News

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.

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It’s a trend that has been anecdotally known since the beginning of 2009, but the National Association of Home Builders is backing up our hunch with census data.

“After increasing continually for nearly three decades, the average size of single-family homes completed in the United States peaked at 2,521 square feet in 2007. It was essentially flat in 2008, then dropped in 2009, so that new single-family homes were almost 100 square feet smaller in 2009 than in 2007.”

This trend happened once before in the recession of the early 1980s. While that size back was temporary, the NAHB expects the recent smaller home phenomenon to continue.

“The decline is related to phenomena such as an increased share of first-time home buyers, a desire to keep energy costs down, smaller amounts of equity in existing homes to roll into the next home, tighter credit standards and less focus on the investment component of buying a home. Many of these tendencies are likely to persist and continue affecting the new home market for an extended period.”

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In our extensive demographic research for various projects around the St. Louis area, we have found that home buyers, while desiring less square footage, are requesting higher finish levels and more amenities to counteract fewer bedrooms and bathrooms.

A building permit in the amount of $11 million was applied for recently for the former Coca-Cola Syrup Plant at 8125 Michigan.  A year ago the Post Dispatch reported the possibility of lofts and a ground-floor Lemp Brewery in the building.

Looks like the new River City Casino may be prompting development in the farthest reaches of South City.

The Census building permit database contains data on permits for residential construction issued by about 21,000 jurisdictions collected in the Census Bureau’s Building Permits Survey. Monthly data are available from January 1997 through September 2009 for about 9,000 jurisdictions that respond to the monthly survey. The remaining jurisdictions report annual data only. The following map provides totals of available monthly data for building permits for the year 2009.

{Click Map to Open Interactive Link}

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.

Have you noticed? I heard three in a row last night.

New home development commercials are back on the airwaves. Radio seems to be the medium of choice with typical high-energy 30 second spots touting new prices in the low $100’s and tax-credit-over-soon urgency.

It’s a good thing.  The return of the ad budget means builder confidence is increasing and the deer-in-the-headlights syndrome has run its course.

That means it is time to shake off the hanging Tyvek, breathe in the (hopefully soon) spring air and get to work.  Scared? No worries, Zanola Company can help.  We’ve created a program to help clear the cobwebs and jump start your new, fresh outlook.

Introducing the Development Re- Energy Program. Read more below and call Zanola Company to request a personal evaluation.