Facebook Statistics

Member Profiles – 610,736,920 MILLION

Member Profiles – 1 in every 11 people on the planet now have a Facebook profile
#2 visited site behind Google

Each month, the average time by member = 6 hours, 2 minutes, and 59 seconds

Every 60 seconds….

230,000 messages sent
95,000 status updates
80,000 wall posts
65,000 photos tagged
50,000 links shared
500,000 comments….

Zynga, Facebook’s biggest app developer has…

19 games
275,000,000 users per month
Kazillion hours of productivity lost….

World-wide use….
24% of all users are from USA
6% of all users from Indonesia
5% from England
4% from Turkey

Brands with most fans on Facebook: 21.6 million = Coca-Cola
19 million = Starbucks
16.2 million = Oreo
15.6 million = Disney
14.7 million = Red Bull

Facebook pulled in an estimated… $1.86 Billion in 2010 advertising dollars

Expected to grow 118% in 2011 to…. $ 4 Billion in advertising dollars

GDP REPORT

2nd quarter 2009                   - 0.7%

3rd quarter 2009                      2.2%

4th quarter 2009                      5.6%

1st quarter 2010                       2.7%

2nd quarter 2010                      1.7%

3rd quarter 2010                      2.6%

4th quarter 2010                       3.1%

1st quarter 2011

Advance Estimate April 28        1.8%

Second Estimate May 26          1.8%

Third Estimate June 24

I am not an economist but the first quarter of 2011 looks exactly like the 2nd quarter of 2010.

WHY talk about anything other than the economy and jobs????????

Release dates in 2011 Gross Domestic Product

                                        2nd QT                    3rd QT
Advance Estimate              July 29                     Oct 27
Second Estimate               Aug 26                     Nov 22
Third Estimate                  Sept 29                    Dec 22

As housing goes …. So goes the economy!

States Are Broke

The following chart shows the projected DEFICIT as a percentage of each state’s 2012 budget.

STATE                          PERCENTAGE OF THE STATE BUDGET

AL                                                          13.9
AR                                                          11.5
CA                                                                          29.3
CO                                                         13.8
CT                                                          18.0
DE                                       6.3
FL                                                          14.9
GA                                      7.9
HI                                       8.2
ID                                       3.9
IL                                                           14.6
IN                                       2.0
IA                                       3.5
KAN                                  8.8
KY                                     9.1
LA                                                                           20.7
ME                                                       16.1
MD                                                      10.7
MA                                    5.7
MI                                     5.9
MN                                                                         23.6
MS                                                      14.1
MO                                   9.1
NE                                    9.2
NV                                                                                            45.2
NH                                                                         27.2
NJ                                                                                             37.4
NM                                   8.3
NY                                                     18.7
NC                                                     12.7
OH                                                     11.0
OK                                   9.4
OR                                                                         25.0
PA                                                      16.4
RI                                                       11.3
SC                                                      17.4
SD                                                      10.9
TN                                   9.4
TX                                                                                             31.5
UT                                   8.2
VT                                                      16.3
VA                                                      13.1
WA                                                     16.2
WI                                                      12.8

Peak of the Week

The following chart shows the average home price comparison by states from the peak of the market in 2006 and a peek forward to the prices of March 2011. Sales price shown in thousands.

STATE                         2006                                 March 2011

AL                                216                                         232
AR                               400                                          268
CA                             1,000                                        567
CO                               380                                         482
CT                                600                                         583
DE                                380                                         317
FL                                400                                         364
GA                               250                                         247
HI                                900                                         876
ID                                250                                         303
IL                                340                                         285
IN                               200                                         183
IA                               200                                         178
KS                              200                                         199
KY                             200                                         206
LA                              250                                         231
ME                             270                                         310
MD                            460                                         356
MA                            620                                         535
MI                             220                                         185
MN                           370                                         245
MS                            200                                         197
MO                           200                                         204
NE                            200                                         190
NV                           400                                         286
NH                           400                                         317
NJ                            560                                         441
NM                          400                                         325
NY                           490                                         690
NC                           230                                         282
ND                           170                                         192
OH                           190                                         173
OK                           170                                         199
OR                           380                                         313
PA                            320                                         254
RI                             565                                         435
SC                            250                                         287
SD                            180                                         219
TN                            250                                         239
TX                            190                                         266
UT                            330                                         341
VT                            320                                         363
VA                           470                                          339
WA                          420                                          333
WV                          160                                          194
WI                            270                                         230
WY                          200                                          542

Vacancy Rates

The rental vacancy rate graph shows a significant trend down. The rental vacancy rate into 2011 is sharply declining. The lower the vacancy rate, monthly rents will trend higher. In my previous posts, I indicated that multifamily housing projects have also suffered during the great recession. Also, municipalities are reluctant to approve zoning requests increasing density. Most of the rental units are being absorbed by displaced homeowners that have lost their home to foreclosure or a short sale. Their credit rating must be repaired before entering the housing market again – if ever.

