Tag Archives: Housing

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What lies ahead for remodelers?

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As remodelers prepare to say goodbye to the century’s second decade, they may be feeling a bit ambivalent about their future prospects. All in all, the last half of the present decade has been pretty good for remodelers, with annual growth figures hovering around 5 to 7% or better.

Recent indicators suggest that trend is winding down. The good news is demand for remodeling services should remain solid, but revenue growth in the next couple of years will likely be more modest.

In keeping with other industry indicators, MetroStudy announced that its Residential Remodeling Index (RRI) for the third quarter of 2019 remained more or less flat, squeaking up just a half a percentage point from the previous quarter. Although the index reached a new high of 118.9, it posted a 2.89% year-over-year gain, well below that of the previous several years. MetroStudy projects an average annual growth rate this year of 3.1% for businesses in the 380 metro areas it tracks.

Looking ahead to the start of the next decade, MetroStudy forecasts continued but leaner gains in remodeling activity in the next several years. It anticipates average year-over-year growth of 2.2% in 2020 and 2.4% in 2021, with a possible rebound in 2022.

MetroStudy chief economist Mark Boud pointed to the weak housing market, low turnover in housing, and an expected lower growth in employment in the coming years as reducing demand for remodeling services. Rising home prices as well as the cost of materials and goods, along with a shortage of skilled labor, will also create headwinds for remodelers, according to the third quarter Kitchen and Bath Market Index (KBMI), produced by the National Kitchen and Bath Association and John Burns Real Estate Consulting.

Other factors, however, are lining up in remodelers’ favor. Chief among those is demographics. Speaking with Kitchen and Bath Design News, Jay McKenzie, director of consumer insights and research at leading builder marketing firm BDX, observed, “The oldest millennials are entering their mid-30s, a key age for first-time homebuyers, and 10,000 baby boomers per day are heading into retirement.” Consequently, he foresees strong consumer demand continuing into 2020.

At present, many of those baby boomers are choosing to stay in the homes they have and are making upgrades and renovations to make them more functional and comfortable. Kitchen, bathroom and master bedroom remodels with aging-in-place features still remain priorities for these homeowners, as reflected in the National Association of Realtors’ 2019 Remodeling Impact Report.

Millennial first-time homebuyers, on the other hand, are in many cases buying homes from boomers who have decided to change their residence and want to customize them to suit their own tastes and lifestyles. Findings from the National Association of Home Builders 2019 What Home Buyers Really Want survey show millennial homebuyers place a high value on having a laundry room, home office or work space, and a more open floor plan, such as expanded kitchen for entertaining or a great room — features not present in the home when they purchase it.

Provided interest and mortgage rates remain low and home prices begin to stabilize, remodelers should see a steady stream of demand from both these constituents. Concerns about health and wellness in the home as well as money-saving utility conservation improvements cut across all generations and are other areas of opportunity for remodelers.

Another growing business for remodelers, highlighted at this year’s Home Improvement Research Institute Summit, is assisting with modifications or repairs needed due to the effects of climate change.

As both winter and summer temperatures and weather conditions become more extreme, homeowners will need to make changes to keep their homes comfortable and secure. Those whose homes have been damaged due to floods, fires, hurricanes, tornadoes, or other natural disasters will have to replace or make substantial repairs to parts of the structure.

In addition, consumers who have the means will want to update or redesign their homes to make them more pleasing and attractive. All these trends should help to drive business for remodelers.

However, should the economy and employment growth begin to slow, they may receive more requests for smaller projects with more modest budgets. The volume of demand may remain fairly constant but revenue growth probably will not keep pace with that of years past.

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Luxury homebuyers are shifting locales

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The market for luxury homes regained its footing in the third quarter — the first positive quarter of growth this year. Sales of second and vacation homes also are rising.

Unexpectedly, activity was greatest in so-called secondary markets, notably areas that are experiencing migrations of more affluent homeowners and real estate investors. These trends should help to widen the sphere of opportunities for interior designers seeking to acquire more high-end clients.

