As reported by the Associated Press, “sales of new homes fell to a six-month low in August. The fourth straight monthly decline during the peak buying season suggest the housing market is year away from recovery.” In our update last week, we reported sale of new and resale houses in August was up 8.8% from July. This shows that the aggregate increase in the number of transactions was mostly due to existing home sales. The weak new home sales volume is a clear sign of the glut in the real estate market. California home prices have been in a downward spiral for over 3 years but there is still so much supply in the market that there is no sign of a turnaround in the near future. This problem is exacerbated by the weak demand.
Contributing factors to the dismal real estate demand are high unemployment, very tough lending standards, and strict down-payment requirements. These factors are preventing potential buyers from purchasing real estate and have made it near impossible for working class families in the metropolitan areas to purchase a home.
Combine the high supply with low demand and all of a sudden low and falling prices make a hell of a lot more sense. The big question, however, is how long is this trend going to continue? It is very easy to adopt a doom and gloom view and to forget that economies have cycles and that big winners almost always emerge out of bad economic times.
The United States is still the biggest economy in the world with a sophisticated industrial and technological base. According to data supplied by the Migration Policy Institute, the US economy has benefited from an average annual inflow of more than one million immigrants between 2000-2010, most of whom settle in major metropolitan areas and create demand for real estate and other goods and services. With adjustments to the size the dynamics of the labor force unemployment will eventually stabilize and then start to decline. Since 2008 families have made and will continue to make adjustments to their spending habits creating healthier balance sheets. In our view, all this will, in the long term, change the direction of the economy.
CASH IS KING
What remains constant through economic cycles is the people need a place to live in. In “down” times, investors with cash can acquire assets at fire sale prices. The weak market for home sales often contribute to relatively strong rental markets guaranteeing healthy returns from the acquired assets. When the storm settles and when demand is reinvigorated, those who had the guts to invest in a down market usually reap above average returns. That’s why we believe that now is the time to use all resources to increase real estate holdings in your portfolio.
It is true that during the boom years developments in some areas were entirely based on speculation and that such dwellings may never experience considerable growth. Major metropolitan areas, however, follow a completely difference logic. They are supported by large populations and various industrial and technological establishments. Natural population growth and immigration will continue to contribute to a healthy increase in the size of the market and eventually demand in housing will exceed supply prompting relevant price adjustments.
Monday, September 26, 2011
Friday, September 23, 2011
August Home Sales in California
August Home Sales in California up 8.8% from July
According to Dataquick Statistics, an estimated 37,734 new and resale houses and condos were sold statewide in August. That was up 8.8 percent from 34,695 in July, and up 10.2 percent from 34,239 for August 2010. California sales for the month of August have varied from a low of 29,764 in 1992 to a high of 73,285 in 2005, while the average is 48,344.
The median price paid for a California home in August was $249,000, down 1.2 percent from $252,000 in July, and down 4.2 percent from $260,000 for August a year ago. The bottom of the current cycle was $221,000 in April 2009, while the peak was $484,000 in early 2007.
Distressed property sales continued to make up more than half of California's resale market last month. Of the existing homes sold last month, 34.6 percent were properties that had been foreclosed on during the past year. That was up from a revised 34.5 percent in July and down from 35.6 percent in August a year ago. The all-time high was in February 2009 at 58.5 percent.
According to Dataquick Statistics, an estimated 37,734 new and resale houses and condos were sold statewide in August. That was up 8.8 percent from 34,695 in July, and up 10.2 percent from 34,239 for August 2010. California sales for the month of August have varied from a low of 29,764 in 1992 to a high of 73,285 in 2005, while the average is 48,344.
The median price paid for a California home in August was $249,000, down 1.2 percent from $252,000 in July, and down 4.2 percent from $260,000 for August a year ago. The bottom of the current cycle was $221,000 in April 2009, while the peak was $484,000 in early 2007.
Distressed property sales continued to make up more than half of California's resale market last month. Of the existing homes sold last month, 34.6 percent were properties that had been foreclosed on during the past year. That was up from a revised 34.5 percent in July and down from 35.6 percent in August a year ago. The all-time high was in February 2009 at 58.5 percent.
Wednesday, December 15, 2010
Energy Innovation
Tom Friedman: "A breakthrough innovation is always hard to predict and the case of energy will be no different. 'you are not going to see it coming,' Bill Gates said to me in an interview. 'the breakthrough will probably come out of somewhere you least expect, and we'll only know how it happened looking backward.'"
Wednesday, June 23, 2010
A Brief Analysis of Photovoltaic Solar Power Industry
We rcently published a research report on the solar power industry with a focus on photovoltaic technologies. The report provides an overview of the photovoltaic (PV) market, covering major PV technologies, recent developments of some of the major players in the industry, and a summary of various government initiatives aimed at helping to accelerate the growth of the sector.
