Blog

Joe Zanola spoke recently at Downtown, St. Louis Partnership Event, emphasizing the three key indicators for housing growth:

• Demographics
• Housing Supply and Demand
• Community Readiness for Demand

Here is what STL Today’s Tim Bryant has to say about the presentation: Downtown, Inner Burbs Seen as Growth Areas

Click Here for \”Blob\” Analysis

In a slow-growth city like St. Louis, competition among municipalities for tax dollars is fierce.  Pulling big box retailers from one town and offering them tax incentives to float to another has been the main source of competition among municipalities for over 10 years.  It’s time to start thinking about growth differently, not as feeding off of ourselves to stay afloat but as attracting new residents. New shoppers, new taxpayers, new rooftops.  Creating and attracting lifelong municipal residents is dependent upon the type of housing that is created.  The early years in the new millennium fed the belief that whatever the housing built, buyers would be endless and values would appreciate. The time has come, however to understand community demographics as an integral part of the future of our town and cities.

MarketGraphics tells us that current lot supply exceeds demand by six years. The future of our cities lies in responsibly creating the type of housing that not only attracts new residents but creates lifelong citizens. Every one of the lots that is currently in oversupply was at one point approved by their municipal planning commission and expected to create revenue and benefit the community socially and economically. The anticipated municipal population growth, educational benefit and community vibrancy is now at risk based on improper planning and lack of demographic foresight.  The focus for 2011 and beyond must shift to one of thoughtful planning and approval.

According to a survey (known as the Beige Book) released on October 20, 2010, by the Federal Reserve, seven of the Federal Reserve’s 12 regions reported moderate improvements in business activity, while the other five are growing too sluggishly to see improvements or to reduce the joblessness number.

For the St. Louis region, economic activity expanded modestly. Factory activity increased and makers of detergent, frozen foods, transformers, plastic products, autos and parts and primary metals reported plans to expand operations and hire new workers. Service-sector businesses also saw improvements, but hotels and casinos planned to cut back and lay off workers.

When the Fed takes over a failed bank, every detail is pre-planned to ensure a seamless, panic-free process. So when WestBridge Bank, the 131st bank to fail this year, went under last week the top-secret takeover mission was as smooth as ever.

As WestBridge closed its doors to a normal business day, unannounced regulators strolled into the lobby. The bank president and employees were told of the bank’s fate by an official from the Missouri Division of Finance. Under the cloak of the night, FDIC examiners transferred all of WestBridge’s assets, accounts, staff and most loans to Midland States Bank.

Over the course of 48 hours, with help from the FDIC and Tom Flores, Midland’s Regional Market President, WestBridge Bank vanished under black plastic coverings and Midland Bank began business.

Flores says it will take at least two months to transfer all the WestBridge accounts to Midland, but the smooth finish of the now Midland States Bank lobby shows no sign of upset.

New home starts are forecasted to increase in 2010.  A select few home builders got a head start by increasing sales during 2009.

Payne Family Homes, an apparent new favorite for home buyers, increased from 13 starts in 2008 to starting 36 new homes in 2009.  Only exceptional builders can brag about increased sales in 2009.  Payne Family Homes starts soared 64%, positioning Payne as the 2009 fastest growing home builder in St. Charles County.

Joe was featured in last week’s St. Louis Business Journal with a comment on declining inventory levels in the St. Louis, Missouri metro area.  Our research shows that the trajectory of the St. Louis, Missouri market new home inventory is on course to be back to normal levels in most areas by the 3rd or 4th quarter of this year.

Read the full article here.

New home inventory in the St. Louis, MO market has been steadily declining since November 2008. In fact, new homes that are finished but unoccupied are back to March 2006 levels.  Lowering these inventory numbers has been of the utmost importance in builder survival, price integrity and overall market improvement.

However, there is another, sneakier number lurking behind new home inventory - developed lot supply. In theory, as the supply of finished, empty homes begins to dwindle, we will logically need to begin breaking ground on the abundant developed lot supply.