Following three quarters of declines in sales and price increases, the luxury home market stabilized during the summer months and early fall. Real estate brokerage website Redfin reported sales of homes priced at $1.5 million or more were up 3.2% year-over-year, slightly above the annual growth for homes priced below $1.5 million.

The average price of homes selling for $1.5 million or more nudged up by 0.3% for the year. Price gains varied considerably by location, from a phenomenal 128% year-over-year increase in West Palm Beach, Florida, to a 17.6% annual decline in Charlotte, North Carolina. About 1 in 5 luxury homes sold for more than the asking price, down from around 1 in 4 a year ago.

The boost in buying brought more sellers into the market. New listings for luxury homes grew by 6.0% compared to the same period in 2018, and overall inventories were up 9.3%. By comparison, the supply of homes selling for under $1.5 million was down 6.9% from the third quarter of 2018.

Demand also has been growing for second and vacation homes, finds the National Association of Realtors. According to its 2019 U.S. Vacation Home Counties Report, between 2013 to 2018, the median sales price in vacation home counties increased at a slightly higher pace of 36% compared to the pace of increase of all existing and new homes sold, at 31%.

Based on Black Knight property data, the study found the median prices in the top 25 most expensive vacation home counties in 2018 ranged from nearly $272,000 (Sussex, Delaware) to $1.6 million (Nantucket, Massachusetts).

Substantial growth in household income, tax cuts and lower mortgage rates have made luxury and vacation properties more attractive. Other factors, though, are causing buyers to look for properties elsewhere than in traditional high luxury markets.

The Institute for Luxury Home Marketing’s Luxury Market Report for November 2019 states the changes in the tax code that capped deductions for mortgage interests has led to a significant migration from high-priced, premier markets such as San Francisco; Los Angeles; New York; Chicago; and Washington, D.C., to communities in more tax-friendly states, such as Florida, Nevada and Texas.

This has resulted in high growth in luxury home purchases in secondary markets such as Phoenix, Atlanta, Las Vegas, Portland, Austin, Dallas, Nashville, and parts of Florida and Virginia.

Younger, affluent homebuyers are migrating to more affordable locales that also offer a higher quality of life, such as Seattle; Charlotte; St. Louis; Denver; and Richmond, Virginia, as well as Nashville and Austin. Florida is the hottest destination for luxury homes at present, attracting retirees and near-retirees as well as investors looking for better returns. Buyers are bypassing Miami and Palm Beach for more attractive properties in West Palm Beach, Clearwater and St. Petersburg.

On the whole, though, the luxury home market has been fairly stagnant this year, and experts wonder whether the third quarter gains are a trend reversal or a temporary blip.

A recent Hot Property newsletter from the Los Angeles Times points to sudden price reductions in luxury homes in Southern California as a sign that sellers are trying to take advantage of the third quarter momentum in the hopes of closing before the end of the year. It notes that sellers usually will take their homes off the market in early December in order to come back with a fresh offer in January, which will affect end-of-year sales figures.

Furthermore, political and economic uncertainties could drag on the market in coming months. The Luxury Market Report cites a recent PwC report that cautions the luxury real estate market will be “more volatile” in the coming years due to political divisiveness, tax policies, and media coverage of particular markets. Luxury real estate news website Mansion Global predicts that the 2020 general election and expectations of subdued economic growth will dampen sales of luxury homes next year.

At least for the short term, the good news for interior designers is that the increase in activity in a number of secondary markets around the country should mean that more designers will have an opportunity to compete for high-end clients and grow their businesses. The recent spate of luxury purchases may translate into design projects in 2020 as buyers settle into their new homes and contemplate how they want to improve them.

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Master planning: A trellis to grow a city on

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We have all likely come across master plans, the “placemaker’s” new tool of choice. They mostly take the form of differently colored polygons within a site outline to delineate what uses will be allowed where and how an area of new development (or regeneration scheme) might take shape.

But until recently, master plans have been quite unfashionable. In an age of speculative anything-goes urbanism, development has resisted attempts to grow itself along a “trellis” drawn up by the planners.

