Friday, January 23, 2015
Homebuyers and builders are beginning to downsize houses to make them more affordable and meet changing lifestyles.
The average new home built in the U.S. last year was about 20 square feet smaller than in 2013.
“After rising for four consecutive years, it began to recede in 2014,” said Rose Quint, a researcher with the National Association of Home Builders. “It went down to 2,642 square feet.
“I think the average home size will likely continue to recede in 2015,” Quint said at the builders association’s annual show in Las Vegas.
New homes on average are still about 25 percent larger than they were in the mid-1990s. And for a few years it looked like the American home would continue to be plus size, with more bedrooms, garages, media rooms and the like.
Quint said market factors are now putting a ceiling on home size growth.
In recent years most of the houses built across the country have been designed for more affluent, repeat buyers.
As young, first-time homebuyers come back to the market, average new house sizes will decline, she said.
“We are going to have more young people — first-time buyers — entering the housing market in 2015,” Quint said. “They are going to want smaller homes that cost less money.”
Those younger buyers say they are not interested in pricey features like outdoor kitchens, media rooms and fireplaces.
Dallas-Fort Worth homes have already seen big increases in size and price.
“From 2010 to 2014, the median new home price in D-FW has climbed from $213,000 to $285,000, an increase of almost 34 percent,” said Ted Wilson of Residential Strategies Inc. “During the first part of the D-FW housing recovery, as mortgage rates declined, very clearly buyers were purchasing more expensive homes with larger square footages.”
Higher construction and land prices have been putting pressure on the cost of a new home in North Texas, Wilson said. “As a result, the square footages are flat to down.”
Steve Brown - Dallas Morning News
I’m having a hard time getting my head about being a target market.
Except for hair dye and cholesterol blockers, folks my age don’t get a lot of attention from Madison Avenue.
The last time mass marketers considered me their prime demographic, it was for sales of eight-track tapes.
So I’m surprised by the love I’m getting from the nation’s $400 billion residential construction industry.
Turns out that over-55 Americans are the one of the largest and fastest-growing segments of the new home market.
“We thought that as soon as the housing industry started to recover this segment would take off in a very strong way,” Sharon Dworkin Bell, senior vice president of the National Association of Home Builders, said at the industry’s annual meeting in Las Vegas. “We have definitely seen that increase in the last year.
“We expect these buyers to continue to be a big share of the home market.”
For 2015, Americans 55 and older are likely to account for 44 percent of households. And by 2020 that share will rise to about 47 percent, housing economists forecast.
“It’s growing not just in absolute numbers but as share of all U.S. households,” said Paul Emrath, a research vice president with the Washington, D.C.-based builders association. “Those people have wealth, and that wealth makes this segment of the market attractive to many builders.”
Chris Porter, chief demographer with John Burns Real Estate Consulting, said that there are about 89 million Americans over age 55. They represent more than half of current homeowners.
“It’s a very, very rapidly growing group,” Porter said. “It’s ramped up in the last decade as baby boomers have reached this age.
“One of the reasons it continues to grow is they aren’t dying off as rapidly,” he said. “We are living longer and longer, and people are also working longer.”
Porter said that new home purchases by older buyers were delayed during the recession.
“Now they are ready to buy,” he said. “They have been waiting for the equity to return in their current homes.
“The challenge is they can’t find what they are looking for,” Porter said. “They want different layouts and new features and changes in location.”
And with existing housing inventories running short in many parts of the country, boomer buyers are more likely to be hunting for a newly built home.
“This is the story of the baby boomer,” said Tim McCarthy, a Pennsylvania homebuilder who’s vice chairman of the builders association’s 55-plus housing council. “They started arriving in our office about three years ago. Now it’s a tidal wave.”
McCarthy said that when one of his boomer target communities recently opened its doors, he sold 68 new houses in the first hour.
“The demand right now is overwhelming,” he said. “The challenge is to keep up with the production of homes.”
Steve Brown - Dallas Morning News
The Dallas area had one of the biggest home price increases on record in 2014.
Average prices rose 12 percent from 2013 levels in the 46 areas The Dallas Morning News analyzed for a year-end comparison.
The biggest price gains were in several southern Dallas County residential districts — including Wilmer-Hutchins, Southeast Dallas, Lancaster and Oak Cliff — where single-family home sales prices rose by more than 20 percent, according to data from the Real Estate Center at Texas A&M University.
Prices jumped at double-digit percentage rates in more than half of the areas.
Housing analysts and longtime sales agents don’t expect last year’s high home price appreciation rates to continue indefinitely.
“I can’t imagine we will see the kind of appreciation we have seen over the last couple of years,” said Rich Thomas, executive director of the MetroTex Association of Realtors. “I think things will level out a little bit.
“But overall I think we will see much of the same in 2015 as we saw in 2014,” Thomas said. “It’s still going to be a tight market.”
A shortage of houses for sale in the Dallas area has combined with robust economic growth to create the current housing crunch.
There’s only about a two-month supply of preowned homes listed for sale with Realtors in the area. A normal market is about six months of inventory.
“Inventory is still at an all-time low,” said Mary Frances Burleson, CEO of Dallas’ Ebby Halliday Realtors. “I just wish we had more homes.
