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05/17/09
Report examines building permits granted in U.S. metro areas
Filed under: General, Real Estate
Posted by: Lillian Wong @ 6:08 pm

What are Valley home-building executives doing these days while they wait for the economy to perk up and new homes to be in demand once again?

Some are studying data and asking themselves questions such as: Where did we go wrong? How can we learn from this? When will the market change?

Some of them, including Meritage Homes Chairman Steve Hilton and Standard Pacific Homes Arizona President Pat Moroney, are studying The Frank Report, an analysis of building permits issued in 110 U.S. metropolitan statistical areas.

The report was published this spring by Frank Owens, a Scottsdale-based executive recruiter who has specialized in the home-building industry for 25 years. He still handles executive staffing, but the economy and personal interests added focus.

“I enjoy data, and you’ve got to know your business well to talk intelligently about what is happening,” said Owens, who started compiling various housing reports three years ago. “I put it on my (Web) site, and the builders just loved the information.”

That led him to examine historical trends of building permits issued, particularly in the < ?xml:namespace prefix = st1 ns = “urn:schemas-microsoft-com:office:smarttags” />Phoenix and Tucson markets, but he was unable to track data preceding the 1983 U.S. Census through Internet sources.

He wanted to trace data back to 1960 for multiple markets across the country. That necessitated spending many hours last summer at the Arizona State University library.

“It was an enormous job. The Census (Bureau) would change format and tables, but the people at ASU were fabulous,” Owens said. “To my knowledge, this information hasn’t been compiled in one document anywhere.”

Hilton concurred.

“There are people who provide some of that data, but no one has it to the degree of completeness that Frank has done it over such a long period,” he said.

With all of the information he gleaned by the end of 2008, Owens published the data into four U.S. regional volumes: East, West, North and South. The volumes sell for $495 each, or two for $650.

The report will be updated yearly, probably by the end of January, when Owens gets the data from the Census Bureau.

“What is cool is when we have the 2009 figures, that will represent 50 years of permits,” he said.

While The Frank Report is driven largely by trends in building permits, other local research firms provide an amalgam of housing-related data.

One of the longest-operating local housing data firms is RL Brown Housing Reports, which has been churning out reports since the mid-1980s. It focuses on monthly analysis and year-to-year comparisons of new home closings, permitting and resales in the Phoenix metro area. It has a proprietary software program called Magic data analysis that co-owner Greg Berger describes as the “gold standard” for home builders.

A more recent entry into the housing data industry is Belfiore Real Estate Consulting. Owner Jim Belfiore said he spends 50 percent of his time in the field analyzing what’s going on beyond statistics.

“We spend time with builder representatives, developers, lenders, appraisers and auditors in an effort to understand the markets more thoroughly,” he said.

Owens said he will continue to use The Frank Report as a tool to augment his executive search capabilities. He feels that since he provides data from across the country, Valley home builders can get a leg up on the national scene. So far, he has not had to advertise his product to get sales.

So, what are some things Owens discovered from his research?

• Not since the 1960s have all U.S. metropolitan areas been hit by a housing downturn at the same time.

• Migration patterns from the Northeast and Midwest are predominantly to the south, rather than to the west, as many believe.

Houston had the longest span of time without a decline in building permits. That metro area saw an increase in building permits every year from 1987 through 2006.

• The Phoenix metro area had never experienced more than four consecutive years of declines in building permits until now. Permit declines started in 2005 and continue to fall dramatically.

Housing Data

Housing statistics and trends are compiled by several consulting firms and Arizona State University, including:

The Frank Report: www.frankowensltd.com
RL Brown Housing Reports: www.rlbrownreports.com
Foresight Realty Advisors:  www.foresightrealtyadvisors.com
Belfiore Real Estate Consulting:  www.belfioreconsulting.com
The Information Market: www.theinformationmarket.com
ASU Realty Studies: www.poly.asu.edu/realty

Phoenix Business Journal - by Jan Buchholz 05.08.09


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