It becomes obvious from the quality of some of the “placeless” and incoherent neighborhoods we are creating, that this has led to a crisis of “placemaking,” and has provoked calls for a new era of the “master planner.” Here we look at what master planning means as a process and what challenges it faces for the future.

Master planning as process

At its most basic, a master plan is an instruction manual for how a site, city or even region should be developed in future. While most of us only get to see the final document, the hard work of master planning begins much earlier. This is the stage where the team might be faced with an empty piece of land, or a fragmented neighborhood in need of regeneration. It is at this stage that the quality of output has to be locked in.

Master planning is a fundamentally collaborative approach of creative thinking that calls on a wide range of disciplines — from architects, urban designers, ecologists, engineers, and economists, to name a few. CABE, the U.K.’s former Commission for Architecture and the Built Environment, set out the stages for a successful master plan as follows:

Prepare: setting out clear aims and objectives for a place, expressed through a vision, which usually involves resolving conflicts between differing aspirations.

Define: defining requirements in a clear, succinct brief, based on a careful understanding of the place and how it came to be the way it is.

Design: developing the plan through analysis, consultation, testing and refinement.

Implement: phasing the delivery and ensuring quality is safeguarded throughout, as envisioned in the early stages.

Getting the vision right

The vision is the foundation of the master planning process. This is where the “narrative” of a place is teased out and reimagined. Get this right, and you are on the right track. But the question remains of whose vision is to be recreated?

Historically, setting this vision was overwhelmingly a top-down process. One famous example was the plan that created Washington, D.C.’s famous arterial boulevards in 1791 by French engineer Pierre-Charles L’Enfant, now ubiquitously known as the “L’Enfant Plan.”

Today, you would struggle to find architects or urban designers naming their plans after themselves. In today’s more humble age, consultation is the name of the game, with the aim of taking on as broad a range of views as possible and creating a vision that meets as many of their aspirations as feasible. If this is left, as it too often is, to a superficial opportunity to scrutinize the finished product, planner should prepare for a pretty unreceptive audience.

Delivering a master plan

While the vision is important, it must also be realistic. The frustration of many a master planner is that too many plans sit as little more than inert colored blocks on the desk of a city planner without ever becoming bricks and mortar or are simply watered down beyond recognition.

The key to avoiding this also lies in getting the very earliest stages right, long before pen is put to paper (or a mouse starts to click on Adobe suite). The delivery partners should be on board as early as possible.

Master planning through the climate crisis

One of the biggest challenges facing master planners in the 21st century is how the practice can respond to the demands of the climate crisis. In the past, the starting point for a master plan might have been the roads, leaving gaps for buildings, with leftover space to be filled in (usually with parking lots). If you were lucky, the components might be interspersed with trees. Today the objectives of such plans are being called into question.

Many now call for landscape-led master plans which looks at “landscape” not as the view from your window, but as the fundamentals of the place and how people live in it. In some ways this has turned the whole master planning process on its head — everything follows from landscape. This is giving landscape architects a seat at the table along with the architects and engineers, and means much greater attention to green infrastructure, and how we better balance the requirements of residents and users and the pressures on the environment. This move could slowly bring a whole new agenda to master planning.

Master planning a ‘natural town’

More far-reaching critiques of ‘business as usual’ master planning have come from those who argue that master planning practices are actually failing to create cities that match up to the performance of some informal cities that grow organically, without outside expert help.

In the new book “Climax City,” two urban designers from the U.K. and India argue that urban designers have been trying too hard with their plans, and not leaving enough space for the city to grow on its own, more organic terms as we might see in structurally complex informal settlements globally.

This critique starts from the assumption that the perfect city cannot be “willed into existence” by a utopian architect, and questions the very role of the master planner, certainly as it has been conceived of in the past. It suggests that today’s master plans have to be drawn up with less hubris, striking a more healthy balance between rigidity and flexibility, so that they are able to fix only the absolute essentials of the relationships between buildings and open spaces, without starving new neighborhoods of the room to grow on their own, often unexpected trajectories.

What next?