According to the U.S. Department of Energy, the resource potential for PV is effectively unlimited relative to electricity demand. Furthermore, PV can be sited anywhere at any scale, which makes the long term growth potential of PV as a major energy supplier very promising.
With technological breakthroughs constantly on the horizon within the PV industry , the cost gap between generating electricity from burning fossil fuels and generating electricity from PV systems is getting smaller and smaller. We believe that a large portion of tomorrow's clean energy will be provided by these increasingly efficient, high yield solar cells.
"Developing low-cost, renewable energy generation is crucial to meeting our nation's increasing demand for electricity," said U.S. Secretary of Energy, Steven Chu. "By investing in the development of low-cost solar technologies we can create new jobs and pave the way towards a clean-energy future."
According to the U.S. Department of Energy, the resource potential for PV is effectively unlimited relative to electricity demand. Furthermore, PV can be sited anywhere at any scale, which makes the long term growth potential of PV as a major energy supplier very promising.
With technological breakthroughs constantly on the horizon within the PV industry , the cost gap between generating electricity from burning fossil fuels and generating electricity from PV systems is getting smaller and smaller. We believe that a large portion of tomorrow's clean energy will be provided by these increasingly efficient, high yield solar cells.
"Developing low-cost, renewable energy generation is crucial to meeting our nation's increasing demand for electricity," said U.S. Secretary of Energy, Steven Chu. "By investing in the development of low-cost solar technologies we can create new jobs and pave the way towards a clean-energy future."
Monday, April 5, 2010
Solar Power Industry Report: Major Solar Thermal Players
Today, we published a research report on the solar power industry. The report provides an overview of the solar energy market, various solar thermal technologies, and the current status of some of the major players in the industry.
Within the solar market, it is widely believed that tomorrow's solutions will be a combination of photovoltaic (PV) and solar thermal (Concentrated Solar Power or CSP) technologies. While PV technologies are suitable where direct sunlight is scarce and where small-scale rooftop or scattered power generation is required, CSP clearly is more efficient for larger scale generation in desert environments with strong direct sunlight.
A US Department of Energy study cites that the cost of solar energy from PV panels could be anywhere from 20 to 40 cents per kWh depending on the size of the panel. In contrast, the cost of energy from a CSP plant could be as low as 18 cents per kWh over the plant's lifetime. Recent innovations in the industry have brought the cost from CSP plants even lower.
To read the complete report , please go to: http://www.floyd-associates.com/solar2.pdf. To read more about Floyd Associates please visit www.floyd-associates.com or contact us by email at info@floyd-associates.com or by phone at: +1 (310) 300-0890.
Within the solar market, it is widely believed that tomorrow's solutions will be a combination of photovoltaic (PV) and solar thermal (Concentrated Solar Power or CSP) technologies. While PV technologies are suitable where direct sunlight is scarce and where small-scale rooftop or scattered power generation is required, CSP clearly is more efficient for larger scale generation in desert environments with strong direct sunlight.
A US Department of Energy study cites that the cost of solar energy from PV panels could be anywhere from 20 to 40 cents per kWh depending on the size of the panel. In contrast, the cost of energy from a CSP plant could be as low as 18 cents per kWh over the plant's lifetime. Recent innovations in the industry have brought the cost from CSP plants even lower.
To read the complete report , please go to: http://www.floyd-associates.com/solar2.pdf. To read more about Floyd Associates please visit www.floyd-associates.com or contact us by email at info@floyd-associates.com or by phone at: +1 (310) 300-0890.
Friday, March 26, 2010
Energy Crisis and Its Consequences
The global energy crisis is one of the few topics that cross my mind on a daily basis. The actions that we take today and our energy policies will have profound effects not just on the way we live tomorrow but also on whether or not we will Be a leading nation in an increasingly competitive world.
One quote I read recently in a Thomas Friedman book caught my attention. I would like to invite others to comment on this.
There are "five key problems that a hot, flat, and crowded world is dramatically intensifying. They are: the growing demand for ever scarcer energy supplies and natural resources; a massive transfer of wealth to oil-rich countries and their petrodictators; disruptive climate change; energy poverty, which is sharply dividing the world into electricity haves and electricity have-nots; and rapidly accelerating biodiversity loss, as plants and animals go extinct at record rates." (Hot, Flat, and Crowded, 26)
One quote I read recently in a Thomas Friedman book caught my attention. I would like to invite others to comment on this.
There are "five key problems that a hot, flat, and crowded world is dramatically intensifying. They are: the growing demand for ever scarcer energy supplies and natural resources; a massive transfer of wealth to oil-rich countries and their petrodictators; disruptive climate change; energy poverty, which is sharply dividing the world into electricity haves and electricity have-nots; and rapidly accelerating biodiversity loss, as plants and animals go extinct at record rates." (Hot, Flat, and Crowded, 26)
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