New Home Sales In The US Fell 6% Last Month As Construction Costs Continue To Rise 

The US experienced a 6% fall in home sales throughout the month of April, partially due to the fact that construction and other additional costs that come with buying a home have been on the rise as the pandemic continues. 

The US Census Bureau reported on Tuesday that new residential sales occurred at a seasonally-adjusted annual rate of 863,000 in April. They also reported that the previously published figures for March sales should be decreased to 917,000. This time last year during the pandemic, new home sales were surprisingly up by 48% due to an increase in individuals leaving the city to have more space in the suburbs. 

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The Bureau also noted that new home sales reports are prone to change within the first month of release as well, and they predict that the new home sales between March and April could be 11.2% larger or smaller than what it is currently. 

Sales rates in every part of the country have decreased except for the West, where sales grew by 3.9%; the largest decline occurred in the Northeast with a nearly 14% drop. The inventory of new homes available for sale at the end of April was also significantly lower from March. 

Pantheon Macroeconomics chief economist Ian Shepherdson had “projected a larger decline than what occurred, because of trends in mortgage application data. Over time, though — and usually not much time — new home sales gravitate to the pace implied by the trend in mortgage applications. So, absent any other reliable near-time indicators of the pace of sales, we have to expect a steep drop in April.”

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Experts believe that the decline in mortgage demand is linked to an increase in property costs, as well as construction and renovation costs. Affordability is obviously a top priority for every working class American right now as we navigate this grey area of the pandemic where half of people are receiving vaccines while the other is refusing. 

“The market for new homes is seeing price pressures not just due to the high demand for housing but also because of rising material costs that are driving construction expenses higher.”

“Builders are reluctant to sign sales contracts for houses they haven’t broken ground on because of the possibility that costs will continue to rise, nibbling into profits. So some builders are waiting at least until houses are framed before accepting buyers’ offers. This limits the number of home sales, even as demand remains strong,” ,” said Holden Lewis, housing and mortgage expert at personal-finance website NerdWallet. “

“The market for new homes has benefitted from a near-record low supply of available resale properties, which is sending prices skyward,” said Sal Guatieri, senior economist at BMO Capital Markets.

Theatre Stage

Broadway Experiencing Biggest Ticket Sales Slump In Three Years

Now that the holidays are officially over, a general sense of frugalness is in the air. As consumerism continues to increase every holiday season, so does the amount we try to save once the season is complete. Retailers, restaurants, and any other industry that would require the spending of money takes the hit every year, but depending on how much they made during the holidays themselves, they’re normally fine. 

An industry that’s taking the hit particularly hard this year is Broadway. Unless gifted tickets, people tend to stay away from purchasing big ticket items, literally, when they’re trying to save up. This year, it’s been reported that the industry is witnessing a 28% decrease in overall sales with the new year/holiday season. That’s still an estimated $31 million coming into the box office, however, it marks a three-year low for the industry as a whole. 

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Along with the loss of money, theater attendance is also down 6% compared to last year’s stats, however, Broadway had three more active shows this time last January. Over this past weekend (1/10/20), Broadway also closed down three shows but all of them were planned closings as the shows themselves had planned limited runs. 

“While 18 shows grossed over $1 million, most only made it over that threshold by a hair. Only five cracked $1.5 million – down from ten last week. Bucking the downward trend were traditional, non-musical plays, which performed markedly better than they did over the holiday frame. This pattern isn’t unusual – most holiday buyers spend on song-and-dance spectacles – but it was still good news to their producers,” (Forbes).

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2019 in general was the opposite of successful for Broadway; as an industry they grossed $67 million less than what they earned in 2018. The reasoning behind why Broadway takes such a massive financial hit when certain shows fail has a lot to do with real estate costs. As we all know, New York City is one of the most expensive cities in the US to live in, and for businesses, the cost of theater space is just as high. So when a show “flops” in terms of ticket sales and theater attendance, the industry itself loses the most money in real estate and production investments.

When shows continue to remain active into the new year, it typically means that the industry is making an influx of money back on the investment, so they remain open. This year, only four plays remain from 2019’s playbill;  Hadestown, Ain’t Too Proud, To Kill a Mockingbird, and Beetlejuice. 

When 2019 began, Broadway saw seven plays get carried into the new year, three of which are listed above and continue to sell. In total, the number of show closings within 2019 has caused the industry to lose about $100 million in investments and real estate costs. 

“Booking schedules define [a lot] of the [financial] landscape, and those are affected more by individual productions than market trends. This season, several big musical houses have remained empty, leaving big money on the table. That, and the fact that The Palace [a major Broadway Theater] is under renovation accounts for a whole percentage point of lost sales. However, every show is different, and comparing one season to the next is always tricky,” Brian Mahoney, Vice President of ticket sales for the Shubert Organization.

Real Estate Meeting

Real Estate Industry In Need Of Affordable Housing Solutions

The real estate industry is like the stock market, one day you’re way up, and the next you’re crashing. The housing market always fluctuates with the economy and today is no different. Due to a slew of combined issues, the real estate industry is suffering to find and maintain affordable housing in the US for clients looking to live in metropolitan areas. Phoenix, Arizona is seeing some of the worst of it currently, according to Chamber Business News (CBN).  A combination of lack of labor, high demand for properties to be built fast, and rising development costs is taking a hit on the entire industry, (CBN).

“I refer to it as the perfect storm. It isn’t just building and labor costs, but building products have gone up, too, and, today, the most severe labor shortage is for lot development, the folks that put in the sewer, concrete curbs and gutters, dry utilities, everything underneath the house, and the infrastructure to get to and from the home site,”  said Jim Belfiore, President of the firm Belfiore Real Estate Consulting in Phoenix. 

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Homeowners themselves are trying to take some of the heat off the companies they work with by providing additional costs, but even the real estate agents working with them know that what they’re paying additionally is way above what’s considered “normal”. The lack of labor is one of the biggest hurdles the industry is trying to get past, especially in Phoenix. According to CBN, construction costs overall have increased almost 40% over the past four years, give or take based on the specific residential market of course. Since a majority of the market’s clients can’t keep up with the rising costs, more labor workers are left without jobs. 

The labor shortage is affecting the whole country, but Arizona is especially feeling the negative effects. With an increase in anti-immigration laws and stricter policies regarding immigrant workers, many individuals have fled the state to avoid any threat of deportation. 

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“The labor shortage has really affected the schedule that home builders can deliver on because of a lack of contractors. There are projects that are going out to bid and getting zero bidders responding with proposals. It’s not unusual once you find bidders who can’t meet their schedule,” said Ron Hilgart, managing principal of a Phoenix construction management firm, to CBN.

Arizona alone has seen one of the highest influxes in population throughout the country, but they’re definitely not alone in the struggle of maintaining the growing clientele. According to a survey done by Freddie Mac, two-thirds of renters in this country can’t currently afford to become a homeowner, this is a 59% increase compared to last years renter statistics. The biggest and simplest solution to this growing problem is acquiring more land to develop properties. The need for property space is one of the leading causes to the decline in everything else within the industry. Agents are attempting to fulfill their clients specific limitations while finding them a proper space to call their own. Clients are demanding large and extravagant additions to be made to their homes that just aren’t necessary, such as large porches, grand foyer entrances, and garage spaces. These additions increase property value, which is currently being viewed as a bad thing due to a lack of clients that can afford those spaces.

“At the end of the day, anywhere there is land to build on today that is appropriate for residential use, I think our municipal leaders and our builders need to come together and allocate some share of that remaining land towards affordable housing and we need to have different requirements” concludes Belfiore.