Master planning is fundamentally a social endeavor, not a technical one. This is why we have to be vigilant against cut-and-paste master plans, that simply apply rules systematically. A good master planner delves into the rich context of the site or city, shaping the “narrative” of the place before even giving a thought to the buildings that might occupy it.

It also means constantly recalibrating objectives to deal with new challenges — the climate crisis foremost among them. Master planning is back, but not as we once knew it.

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US payrolls add 266,000 jobs; unemployment rate falls to 3.5%

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In November, total U.S. nonfarm payrolls added 266,000 new hires, as the unemployment rate dipped to 3.5%, according to the Bureau of Labor Statistics. The unemployment rate has been under 4% for 21 straight months.

In November, unemployment among major worker groups changed scantly, as did the number of people out of paid work at 5.8 million. GM workers returned from being on strike.

“Over the last three months, payroll employment growth has averaged 205,000 new jobs, more than enough to keep up with population growth and pull in thousands of workers off the sidelines each month,” according to Elise Gould, an economist with the Economic Policy Institute in Washington, D.C., in a statement.

Wage growth, however, is not as robust as job increases, according to Gould. “Nominal wages rose 3.1% year-over-year in November,” she said, “which is slower than expected in an economy that has had historically low unemployment.”

As the unemployment rate falls, employers compete for new hires, which in theory tends to boost hourly wages, according to standard economic theory. That principle of supply and demand remains but is tepid.

The workweek stayed static last month. “The average workweek for all employees on private nonfarm payrolls was unchanged at 34.4 hours in November,” according to the BLS.

Medium-sized business of 50-499 employees created 29,000 jobs in November, down from 64,000 in October, according to the Automatic Data Processing National Employment Report, produced from ADP payroll data in conjunction with Moody’s Analytics.

Large firms of 500 or more employees hired 27,000 new workers in November versus 44,000 in October. New hires rose at small firms of 20-49 employees with 25,000 new jobs in November compared with 30,000 in October. Very small businesses with 1-19 workers lost 15,000 jobs in November versus losing 12,000 in October.

According to ADP/Moody’s report, the service-providing sector added 85,000 new jobs in November versus 138,000 in October. Meanwhile, the goods-producing sector lost 18,000 jobs in November compared with losing 13,000 in October. Manufacturing, natural resources and mining firms each lost 6,000 jobs in November versus October job losses of 4,000, respectively.

“In November, the labor market showed signs of slowing,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, in a statement. “The goods producers still struggled; whereas, the service providers remained in positive territory driven by healthcare and professional services.”

“Job creation slowed across all company sizes; however, the pattern remained largely the same, as small companies continued to face more pressure than their larger competitors.”

The Federal Open Market Committee’s Oct. 30 move to cut short-interest rates to boost the continuation of the economic expansion was a positive move, according to Gould. “When they meet next week,” she said, “they should continue looking to the data for guidance and keep interest rates low until we reach genuine full employment.”

The central bank has cut interest rates three times in 2019.

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Housing inventories drop as sales heat up

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The seesaw ride that is the U.S. housing market appears to have no end in sight. After dipping in September, home sales rebounded in October.

At the same time, however, inventory levels fell to their lowest point in the year, causing prices to rise by their highest percentage increase in the year. With mortgage rates fluctuating and the winter months just around the corner, sales are likely to stagger in the final months of the year.

Sales of existing homes re-stabilized in October, rising 1.9% following a 2.2% drop in September, according to the National Association of Realtors (NAR). Sales are now up 4.6% compared to a year ago. However, the market is facing pressures due to decreasing inventories and rising prices.

Total existing housing inventory fell by 2.7% last month, said the NAR, and is down more than 4% from a year ago. Real estate firm RE/MAX stated inventory in the 53 metropolitan areas it tracks was 9.1% lower year-over-year, the lowest October reading in the survey’s 11-year history.

Fewer homes for sale means sellers can ask higher prices. Real estate brokerage website Redfin reports the median price of a home sold in October ($312,200) was up 1.4% from the previous month and 5.4% from a year ago, the largest year-over-year increase since July 2018. RE/MAX calculated the median price of a home in its survey at $254,000, up 8.4% from last year.

