U.S. home prices rose in August, lifted by dwindling supply
WASHINGTON — U.S. home prices climbed at a solid pace in August as more home buyers competed for fewer available properties. The Standard & Poor’s CoreLogic Case-Shiller 20-city home price index rose 5.1 percent in August, after a 5 percent gain in July. Portland, Seattle and Denver reported the strongest year-over-year increases for the seventh month in a row, with gains of 11.7 percent, 11.4 percent and 8.8 percent, respectively.
Steady hiring, low mortgage rates and some early signs of rising pay have encouraged more Americans to buy homes. Sales of existing properties increased 3.2 percent in September from August, the National Association of Realtors said last week.
Yet the number of homes for sale has fallen nearly 7 percent from a year ago, the NAR said. Just 2.04 million homes were for sale in September. “Demand is high and enthusiasm for homeownership remains strong, especially among all-important young, minority and would-be first-time buyers,” Svenja Gudell, chief economist at real estate data provider Zillow, said. “Still, the market can’t stay on this course forever, and continued inventory shortages are leading to intense competition, escalating prices and mounting buyer frustration, with the average home search over the past year taking more than four months.”
The Case-Shiller index covers roughly half of U.S. homes. The index measures prices compared with those in January 2000 and creates a three-month moving average. The August figures are the latest available. Developers are building more new homes, but not quickly enough to restrain price increases. Builders broke ground on 783,000 single-family homes at a seasonally adjusted annual rate in September, up 5.4 percent from a year earlier. Apartment construction fell sharply. Many institutional investors bought homes after prices fell sharply in the housing bust and are continuing to rent them out, rather than sell them.
Home prices rose 8.1 percent in Dallas from a year ago, 7.1 percent in Miami, and 6.7 percent in San Francisco. All 20 cities recorded price increased from a year earlier.
Mortgage rates pull back ahead of Federal Reserve meeting
After two weeks of spikes, mortgage rates retreated this week, falling back to where they had hovered most of the summer. With long-term bonds trading in a narrow band, home loan rates likely have settled in ahead of the Federal Reserve meeting next week. While most observers do not expect the Fed to raise rates in November, they are anticipating a rate hike in December. At the same time, the financial markets appear reluctant to make any moves ahead of the presidential election, which means mortgage rates are likely to hold steady at least until after Nov. 8.
Bankrate.com, which puts out a weekly mortgage rate trend index, found that 80 percent of the experts it surveyed believe rates will remain unchanged in the coming week, moving less and plus or minus two basis points. (A basis point is 0.01 percentage point.)
According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average tumbled to 3.47 percent with an average 0.6 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.52 percent a week ago and 3.76 percent a year ago. The 30-year fixed rate, which had jumped 10 basis points in two weeks, dropped back below 3.5 percent, where it has spent all but two weeks of the past four months.
The 15-year fixed-rate average slipped to 2.78 percent with an average 0.5 point. It was 2.79 percent a week ago and 2.98 percent a year ago. The five-year adjustable rate average inched down to 2.84 percent with an average 0.4 point. It was 2.85 percent a week ago and 2.89 percent a year ago.
“Mortgage rates continue to be relatively stable and at near record lows,” Sean Becketti, Freddie Mac chief economist, said in a statement. “The 30-year fixed-rate mortgage fell 5 basis points week-over-week to 3.47 percent, erasing last week’s increase. At the same time, the 10-year Treasury yield ended the week relatively flat – up about 2 basis points.”
Meanwhile, mortgage applications declined this week, according to the latest data from the Mortgage Bankers Association. The market composite index — a measure of total loan application volume — fell 4.1 percent from the previous week. The refinance index fell 2 percent, while the purchase index decreased 7 percent. The refinance share of mortgage activity accounted for 62.7 percent of all applications.
Denver developers have seen the future of parking, and it is no parking at all
The future of parking is no parking. Or at least a lot less parking. A growing cadre of developers in Denver and beyond aren’t passively waiting for the day autonomous vehicles overtake their human-driven predecessors. They’re planning today for a future with less demand for car parking, building garages in a way that, some day down the road, they can be can be converted into residences, offices, retail or other uses.
At Denizen, an apartment complex that opened last year 20 feet from Alameda Station’s light-rail platform, the future is retail — about 30 of the complex’s 275 parking stalls can be converted into street-level storefronts.
The proposed World Trade Center Denver campus, near the 38th & Blake Station in River North, plans to go even further. The more than 700 above-ground parking spaces in the project’s first phase have been designed so they can be renovated into residential, office or retail space as future demand warrants.
“Some people think this is some utopian future, even though Volvo just announced a few days ago they will have autonomous vehicles on the road by 2021, and other major car companies in the U.S. are on the same schedule,” said Thomas Fisher, director of the Metropolitan Design Center at the University of Minnesota, who has studied parking-ramp design for years.
“Within a decade, certainly within two decades, the demand of parking is going to radically change. These buildings that we’re putting up are going to last more than two decades,” Fisher said. “The worry I have is that we’re going to end up with a lot of buildings that we’re going to have to tear down because they’re sloped-ramp parking garages. Unless you want to turn them into a skateboard park, they won’t have much use.”
While unknowns remain in the roll-out of self-driving cars, the change in parking demand has the potential to be mind-boggling. One University of Texas study, modeled on Austin, Texas, estimated the need for car parking would decrease by 90 percent if the entire city shifted to autonomous ride-sharing vehicles. One shared autonomous vehicle, operating like today’s taxi or car-sharing services but without a human driver, could take as many as 11 conventional vehicles off the road, the researchers found.