When rental vacancy rates are back to “normal” ranges, the choice will become clearer for home ownership, especially as the gap in family formations is reduced. All of this highlights a pending surge in demand even beyond the current pent-up demand. Demand will increase housing prices and the cycle will begin in reverse from what we have experienced over the past 3-years.

Time to buy a home, townhouse or condominium is now.

Housing Demand

There is a pent-up demand for housing and it is a direct result of the economic environment. This demand will not be able to be satisfied in the short term due to supply problems. Prices will sharply increase as supply further decreases and demand sharply increases. More people at the triangle base of the housing market will be locked out of the housing market as the market shifts from a buyer’s to a seller’s market.

Annual rate of Family Formations:

Current: 750,000

Norm: 1,200,000

The Housing Pipeline

The home building industry is a manufacturer. Builders and developers produce lots and or homes. Currently, their manufacturing conveyor belt has limited product. This graph shows the decline in homes under construction for sale and homes completed for sale. These are speculative homes. All builders will have some spec homes in inventory for buyers wanting to buy and close more immediately than wait for new construction.

My experience in housing recessions, primarily in leadership roles with regional builders, is to limit the number of spec homes. Today, not only will builders have the same opinion but lenders are not approving funds for spec building.

With existing new inventory (spec homes) significantly lower, builders will not be able to meet the demand due to the lag time between the point of sale and the certificate of occupancy. In some locations, the time to construct a 1,800 square foot home may on the average be six months. This time frame is without factoring in local government’s inspection process, labor shortages in certain trades, possible material shortages, and weather conditions. These are other factors that will impact the ability to satisfy the pent-up demand in a reasonable time.

Low inventories, higher demand, labor shortages, and increased material costs will all cause new homes to increase in price faster than you would expect.

Act rather than react.

Housing Supply

Several states, Nevada, Arizona, Florida, and California have been in a housing and economic depression. Most states are not producing new homes to keep pace with the increase in population and demographic changes. This illustration breaks down the national supply problem to the state level.

This issue seems to be overshadowed by the fact that there are over 3,500,000 homeowner delinquent on their mortgage loans and 2,500,000 homes stagnated in the foreclosure process.

The homeowners facing the above problems may be or will be displaced from their home. However, they will move somewhere i.e. move-in with a relative, rental apartment, become homeless. They may even move to another state to start over. The displaced homeowner becomes pent-up demand – not now but after their credit is restored in about three years. Some of these homeowners will never buy a home again.

The new housing starts meet the need of the increased population, family formations and replacement of old housing stock. The supply of new homes will be (is) a problem. The lack of new housing supply is being overshadowed by the economic impact on current owners, i.e. foreclosure, short sale, loss of job, taxes, etc. When the economy regains traction and trends positive for months, the supply and demand curve will shift dramatically and significantly.

The buyers that wait and react to the shift in the market will have a higher cost of homeownership than those buyers that act NOW.

Single Family Housing Starts

I have studied housing start statistics since my tenure working for the National Association of Home Builders (NAHB) in the late 70’s. The great recession is by far the worst economic environment to predict when a housing recovery will occur. For this blog post, I will focus on the supply of homes. A later blog post will focus on the demand side. In October, 2010, I posted a blog entry on housing starts and predicted that the first half of 2012 is when there will be dramatic changes in housing production and demand.

David Crowe, NAHB Chief Economist, defines a normal housing market by having 1,500,000 NEW homes built each year. He is predicting this to happen by the end of 2012.

Mark Zandi, Chief Economist for moody analytics defines a normal housing market by having 1,600,000 NEW homes built each year. He predicts this to happen by the end of 2013.

In any event and not being an expert, I can even conclude that new home construction has been in a depression since 2008. The lack of production has caused a supply problem. Short sales, foreclosures, and distressed sales are displacing families still in the need for housing. These homes do not add to the overall housing stock.


The trend of increased housing starts has started!
There will be a dramatic increase in housing starts because of the lack of supply AND pent-up demand.
The result will be increased housing production on the back of labor and material shortages. The workforce in housing has been decimated and material manufacturing plants have either reduced production or closed down.

The result will be increased prices and higher interest rates. Act rather than react.