That may be good news for sellers, but it is bad news for the market overall, as much of the recent demand for homes has been at the lower end of the market. The NAR noted that prices had increased in October but reported that the median price of homes sold had dropped slightly from the month before.

For all homes sold, the median price was $270,900, down from $272,100 in September. The median price for a single-family home sold in October was $273,600, down from $275,100 the month before. It is these lower-price houses that are disappearing from the market as inventories shrink.

The ongoing struggle between demand and availability/affordability is stifling the market from gaining momentum. Lower mortgage rates helped to boost activity in late summer and early fall.

Now, with inventories down and prices on the rise would-be buyers are again taking a wait-and-see attitude. Fannie Mae announced that its Home Purchase Sentiment Index (HPSI) slipped 2.7 points from September to October, including a 7-point drop in the proportion of respondents who agreed that “Now Is a Good Time to Buy.”

The good housing news for the month was the uptick in new housing starts (up 3.8% from September and 8.5% year-over-year), along with permit requests (up 5% and 14.1% year-over-year) and completions (up 10.3% and 12.4% year-over-year).

The National Association of Home Builders related that its Housing Market Index, which measures builder confidence, remained stable (at 71) and at its highest point of the year for the second month in a row, with half of respondents reporting an increase in buyer traffic conditions.

Industry experts are hopeful that a surge in new homes for sale early next year will take some pressure off inventories and prices, drawing more buyers into the market. At present, although conditions look less favorable for the next couple of months, it appears the industry will end the year with a modest gain in growth.

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In hotel design, business skills can give you an edge

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Hoteling today is all about creating memorable guest experiences. In recent years, hotel operators have turned to designers to create awe-inspiring, welcoming and soothing interiors to help distinguish their properties from those of their competitors.

At the end of the day, though, hotels are businesses, and designers who can help cut or control costs and deliver an Instagrammable interior are likely to find favor with clients.

Knowing how clients will weigh their proposals can give designers a leg up when competing for projects. A team of researchers in the Department of Architecture at National Taiwan University of Science and Technology conducted a study to learn more about what criteria a certain class of hotel design operators look for when reviewing design proposals for their projects.

H.T. Huang and his colleagues, C.P. Chen and S.J. Tsaih, observed that there was a growing demand in China for economy hotels that cater to budget-conscious business travelers, tourists and students.

Increased competition among providers, including the incursion of some international chains, has caused operators to adopt more Western hospitality management practices, such as focusing more on the guest experience by investing more in brand management, hotel design and intelligent technology. Accordingly, competition for projects to upgrade existing properties has intensified.

Recognizing that this is a great opportunity for interior designers, the researchers sought to find out what elements made for a winning proposal. Employing a questionnaire rating 20 design criteria sent to 30 hotel CEOs and property managers, they used a Kano Model analysis methodology to determine which elements of a proposal clients considered “must-haves” and which were “nice to have” (referred to as “one-dimensional” in the paper) or “attractive” (likely to heighten guest experience and satisfaction).

What they discovered is that respondents ranked those elements of the proposal that related to project management and efficiency of operating the property highest. They gave the highest scores to construction phase scheduling and control (80%), design phase scheduling and control (70%), and construction cost control (63%).

The next highest scores went to easy to maintain and energy and water-saving design. In third place were criteria pertaining to branding, such as systemized corporate identification, customer segment identification, and storytelling.

Besides these criteria, the researchers noted two areas that were not considered “must-haves” by the respondents but were acknowledged to be attractive to guests and thus could be important for future business. These were incorporating modern intelligent technology and social media propagation (i.e., providing guests with “shareable” experiences and photo ops).

Overall, respondents gave relatively low scores to criteria that applied to aesthetics and the design firm’s reputation. However, it is worth noting that CEOs were more likely to rank criteria such as an award-winning designer, firm experience, firm size and international firm higher than did property managers, who focused on more operational criteria. CEOs also were more concerned about brand execution and presentation of visionary business models than were property managers.