“People are not rushing to put their house on the market and sell it,” she said. “Every time I go to a sales meeting we talk about inventory and what to do.”
Because so few houses were available, Dallas-area home sales were basically flat in 2014 compared with the year before. The largest sales increases were in Lancaster, Ellis County, Wylie and Euless.
Home sales fell in about half of the residential areas, with the largest declines in affluent neighborhoods with scare supply, including North Dallas, the Park Cities and Southlake.
“I think 2015 will be another good year for smart agents who can get the listings,” said Virginia Cook, CEO of Dallas’ Virginia Cook Realtors. “I think buyers realize that one day mortgage rates will go up, and it could be a substantial increase.”
Current low home finance rates have motivated some potential buyers, said David Brown who oversees the Dallas office of Metrostudy Inc.
“With rates down, it’s causing people to get into a rush,” Brown said. “Buyer traffic is up substantially, and earlier than normal.”
Analysts and some sales agents are predicting that home price gains will slow in the Dallas area this year.
“I think prices have leveled off, and the hip pocket listings aren’t selling like they were,” said Dallas agent Allie Beth Allman. “The sellers are worried about the oil market.
“Residential real estate is driven by emotion and fear.”
By Steve Brown/Dallas Morning News
Thursday, January 08, 2015
FAQ Capital LLC headed by Mike Hoque has just purchased the 27-story Adolphus Tower on Main Street with plans to redevelop the building into first-class offices and restaurant space.
The 181,000-square-foot, 60-year-old office tower is about 70 percent leased to a variety of business and retail tenants. Major tenants include WhichWich’s corporate headquarters, the State of Texas, The Berry Law Firm, Mathis & Donheiser Law Firm and consulting firm Litzler, Segner, Shaw & McKenney.
The new owners plan to give the high-rise a new exterior plus rebuild the ground floor for restaurant and retail tenants.
Buyer Hoque’s DRG Concepts has developed a string of popular downtown restaurants including Dallas Chop House, Dallas Fish Market and Wild Salsa. He’s credited with significantly boosting the downtown restaurant market.
His Hoque Global firm is also in transportation, meeting planning and other businesses.
“We have admired the Adolphus Tower since our entry into downtown with Dallas Fish Market in 2007 opening in the historic Kirby Building at Main and Akard,” Hoque said Tuesday. “With an ideal location and scale, Adolphus Tower will become an even more exciting downtown Dallas anchor in providing modern office space, and quality of life amenities for business and residents with a vibrant and expanded retail and restaurant mix.”
Hoque said he’s been working with Dallas developer Jack Matthews who did the Omni Hotel to better understand the downtown market.
“This is not something I just woke up and decide to attack,” he said.
After renovating Adolphus Tower, Hoque said he plans to target the offices to technology firms and business entrepreneurs.
Construction will start sometime during the next three months.
Hoque has hired Dallas architect 5G Studio Collaborative to handle the redesign of Adolphus Tower.
“We are looking at different sources of exterior lighting,” he said. “In the next few weeks we will be looking at finalizing the design.”
The building’s mechanical systems will also be reworked.
FAQ Capital bought the tower from a partnership set up by Henry S. Miller Co., which had owned the building since 2005.
Darrell Hurmis with Henry S. Miller Brokerage and Jonathan Diamond of United Commercial Realty brokered the sale. Terms of the transaction were not disclosed.
Adolphus Tower was built by the famed Dallas developer Leo Corrigan. He also owned the landmark Adolphus Hotel next door.
The office building was originally supposed to be 50 stories tall but it was impractical to construct a building so tall on such a small site. The $7.5 million project was designed by noted Dallas architect Wyatt C. Hedrick, who also did many prominent 1950s projects.
It was touted as “the most modern office building in the Southwest.”
The original exterior of Adolphus Tower was done in gray aluminum panels, which were replaced with stucco in the 1980s.
The renovation of Adolphus Tower will be just the latest in a series of high-profile building redevelopments on Main Street in Dallas’ old financial district.
“The Adolphus Tower at Main and Akard is a premier downtown location and important project in the Main Street district,” said John Crawford, CEO of the economic development group Downtown Dallas Inc. “In addition to adding and expanding restaurants, the decision to purchase Adolphus Tower and invest in improvements shows [Hoque’s] continuing commitment to downtown.”
Developer Trammell Crow Co. has finally pulled the wraps off its huge new Uptown high-rise project.
The more than 900,000-square-foot office, retail and residential development will start construction this year at Pearl Street and Woodall Rodgers Freeway on the north side of Klyde Warren Park, Crow said Wednesday.
The 3-acre mixed-use project will be built in partnership with Metropolitan Life Insurance.
“We believe this is the best site in North Texas for a project of this kind,” Scott Krikorian, Senior Managing Director with Trammell Crow, said in a statement. “We are excited about working with MetLife and the City of Dallas to develop this site at the doorstep of our city’s signature park.”
Called Park District, the development will include a 19-story office tower and a 32-story residential building with 255 units.
There will be 22,000 square feet of retail space on the lower floors of the skyscraper complex.
