances from any
to the citys top agents. EYE IN THE SKY location that couldnt be seen from the ground, Cheng said.
Agents are always looking for the next best way to Also making a big impact on the real estate market will be One Autel customer even uses his drone to do walk-throughs
market their homes, and virtual reality is it, Colantuono the increased use of drones. of the house, using its onboard stabilizer and 4K camera to
said. Im now convinced. We more than doubled the Between the Federal Aviation Administrations new rules get high-quality video footage of the interiors, too, she said.
amount of agents we would have normally had at a this past summer making it easier to become certified to fly
REAL ESTATE OUTLOOK ADVERTISING SUPPLEMENT FOR APRIL 23, 2017 PAGE 6

HOUSING
BOOM
Builders cater to strong baby boomer market
W
BY MELISSA ERICKSON | MORE CONTENT NOW
hether they are selling the
homes where they raised their
children and are heading to
sunnier pastures, or staying
put and redesigning to accommodate
their retired lifestyle, boomers are making
an impact on housing trends and
homebuilders are paying attention.
Builder confidence in this growing
segment of the market remains strong,
said Paul Emrath, National Association of
Home Builders vice president for survey
and housing policy research. The 55-plus
housing market ended 2016 on a record
high with an index reading of 67, up eight
points from the previous quarter and the
highest reading since the inception of the
index in 2008.
The index is based on a survey of NAHB
members in the 55-plus housing market.
Theyre asked to rate factors including sales
and traffic for single-family homes, condos
and rentals.
Builders and developers in this market
segment are encouraged by the fact that
for the next 15 years, 10,000 baby boomers
will be turning 65 every day. The consistent
pressure of this age group wanting to
downsize from a large home, shifting to
other regions of the country, or just simply
looking for a newer home or community
also play a key role in the index movement,
said Dennis Cunningham, chairman of the
National Association of Home Builders 55+
Housing Industry Council and president of
ActiveWest Builders in Coeur dAlene, Idaho.
TRENDS
In many ways boomers are similar to other
home buyers, with the exception that
they tend to want everything on one level
without a basement, Emrath said.
They have pretty much the same
preference for general location such as
favoring suburbs and rural locations over
central cities, Emrath said.
The community amenities boomers prefer
include nearby retail space, parks, walking
and jogging trails, and other fitness features.
REAL ESTATE OUTLOOK ADVERTISING SUPPLEMENT FOR APRIL 23, 2017 PAGE 7
The main differences are, older home
buyers are less interested in playgrounds,
more interested in an outdoor maintenance
service. Older buyers are looking for a
maintenance-free lifestyle, Emrath said.
Energy Star appliances and windows and
overall Energy Star home ratings are key
features for boomers, Emrath said.
Other items boomers most often flag as
essential are laundry rooms, ceiling fans,
a full bath on the main level and exterior
lighting, he said.
Baby boomers are even more resistant
than other buyers to some less popular
community features such as golf courses,
mixed use (residential and commercial in
one) and high density, he said.
An important caveat to this is that America
is a large country. So it is certainly possible
to build successful 55-plus communities in
central cities or with golf courses, but these
are not for everyone, Emrath said.
PRICE POINTS
Boomers have experience in the home
buying market and are looking for good
deals.
Its a diverse market, but certainly a
substantial share of boomers are looking
for something at the affordable end of the
spectrum. One-third of boomers who buy
homes want to spend under $150,000, and
half of these want to spend under $100,000,
Emrath said.
But like the Rolling Stones sang, You cant
always get what you want.
Although many boomers are looking to
buy homes priced below $150,000, very
few of the new age-restricted homes are
being built in this price range. The reason
is not because builders dont want to build
for these customers, but because costs
dont allow them to, Emrath said. There
is currently a significant problem with
the price and availability of lots and labor,
especially in key locations, and regulation
by government at all levels often drives up
the cost of development and construction.
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