The researchers note that it is to be expected that operators of economy hotels would focus heavily on bottom-line and scheduling criteria.

What the findings suggest is that proposals that address improvements in operation and guest experience while holding down costs are likely to receive greater consideration from prospective clients. In addition, where competing proposals may have similar virtues, other criteria such as designer or firm reputation can become a deciding factor.

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Fortress America: Why is the US still building gated communities?

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Gated communities go against most of what is currently in vogue in progressive urbanist thought. They turn their backs on an inclusive public realm, starving public streets of their vibrancy and withdraw a whole community from the theatre of our streets — limiting the protagonist for what Jane Jacobs describes as the “sidewalk ballet” performance of street life. Or, at least perhaps, creating splinter private ballet companies performing their own show for restricted viewing.

But still, by the year 2009 almost 11 million people in the U.S. were reported to be living in gated communities. We might be familiar with super-elite gated communities, where perks include riding arenas and performing arts centers, and it was for the superwealthy that gated residential communities really began.

But, in fact, gated communities now span the whole spectrum of housing across the U.S. So, what is driving this broader process of “residential fortification?” And what does it mean for the life of our neighborhoods?

The history

Gated communities may be seen as the archetypal North American urban form that now proliferates in mega-cities around the world. But they are not simply a modern U.S. export. The first city builders enclosed their creations with walls to keep outsiders away — from ancient Inca “kanchas,” to Chinese walled cities, and the Islamic walled city. The open city only became more common much later with the rise of nation states in the 19th century, and the internal security that ensued.

Newer forms are notably diverse. Some scholars have suggested that “new urbanist” communities like Seaside in Florida may have divergent motivations from gated communities, but essentially lead to the same segregating results, without a guard house in sight..

The impact on the wider public realm

While security is arguable a key driver for individuals and families choosing to live in a gated community, ironically it has been suggested that the gates probably make people less safe. Within these communities, the responsibility for keeping people safe is passed on to the security infrastructure (guards, gates, CCTV), meaning that neighbors are less likely to remain vigilant and to provide the “passive surveillance” that has been proven so powerful in making communities more secure and resilient.

Even if these communities did have a positive influence on security within, they tend to have a negative influence on the security of the wider neighborhood they are embedded within.

Similarly, while these developments are often marketed as creating tight-knit communities, brought together by the walls, by a similar mechanism, studies have shown that community volunteering rates are often actually lower in such developments.

The very form of these communities, structured around private and restricted roads, form interruptions in the urban grain, threatening the “permeability” that urbanists today are urging more of. But beyond the impact on the urban grain, what is more pervasive is the suggestion that this is an urban form that is helping to create a “gate mindset.”

Negotiating the public and private

The art of urban design might be stripped down to the challenge of negotiating the right balance between what should be private and what should be public. Most of us desire a modicum of private space, and it has been shown that a careful transition between the private and public realm can make or break a city.

Traditional courtyard blocks in urban areas are a well-established form developed in cities to manage this transitional space and foster community, but there are crucial differences between these and gated communities, particularly because the community is expected to spill over these boundaries in order to create connection with the wider community.

Inscribing societal divisions in our built environment

We are living in an era marked by division rather than inclusion. Survey data suggests that trust in our neighbors may be on a downward trend.

In particularly insecure contexts and fragile states, gated communities might be understood as a pragmatic (if imperfect) response to genuine insecurity. However, in the U.S., while crime rates are going down, fear of crime is rising, thanks in no small part to sensationalist media coverage.

These shifts toward a compartmentalized society — where we rarely exit our echo chamber and less frequently encounter and confront difference — inscribed in physical terms in our urban space with the continued rise of gate communities. This goes against the grain of the latest urbanist theories about community, health, well-being and prosperity. But they seem to be accepted as inevitable and it appears that contemporary U.S. planners (for all their advocacy of “smart growth”) are unable to resist.

The continued rise of these forms is certainly troubling, representing a step backwards in accommodation of diversity and a reversal of some of the progress made in social inclusivity over the previous decades. Although we must not only point the finger at gated communities and their role in shaping this segregated urban landscape.