HKS Architects designed the development. It has sleek glass towers with low glass restaurant and retail buildings in front, facing the park.
The huge project will be constructed on the site of the Chase motor bank across the street from the Federal Reserve Bank of Dallas.
Crow and MetLife bought the bank property in June from JP Morgan Chase Bank.
The office tower will be located on the corner of Pearl and Woodall Rodgers and the residential high-rise will be on Olive Street.
The office, apartment and retail complex will be the largest such development in the downtown and Uptown area. The office building will contain more than 500,000 square feet of space – the biggest in the works for Dallas.
Park District is one three major mixed-use projects Crow is planning in central Dallas.
The developer has announced plans for a 20-story apartment and retail complex to be built on McKinney Avenue at Bowen Street in Uptown.
And Crow is starting work soon on another apartment and shopping project just east of Highland Park near Knox Street and McKinney.
By Steve Brown, Dallas Morning News
The Dallas-area ranked as one of the country’s top office leasing markets in 2014.
Commercial real estate firm DTZ said that Dallas had the fourth highest net office leasing in the U.S. last year with 4 million square feet.
That was behind New York City, Houston and San Diego, the nationwide real estate services firm said.
Total office leasing for the U.S. in 2014 was the highest since 2006 and rose 47 percent in the fourth quarter.
“If one annualizes the second half of 2014, the office sector has been absorbing space at nearly twice its historical average,” DTZ economist Kevin Thorpe said in the report. “Fundamentals still vary greatly by location, but the latest demand metrics can no longer be characterized as subpar. This is robust.”
Thorpe said the office market was one of the slowest real estate sectors to recover from the recent recession.
Nationwide there was there was 105 million square feet of office space under construction – up 76 percent from a year ago. About 6 million square feet is being built in the Dallas area.
Along with strong leasing, Dallas was also one of the country’s fastest growing office rent cost markets with an average 5.5 percent increase in rates in 2014, according to DTZ.
Developer Holt Lunsford is breaking ground this month on a new industrial building west of downtown Dallas.
The Turnpike West development will contain 259,672 square feet of warehouse space and is to be built on Interstate 30 at Chalk Hill Road.
John Gorman and Jim Brice with Holt Lunsford are leasing the industrial project which will start on Jan. 21.
It’s one of several warehouse projects Holt Lunsford has in the works in the Dallas area, including a business park in Far South Dallas and a 2-building project in Carrollton.
A jump in fourth quarter home starts made 2014 the best year for home construction in the Dallas-Fort Worth area since the recession.
Builders started 30 percent more houses in the final three months of last year compared with fourth quarter 2013, according to a new report by Residential Strategies Inc.
For all of 2014, 25,902 homes were started in North Texas. That’s about a 91 percent increase in home construction since 2011.
“On an annual basis the starts were up 24 percent,” said Residential Strategies’ Ted Wilson. The builders had a really good fourth quarter.”
New home sales were 11 percent higher in the final months of last year. In 2014, North Texas homebuilders sold 21,792 homes – an increase of about 12 percent over 2013 levels.
“Everybody is clucking about how strong their traffic and sales have been,” Wilson said. “What has helped out quite a bit is that 30 year mortgage rates have edged down.”
Home financing costs have recently dipped below 4 percent.
Builders are also getting a break in construction.
“We have heard some reports that there has been an improvement in the availability of labor,” he said. “The lack of skilled construction workers has acted as a governor to the market for much of the recovery.”
The number of new houses on the market for D-FW consumers to chose from remains very low. At the end of the year there were only 3,376 finished vacant houses in North Texas, according to Residential Strategies. That’s only about a 2-month supply.
Wilson is forecasting another strong year for North Texas new home sales and construction in 2015.
He said most builders aren’t concerned about recent drops in oil prices which have fueled fears of an economic slowdown in Texas.
“There is not any near term expectation of any swoon in the business,” Wilsons said. “People in the housing industry are saying they still have all these jobs coming from Toyota and other companies.
Even with the rebound in homebuilding during the last few years, new home starts in North Texas remain almost 50 percent behind where they were in 2006 before the recession hit. Builders started more than 48,000 houses here at the peak of the market.
Home construction firms have been constrained in the recovery due to shortages of workers, building lots and tougher financing requirements.
Almost 27,000 new building lots were developed last year, compared with just 15,748 new D-FW home lots in 2013, according to Residential Strategies.
By Steve Brown, Dallas Morning News
Invesco Real Estate has made a high-profile building buy in Dallas’ Uptown district.
Invesco has purchased the 13-story McKinney Place tower at 3131 McKinney Avenue.
The 150,000-square-foot office building was constructed in 1984 and is more than 90 percent occupied.
Invesco bought the Uptown building from Velocis Fund, which acquired the property in early 2013, county deed records show.
McKinney Place was marketed for sale by HFF.
Demand for office building investments is high in Uptown, which has some of the highest rents in the city.
Invesco is already a major player in central Dallas, with its ownership of downtown’s Plaza of the Americas complex.
And Invesco is a partner in an 11-story office tower under construction at 1920 McKinney at Harwood Street.
By Steve Brown, Dallas Morning News