Housing Affordability Index

By reviewing this graph, you will note that before the great recession, housing affordability has been trending up. From ’07 – ’11 shows a dramatic increase in housing affordability primarily based on the dramatic decrease in housing prices, ample supply, and historic low interest rates. In my opinion, the affordability index is reaching its own “bubble” and the pendulum will swing past normal levels due to increased demand, reduced supply and higher interest rates. The fluctuation in these trends is due in part to less than focused national policy and debate on housing issues. The rebound would then situate affordability in the band of normal expectancy.

Bottom line is affordability in real estate is at an all time high and will never be this high again in our life time. It is time to buy real estate. Act rather than react.

As Housing Goes………..So Goes the Economy

Over the next two weeks, I will provide a current status of the housing industry and why I think we will have an instantaneous flip-flop from a buyer’s market to a seller’s market. As I outline the case substantiating this opinion, please keep in mind your real estate goals and dreams. Without a doubt in my mind, the American Dream is having land with a home to raise your family; have a height chart on the wall; create memories associated only with your home; and establish roots in your community. Home ownership is not a stepping stone but a concrete foundation of pride, a sense of gratitude, and verification of family achievement surpassed by nothing else.

In the late 70’s and during the severe recession, the NAHB membership had a motto for the times:

“Where will our children live?

In my opinion, this question is as relevant today as it was over 30-years ago. Even with housing prices being significantly adjusted down over the past several years, my fear is that our children will miss a great opportunity to own their own home before we don’t have an answer to the question!

This map shows the average house price-to-income ratio in each state. The comparison is based on data generated over the past two decades. However, this snapshot in time will change as homes will again appreciate and the COST of homeownership will again rise. Why do some of the states currently have a high ratio? I can explain a few.

Virginia – the federal government influences the Virginia market and the housing demand-supply curve. More buyers than supply.
Oregon – Portland and state growth management plans restrict growth and supply. Plus, more buyers than supply.
New Jersey - because it is New Jersey but most likely, more buyers than supply. After all New Jersey has more people per square mile than any other state.

I hope the next two weeks of blog posts will further highlight the real estate opportunity that exists now but may disappear as early 2012 later in 2013. Act rather than react!

Foreclosures & Shadow Inventory Update

The M and M’s of Success: Part II

Guest Blog Post by Pat Riley
2011Ever hear the phrase, “Just Do the Work?” In a previous post, I talked about “the first M” in my guide to success, which I dubbed “Mindset.” With a good mindset, we have a better chance of success.

So now, let me introduce the second ‘M’ to the equation: Mechanics. Here is the challenge that I raise with the second ‘M.’ We can have the best attitude and the best mindset this world can bring but lack the results desired in life or business.

Whether trying to lead, better a relationship or excel in your chosen profession, there is a certain skill set that is necessary. There is a plan of work. There are activities that you must do in order to achieve the results and success you desire.

Passion about what you do goes a long way. Passion helps you to enjoy the work and activities, and guide you through the gut-check moments along the way.

But passion will only get you so far. Accountability and the right skill set are good additives that will bring you home! The right Mindset combined with the Mechanics of doing the work, and doing it right, will bring you success! Stay tuned for the “rest of the story.” Do you know what the final ‘M’ is?

How do you know Home Prices have hit the bottom?

• Home prices become flat – stabilize at 0%
• Foreclosure rates peak
• Affordability shifts higher – 1st time buyers can buy!
• Active inventories stabilize and start to decrease
• Absorption rates begin to decrease
• Multiple offer scenarios begin again in lower price points
• Local unemployment rates begin to improve

 

Real Estate – A Good Investment?

As you all know, I am a proponent of buying a home to raise a family or become an integral component of your community. The housing bubble was created in part by the financial industry qualifying buyers who normally would not have been able to purchase. And, in part by buyers thinking that buying a house was a short-term investment. Their business plan was to buy, flip and make money. The real estate industry is well into its third year of decline and maybe it is now a good time to buy. First and foremost as a home owner but is real estate a good investment?

Smartmoney.com recently posted an article outlining several reasons why it is a good time to buy a home.

Smart people are buying real estate:

Paraphrasing Warren Buffett ….. be fearful when others are greedy and greedy when others are fearful.

John Paulson, the hedge-fund manager who made $20 billion betting against the housing bubble said: “If you don’t own a home buy one, if you own a home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home”.

Barbara Corcoran, Real Estate contributor to NBC’s Today Show - “We have a regular real estate miracle happening. We not only have record low prices, but we also have cheap money.”

Donald Trump – “I’m pretty sure this is a great time to go out and buy a house. And if you do, in 10 years you’re going to look back and say,” ‘you know, I‘m glad I listened to Donald Trump.’

Real Estate performs well during inflation
If you think we will have inflationary pressures in years ahead, you should consider buying real estate since holding an asset is the right strategy in an inflationary environment.