As the more subtle dynamics of neighborhood gentrification have shown, you do not necessarily need to build walls to keep certain groups on the outside. Increasing house prices might do the trick.

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Remodelers lower expectations but anticipate growth

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Remodeling activity in the third quarter eased slightly. Nonetheless, remodelers remain optimistic that business will rebound in the fourth quarter and they will finish the year on a positive note.

Less certain is what will happen next year. Industry forecasters project that demand will begin to drop in early 2020 and flatten out by mid-year, resulting in near-zero annual growth.

According to recent surveys of remodelers, activity in the third quarter of the year remained relatively flat compared to the previous quarter.

The National Association of Home Builders (NAHB) stated its Remodeling Market Index (RMI) posted a reading of 55 (indicating modest growth) for the third quarter, the same reading as for the second quarter. Remodelers reported slight declines in client traffic and in demand for both major and minor additions or alterations.

Similarly, results of the third quarter Kitchen and Bath Market Index (KBMI), jointly produced by the National Kitchen and Bath Association (NKBA) and John Burns Real Estate Consulting, were nearly exactly the same as for the second quarter (65.4 vs. 65.7, respectively), but several points lower than in the first quarter (71.0). NKBA members indicated business conditions in the third quarter softened somewhat from the previous quarter (61.7 vs. 62.7), yet perceived overall industry health to be positive.

Remodeling contractors responding to the Houzz Q4 Home Renovation Barometer survey showed a notable uptick in business activity during the third quarter compared to the second. However, much of that was attributable to an increase in project inquiries (up 11 points) rather than in new committed projects (up just 1 point). Contractors also reported that their backlog of committed projects had dropped to around five weeks, down from six weeks a year ago.

Yet, despite the lag in new projects, remodelers at the beginning of the fourth quarter were optimistic that business would pick up, largely due to an upswing in client inquiries late in the third quarter.

The NAHB said future market indicators in its RMI were up two points from the previous quarter, and contractors in the Houzz survey posted a four-point gain in Expected Business Activity. The future business condition indicator for NKBA members remained stable (68.4 vs. 68.7).

Remodelers have scaled back somewhat their expectations for business growth this year in the light of easing demand the past two quarters. Overall, NKBA respondents, for instance, now anticipate they will end the year with an average 3.5% growth in sales, down from a projection of 5.4% in the second quarter. This is more or less in line with the growth rate calculated by other industry forecasts earlier this year.

Circumstances may be more challenging for remodelers next year, however. Weak home sales and home construction completions mean fewer owners or buyers wanting to undertake remodeling projects. In addition, the ongoing shortage of qualified labor and rising cost of materials and products are causing some clients to cancel, delay or scale back planned projects.

Demand for remodeling will not cease but is expected to taper off by mid-2020. The latest Leading Indicate of Remodeling Activity (LIRA) from the Joint Center for Housing Studies of Harvard University projects that annual home improvement and maintenance expenditures will decline in the first quarter and then continue to recede, posting a modest decline of 0.3% through the third quarter of 2020.

Not all remodelers will be equally affected. Home sales are doing well in some areas of the country, demand for bathroom remodels remains high, more homeowners are engaging professionals to help with remodeling projects, and the NAHB says remodelers will be needed in areas affected by natural disasters. However, after several years of healthy gains, the industry is likely to be looking at a lean year ahead.

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Home sales lose momentum despite falling prices

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Housing activity in September softened across the board and across the country. Low mortgage rates and reductions in home prices were not enough to offset a shortage of more affordable properties.

Sales of both new and existing homes slid from the previous month. New home starts and completions dropped substantially. While inventory of existing homes remained stable, those at lower price points were harder to find.

Having rebounded in August, new home sales dipped slightly in September, by less than 1%. The median price of a new home was $299,400, down nearly 8% from the previous month, and the average price was $362,700, down more than 10%. The earlier estimate of August’s sales was revised downward by around 1%. Nonetheless, sales were up 15.5% from September 2018.

