e-EDGE is now available as an RSS feed. [Click here to subscribe to it.]Total housing starts fell by -5.0% to 549,000 units (seasonally adjusted annual rate or SAAR) between May and June. This decrease was the second in a row and the lowest pace of activity since October 2009. At 454,000 units SAAR, construction of single-family homes in June was down by just -0.7% over the May rate. However, the volatile multi-family sector declined sharply, with starts dropping by -21.5%% in June to just 95,000 units SAAR, the lowest month since February 2010 (when only 78,000 units were started).
Despite June’s decrease, it looks like the long downturn in homebuilding might finally be over. The apparent low point was reached in the 1st quarter of 2009, when a total of 530,000 housing units SAAR were started, of which 362,000 were single-family units. Total starts in June were up by +11% from the trough, while single-family units increased by +25%. Evidence of a bottom in multi-family activity is more recent—and therefore more tentative. As of this month’s release, the low point came in the 4th quarter of 2009, when builders started just 76,000 units SAAR. Thus, June activity was up by +24% from the bottom.
With housing up from the low point, what happens next? The industry has entered a period of great uncertainty. On the one hand, mortgage rates are quite low and home prices have fallen; so homes are certainly affordable—for those who can obtain mortgages. However, the Federal Reserve is no longer supporting mortgage rates in the secondary market. Also, federal tax credits have expired. Housing starts declined in May-June after a flurry of activity (November 2009-April 2010) caused by the tax credits’ prospective termination. Because we don’t know how many transactions the tax credits brought forward in time, the depth and the length of the current dip in demand are uncertain. The true underlying demand for new housing won’t become apparent for at least three to six months. (Nancy D. Sidhu)
Source: http://www.census.gov/const/newresconst.pdf
The California Association of Realtors (CAR) recently released their June 2010 report for existing home sales and prices in California. Statewide, sales of existing single-family homes declined by -4.2% compared with June 2009 to 492,800 units (seasonally adjusted, annualized rate). Meanwhile, the median price was up by +13.6% to $311,950. Although prices have been on a rising trend over the last several months, the median existing home price in California is still -47.5% below the peak ($594,530) reached in May 2007.
In Los Angeles County, unit sales during June fell by -1.1% over the year, while the median price rose by +4.7% to $334,800. In Orange County, unit sales were up by +6.4%. The median price also increased, rising by +6.0% to $517,620. The Riverside-San Bernardino area posted another steep decline in unit sales. The number of homes sold in June tumbled by -21.0% over the year, but the median price jumped by +15.0% to $191,900. Unit sales in San Diego inched up by +1.1% in June and the median price increased to $397,910 (+9.7%). Ventura County saw unit sales advance by +18.3%. The median price rose by +1.6% to $450,930.
In the San Francisco Bay area, unit sales fell by -3.1% over the year. The area’s median price increased by +16.3% to $598,640.
Looking sales and median prices compared with May:
The CAR reported that the unsold inventory index for all types of homes rose to 4.8 months in June, compared with 4.2 months at this time last year. The termination of the first time home buyers’ tax credit probably influenced last month’s lower sales volumes, but limited inventory helped to push prices up in many areas. Sales were still significantly higher than the trough of 2007 and prices well below peak values. (Kimberly Ritter)
Source: http://www.car.org/newsstand/newsreleases/junereport/?view=Standard
China: China’s National Bureau of Statistics announced that the Chinese economy expanded by +10.3% in the second quarter when compared to a year earlier. China’s economy had grown by +11.9% on a year-to-year basis in the first quarter 2010. The slight slowdown in growth was exactly what the government desired. The Chinese economy was beginning to overheat, leading to concerns related to inflation and a potential real estate bubble. Inflation also cooled off a bit in the second quarter moving up +2.9% in June after increasing by +3% in May. Both figures point to a diminished risk of economic overheating and could translate into the government reducing some of the recent restrictions on bank lending and property purchases. The Chinese government has recently lowered the rate of credit expansion and investment spending as credit and real estate risks began to alarm policymakers. All leading economic indicators rose in the second quarter on a year-to-year basis, albeit at a slower pace than in the first quarter. These include fixed-asset investment, industrial production, retail sales and exports. Exports soared by +44% in June compared to a year earlier expanding the Chinese trade surplus to $20 billion.
UK: The UK’s Office of National Statistics announced last week that the British economy grew by +1.1% in the second quarter, which was the highest pace of growth since the first quarter of 2006. The GDP figure was much stronger than anticipated and has eased fears of a double-dip recession in the UK later this year. However, strong second quarter results in most sectors of the economy should bring some much-desired calm to the economic environment and financial markets. The manufacturing sector grew by +1.6% on a quarter-to-quarter basis, the fastest rate since the third quarter of 1999. In addition, construction rose by +6.6% in the second quarter after declining by -1.6% in the first quarter. However, this quarterly result could be the last hurrah, if fiscal tightening takes hold soon and prevents the economy from performing even better. (Ferdinando Guerra)
Thursday, July 29: Long Beach International Trade Office: 2010 Southern California Business Development Conference
9:00 a.m. - 4:00 p.m. At Hyatt Regency Hotel (200 South Pine Ave.), Long Beach.
Whether you are starting a new business or transitioning one to the next level, you won't want to miss this opportunity to discover the latest business building tools, resources and ideas that you can implement in your business the very next day. Enjoy a day away from the office and receive high quality customized learning with 9 in-depth workshops, 2 panel discussions and over 20 speakers and face-to-face meetings during reception, breaks, lunch and mixer. Remember, nothing beats the personal connections enabled by in-person meetings! Keynote addresses by California Lieutenant Governor Abel Maldonado and Chip Conley, CEO, Joie de Vivre Hospitality.
Saturday, September 25: Valley Economic Development Center: Where's the Money Access to Capital Business Expo
8:00 AM - 2:30 PM at The Odyssey Restaurant (15600 Odyssey Drive), Granada Hills.
Join us for a day of Education, Resources & Business Growth! Discuss your financing needs with lenders – schedule a one-on-one consultation. Obtain information from a wide range of business resource providers. Attend workshops where these topics will be discussed by panels of experts.
Save the Date! Wednesday, November 10: The LAEDC 15th Annual Eddy Awards
6:30 p.m. Reception. 7:30 p.m. Dinner and Awards Program. At the Beverly Hilton. Contact Justin Goodkind (213) 236-4813 for sponsorship and tickets.
The Eddy Awards® is a cocktail, dinner, and awards gala to support fulfillment of the LAEDC mission to attract, retain, and grow businesses and jobs for the regions of Los Angeles County. The Awards were introduced by the LAEDC in 1996 to celebrate individuals, organizations, and now cities that demonstrate exceptional contributions to positive economic development in the region. We are also pleased to present the 2010 Most Business-Friendly City in Los Angeles County award. The winning city will be announced live at the event.
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