“For every car in the U.S. there are three empty parking spaces,” said Rick Petersen, principal at OZ Architecture and lead architect on the WTC Denver project. “If it’s a subscription-based service, you wouldn’t have to have these extra dedicated spaces.”
Americans are showing increasing willingness to consider driverless cars too. In a recent survey by the Consumer Technology Association, 70 percent of respondents said they wanted to test a self-driving vehicle and nearly two-thirds want to trade in their current vehicle for an autonomous one. In September, Uber rolled out a test fleet of self-driving vehicles in Pittsburgh. Fisher said human-driven cars are “simply too dangerous” and “kill too many people” to remain in use when other, safer options exist. He foresees a not-too-distant future in which cities start banning human drivers, insurance companies stop insuring them and parking ramps go the way of horse stables. “People feel that people will never give up their cars, but you know what? In the late 1800s, people said no one would give up their horses for cars,” Fisher said. “Autonomous vehicles are cheaper, safer and cleaner than cars.”
So, what to do with all that car parking? It may be a little early to answer that question definitively, but forward-thinking developers are already designing projects that balance today’s continued expectation of bountiful, easily accessible car parking with a future where that demand could disappear. “You can’t force people out of their cars. It has to evolve organically,” said Sean Campbell, CEO of Formativ and developer of WTC Denver. “The idea is you’ve got several floors, big footprints of parking, you’re never going to go potentially to zero — at least not in my work life — but how do you look toward the future for sustainable use?”
That’s where the idea of convertible spaces comes in, garage floors that can shelter cars today, but potentially people in the future. For the WTC Denver campus, that means providing the two-plus parking spots per 1,000 square feet of office space that tenants expect when the projects opens in late 2019. Those same parking spots could transition over time to a number of uses, including international student housing, artist studios, retail or office space, Campbell said.
“We aren’t required to have any (parking), but you and I know that, let’s say we move our company from DTC and say, ‘By the way, guys, there’s no parking for you.’ That’s probably not the best retention tool,” he said. “But I could see several of those floors of parking we have built into this project being converted before we know it.” Parking remains an important part of getting financing, said Dan Cohen, development manager at D4 Urban LLC, developer of the Denizen apartment project. “A lot of lenders and equity partners, that’s a box they want to check: Is there an appropriate level of parking? And they have their own view of what that is,” Cohen said. “Even if you think you’re meeting the demand, you have to get your capital partners to support that, as well.”
Given its proximity to light rail, Denizen elected from the get-go to offer fewer parking spots than many of its competitors in Denver’s “mid-urban core,” where many multifamily projects have one spot per bedroom or more, he said. At Denizen, the ratio is one parking stall per apartment — 275 stalls for 275 apartment units. The building has about 400 residents — 15 percent of whom aren’t using light rail at all, according to post-occupancy surveys, Cohen said. “What’s interesting is 80 percent of those people who use light rail every day still have a car,” Cohen said. “And the reason is, they want to use (the car) on the weekends or if they’re running errands that aren’t easily accessible by light rail.” About 30 of Denizen’s parking spaces can be converted into about 7,000 square feet of ground-floor retail. It wasn’t autonomous cars, though, so much as the project’s proximity of transit, projected increases in ride-sharing services and other neighborhood factors that led developers to make that decision, he said.
In addition to providing future revenue for the development, swapping out some parking for retail will also help with the city and RTD’s goal to activate the train platform, he said. “It’s smart use of resources and space is a resource,” Cohen said. “If you’re designing a building and there’s space that potentially could become obsolete over time, that’s just a wasted opportunity.” Building parking that has future life as something else requires particular thought to the garage’s floor-to-ceiling heights and slope of the floors, Fisher said. “The typical sloped-ramp parking garage has about a 5 percent slope,” Fisher said. “You can’t work in that space.”
Instead, the floor plates need to be flat, with discrete ramps between the levels, Petersen said. At WTC Denver, the ramps are being designed so they can be removed someday, leaving a light-filled courtyard. Ceiling heights also may have to be adjusted depending on the future use. Offices need higher floor-to-ceiling heights than your typical parking garage offers, while housing falls within inches of the 10 feet or so between every floor that parking tends to have, Petersen said. “It doesn’t take much more initial investment or cost,” he said. “It’s more just thinking creatively.” Denver already has a great example of how a facility built for cars can be transformed for another use — the Sportscastle on Broadway, Petersen said. The iconic building was an automobile dealership before the Gart family opened its “Sportsman’s Castle” there in 1971. Now, in the wake of Sports Authority’s bankruptcy and dissolution, the building is poised for redevelopment again, part of a larger mixed-use project with potential for residential, retail, restaurant, office and a hotel. Even subterranean parking could have a future as storage or a data center, Petersen said.
In Denver, the ground floor of stand-alone parking garages downtown are required to be suitable for conversion to an active, nonparking use in the future, city planning and development supervisor Chris Gleissner said. Everywhere else, there’s nothing in city code that compels or prevents developers from building parking that can be converted, he said. “It’s going to take leadership both private and public sector to start making it a movement,” Gleissner said. “Miami has really embraced this. Some cities have really embraced it. No one is mandating, it but there is more of a social conversation going on.”