Prices of existing homes rose to around 6% year over year, but the median price of those sold in September was down 2% from the previous month. Even so, existing home sales fell by 2.2%, following two months of positive growth.

Single-family home sales dropped by 2.7%. The median price of an existing single-family home sold was 2% lower than in August.

Demand for houses remains high, with both builders and real estate agents reporting increased foot traffic in September as would-be buyers are eager to take advantage of lower mortgage rates. Even with prices coming down somewhat, prospective buyers are having difficulty finding desirable properties at prices they can afford.

In general, higher-end sales are doing better at the moment. As inventories shrink, prices likely will begin to rise again, putting a damper on buying activity at a time of year that traditionally is slow for sales.

Adding to the pressure on sales is the erratic pace of new home construction. After soaring by more than 12% in August following several consecutive months of declines, new home starts in September plummeted by 9.4%. Requests for permits, too, were down by 2.7%. Completions, which grew by 2.4% the previous month, plunged by 9.7%.

Starts of single-family homes remained flat, and permits requests were up by less than 1%. Completions of single-family homes were down 8.6% compared to August. Dodge Data & Analytics reports that single-family construction fell 6% in September and is now off by 4% from a year ago.

Builders, however, remain confident that demand for new single-family homes in the coming months will improve, according to the National Association of Home Builders.

The association’s Housing Market Index (HMI) hit a 20-month high this month, with builders reporting increases in sales activity and buyer traffic. Expectations for activity in the next six months rose 6 points from September. Whether builders can keep pace with demand remains to be seen.

On the other side of the market, the National Association of Realtors announced pending home sales for September were up 1.5%, largely in the upper end of the market and in areas with more available inventory. What happens with home prices will determine whether October will see a gain in sales or a further slowdown in buyer activity.

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Innovative urban farming can meet the demand for fresh produce

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Recent research from Arizona State University gives us hope for a sustainable agricultural future. Researchers assessed the benefits of urban agriculture and found that it can lead to food sustainability.

The case study was that of urban agriculture in Phoenix, and the conclusion was that the city needed to use only 5% of its urban spaces to meet its sustainability goal.

The data-driven analysis shows that crops can be grown in three types of urban areas in Phoenix: vacant lots, rooftops, and building facades. The experiment will slash food deserts, environmental impacts from buildings and land use, and increase open, green spaces.

As the researchers pointed out, this experiment can be adopted quickly by other cities that wish to develop their own sustainability goals through urban agricultural methods.

Arizona is one of the biggest suppliers of produce for other states, and its urban experiment may act as an inspiration to others as well.

New York City’s vegetable production comes nowhere near meeting its demand. The majority of the city’s fresh produce is sourced from Arizona and California. Aside from the cost, long-distance transport of food leads to food waste through spoilage, diminished food freshness, and energy wastage.

The practice of urban or vertical farming promises to counter these effects and offer New Yorkers and others fresh produce locally. These crop production systems primarily use a liquid nutrient solution in lieu of soil and have controlled ambient air temperatures and relative humidity. The enriched concentration of carbon dioxide in its air hastens the crop’s photosynthetic growth, leading to much higher yield and quality.

These crops are less dependent on seasonal changes, pesticide-free, fresh, and hyper-local. They also consume 20% of the freshwater compared with open-field production.

Across the Atlantic, other experiments in urban farming are being carried out in the Netherlands. Located on one of the waterways in the Port of Rotterdam is an urban floating farm.

This small dairy farm seeks to bring animal products closer to the cities and save space. The innovative platform has three decks. The roof collects rainwater and has room for a solar panel to produce power; the cows rest on the middle deck and occasionally stroll over to a feeding station. The lower level of the structure allows entry and also holds the milk and manure processing facilities.

There are individual, communal and commercial efforts sprouting up in the U.S. and abroad. Food production is an experiment that can happen anywhere with some innovation.

Some are also demonstrating this passion by using shipping containers to grow fresh produce. This goes well with new generations’ focus on food safety and affinity for local produce.

As the world’s population increases and arable land continues to decrease, food sustainability has become a top concern. Urban farming might be the answer to meet those sustainability goals.

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