Demand is coming back
As housing goes…. So goes the economy. If jobs are created and unemployment starts to significantly decline, the demand for housing will skyrocket. This will cause a sharp rise in prices. This will most likely occur as interest rates increase and inventories decrease. There is a pent-up demand caused by the delay in family formations, less flexibility of families moving for work, and “fear” is replaced with optimism.

A house is a home and owning a home is the American Dream.

Census Data

Robert Land and Chrissy Nicholas, University of Nevada completed an analysis of the Census Data to determine how the population grew in different growth areas surrounding the fifty largest metro areas. Their analysis was from 2000 to 2010.

They basically classified the growth rings around the metro center. Each growth ring is identified as a type of burb.

Type of suburb growth from 2000 to 2010:
24.5% growth rate in the farthest ring of development from the urban center.
11.3% growth rate in the area closest to the urban core.
7.8% in the middle growth ring.

Metropolitan areas as a whole had a growth rate of 10.5%
The growth rate for the country was 9.7%

It is stated that 85% of the nation’s 308.7 million people live in metro areas and over half live in the suburban rings around urban centers. There are five growth areas identified in the report: urban centers, inner suburbs, emerging suburbs, mature suburbs and exurbs. The report is based on rings of development and how it has occurred over the years.

Using the census to highlight growth patterns is of interest and it is clear that affordability remains an important component of the where to live decision matrix. As we enter a new decade, the growth patterns will continue to follow affordability. However, monthly costs will include energy and transportation. The cost of a barrel of oil will alter growth patterns in the future. Families will need to live within their monthly budget and the cost to commute will be more important than ever before.

Maybe the growth rings beyond the urban core become their own urban centers. Resulting in a sustainable community based on social factors, environmental respect, economic considerations, energy costs and transportation alternatives. With technological advances, maybe companies will have to go to where the workers live rather than the workers commuting to the company.

Peak Of The Week

A peek forward ................................................ Time Magazine will no longer be printed.
Replaced by mobile news apps and social networking! 

The Real Estate Market is Back?

According to an article in Fortune magazine, the Deutsche Bank issued a report listing the top ten cities with the most affordable homes. The findings are based on the cost of owning versus renting. With pricing stabilizing in most markets, affordability is back --- will the first time homebuyers return?

Atlanta Rent as % of after tax mortgage payment: 151%
Median home price change 2006-2010 -33%

Orlando Rent as % of after tax mortgage payment: 137%
Median home price change 2006-2010 -51%

Rochester Rent as % of after tax mortgage payment: 136%
Median home price change 2006-2010 -4%

Cleveland Rent as % of after tax mortgage payment: 133%
Median home price change 2006-2010 -15%

Tampa Rent as % of after tax mortgage payment: 132%
Median home price change 2006-2010 -41%

Las Vegas Rent as % of after tax mortgage payment: 125%
Median home price change 2006-2010 -56%

Jacksonville Rent as % of after tax mortgage payment: 123%
Median home price change 2006-2010 -26%

St. Louis Rent as % of after tax mortgage payment: 123%
Median home price change 2006-2010 -12%

Buffalo Rent as % of after tax mortgage payment: 122%
Median home price change 2006-2010 -23%

Memphis Rent as % of after tax mortgage payment: 122%
Median home price change 2006-2010 -15%

As you may know, rents declined but have not only rebounded but will steadily climb. Also, future multifamily projects will be difficult to obtain entitlements and develop due to the lack of financing, scarcity of multifamily zoned land, and local government reluctance to approve high density projects. Thus the lack of supply and increased demand will drive rents even higher.

The following graph illustrates the “bubble” in rental apartment. The homebuyers that should not have gotten a mortgage during the housing bubble are returning to the rental market and vacancy rates are decreasing. It is very difficult to find an affordable rental apartment.

Real Estate Recovery

Source: FORTUNE Magazine April, 2011

Two basic factors are laying the foundation for a dramatic real estate recovery:

• Historic drop in new construction
• The steep decline in housing prices

Average US homeowner now pays just 9.8% of their income in after-tax mortgage, tax, and insurance payments. This is down from 17.2% at the 2007 peak.

In 28 out of 54 major markets, it’s now cheaper to pay a mortgage and other major costs than to rent the same house.

Non-distressed Markets
Lower active inventory/7 months or lower

New construction will come back fast

Demand will emerge – more than supply
Prices will go up
Rents will increase so ownership will make more sense
Buy now to get ahead of the crowd

Foreclosure Markets
Higher active inventory
Investors are becoming more active
Rental market is strong due to inventory
Will take longer to recover – 2 to 3 years
Prices will continue to drop due to so much active foreclosure inventory
Demand will start increasing due to affordability