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The annual Home Builders International Builders Show (IBS) was held in Las Vegas the first week of February. For the first time, IBS was combined with the Kitchen and Bath Industry Show to create a Design and Construction week.
February 12, 2014

The annual Home Builders International Builders Show (IBS) was held in Las Vegas the first week of February. For the first time, IBS was combined with the Kitchen and Bath Industry Show to create a Design and Construction week.

Judging by the nearly 75,000 people in attendance, it appears the home building industry is on its way back to recovery. The Las Vegas Convention Center was full of both attendees and vendors, reminiscent of some of the record crowds prior to the recession.

The Housing and Economic Outlook led by NAHB’s David Crowe and assisted by David Berson (Nationwide Insurance) and Frank Nothaft (Freddie Mac) continued to offer a very optimistic outlook for 2014 and the intermediate future. The panel noted the following:

  • Single family stats are forecasted to be:

    Year # % Increase
    2012 537,000  —
    2013 621,000 16%
    2014 822,000 32%
    2015 1,159,000 41%

    Hopefully our markets will exhibit that kind of growth.

  • Pent up demand continues to be strong. New family formation seems to be be delayed primarily in the age group of 25 – 34 years. Currently 19% of this age group (vs 12% in normal years) has “doubled up” and still living at home with their parents. High college debt is also a factor with this group. However, household growth has slowed again in the last 6 months – a growing concern.

  • Jobs being created are primarily lower income jobs which are not substantial to support a home purchase.

  • As was noted as far back as 2009, the year 2003 (1,343,000 single family starts) is expected to be the “new normal”. As a point of reference, we are currently operating at 49% of this “normal”.

  • Consumer consumption is back to pre-recession levels as evidenced by the sales of cars, home electronics, and home furnishings. The last big expenditure expected to return is home buying.

  • Homeownership % continues to decline from a record 69% in 2005 to near 65% today. All age groups have declined during this time period.

  • Fixed mortgage interest rates are expected to increase to 5% by the 4th quarter of 2014.

  • The current demographic of home buyers:
    29% First Time
    52% Repeat Buyer
    19% Investors (generally all cash buyers)

    100%

     

  • Three biggest concerns noted by builders according to a recent NAHB survey were rising building material prices, regulation of banking / financial institutions, and cost / availability of labor.
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