Unfortunately, things aren’t exactly working out that way.

The numbers from the March 2010 Housing and Subdivision Analysis are in and of the 1,508 developments being tracked by MarketGraphics, 63.6% are inactive. No construction activity in the past four months. How exactly are we to eat up developed lot supply without construction activity? The hard truth is that the remaining 36.3% of developments are harboring ALL of the market’s activity.

Why?

Consumers don’t see the majority of developments as viable new home options due to improper marketing, an underdeveloped sense of community, shoddy maintenance and an overall desolate atmosphere.

It’s time to take stock of what your community is conveying.  Energy? Activity? Community? Or tumbling tumbleweeds?

The good news is that about half of inactive subdivisions are fixable with a little TLC, outreach and landscaping. It’s easier than you think, give Zanola Company a call for an immediate analysis.

Kansas City Breaking Economic Barriers Kansas City’s Troost Avenue is an economic dividing line similar to our own “north/south of Delmar” dilemma.  Kansas City, however, is openly and actively working on a solution to dismantle the geographic border. Through the “Green Impact Zone”, our northwestern neighbor is creating housing, employment and energy efficiency in an otherwise blighted community.

“Today the neighborhoods east of Troost Avenue still bear the marks of disenfranchisement: abandoned homes, an unemployment rate that’s as high as 53 percent in some census tracts and gun violence that takes many young lives.

Tomorrow, this area could be a center of green jobs, retrofitted energy-efficient homes, a green transportation system and hopeful residents if Congressman Emmanuel Cleaver’s plans for using American Recovery and Reinvestment Act (ARRA) funding come to full fruition.

U.S. Rep. Cleaver, D-Missouri, has developed an ambitious plan for a “Green Impact Zone” to be established in a 150-block area east of Troost Avenue. He convinced the Kansas City Council to vote 13 to 0 to allocate millions of dollars of ARRA money and considerable city effort to this part of the city. And he’s rallied dozens of community organizations, residents and even businesses to work on making it happen. Now Cleaver’s office and the team from the community are submitting applications to numerous Recovery Act programs, supplementing work that’s already begun to bring a greener, healthier environment to this area and jobs to its residents.

At the heart of the plan for the Green Impact Zone is a massive home weatherization project that would put area residents to work conducting energy audits and weatherizing the 2,500 homes in the Zone neighborhoods.”

Source (http://www.greenforall.org/blog/what-a-recovery-fueled-201cgreen-impact-zone201d-can-do-for-a-troubled-city)

What can we learn from Kansas City’s program? How can we apply this to St. Louis’ drama filled Northside Project? Thoughts?

The numbers are in and counted and 2009 was a roller coaster year for new home permits.  Seven out of ten of the MarketGraphics tracked St. Louis area counties exited 2009 with a higher number of new home permits than they began the year with, but what’s ahead for 2010?

What do the numbers tell us and what is ahead?

1. We can expect modest increases on a month to month basis in 2010.

2. Homebuyers like buying in subdivisions where others are also buying.  An ever increasing percentage of starts are going to a smaller number of subdivisions.

3. Underperforming communities need to be re-energized with buyers.  Otherwise, these communities will be de-selected fast and will have no buyers.

A few New Jersey retirement communities have begun offering rooms to senior citizens whose care taking adult children are away on vacation. This allows the adult-living community to recoup lost dollars resulting from unoccupied units.  In uncertain economies, senior citizens are reluctant to leave their current homes, adversely affecting independent and assisted living developments.

Leasing empty rooms to seniors who need temporary care not only helps profit but it allows the community the opportunity to create loyal future residents.  Positive experiences in their temporary stay can hasten the move into the community and bring more referrals than the most seamless traditional ad campaign.

If you can get past the mental guilt factor associated with the idea of “kenneling” a loved one while touring Europe, it’s a brilliant idea.  One that St. Louis Independent and Assisted Living Developments should consider immediately, not only in times of trouble but 100% occupancy. Consider creating temporary stay units designed especially for this purpose.