The prolonged softness in the housing market is “understandable,” given the current psychology of would-be home buyers and the tightening of lending guidelines as a result of the sub-prime crisis, a leading analyst for the National Association of Realtors said last month.
“The market is underperforming when you consider positive fundamentals such as the strength in job creation, economic growth, favorable mortgage interest rates and flat home prices,” observed NAR senior economist Lawrence Yun. “It appears some buyers are simply waiting for more signs of stability before they get serious about getting into the market.”
According to Yun, household formation, a key driver of homebuyer demand, has slowed dramatically since late 2006, “implying that many people are doubling-up — they’re adding roommates or moving in with parents.” Total housing inventory, according to the latest figures, was at 4.43 million existing homes available for sale, an 8.9-month supply at the current sales pace. Existing single-family home sales, currently at a seasonally-adjusted annual rate of some 5.2 million units, are about 11 percent lower than the pace of a year ago.
Existing homes sales have always been a key indicator of remodeling activity. In recent years, as the remodeling market boomed, existing-home sales hit 7 million units. The backlog of home sales is a key factor in a slower growing remodeling market nationally.
Leading Indicator Suggests Tepid Growth into ‘08
Even with the recent weakness in house prices and consumer confidence, growth in home improvement expenditures will hold stable in the low single digit range according to the leading indicator developed by Harvard’s Joint Center for Housing Studies. According to the Leading Indicator for Remodeling Activity (LIRA), which builds on the Remodeling Activity Indicator that the Joint Center has been releasing since 1998, homeowner spending for home improvement activity will essentially remain constant through the first quarter of 2008. Overall growth in spending for 2007 is projected to be 3.0 percent.
“Homeowners continue to draw on built-up equity in their homes to finance home improvements,” explains Nicolas P. Retsinas, director of the Joint Center for Housing Studies. “However, the pace of spending remains moderate and tempered in the context of a very soft housing market.”
“Falling sales of existing homes, and depressed remodeling contractor sentiment remain negative factors in the outlook for the industry,” comments Kermit Baker, director of the Remodeling Futures Program of the Joint Center. “With borrowing costs remaining favorable, though, owners are still able to take advantage of the run-up in their house’s value over the past decade to finance home improvement projects.”
The LIRA is a new initiative from the Remodeling Futures Program to estimate future national remodeling activity with a horizon of three quarters. The LIRA replaces the Remodeling Activity Indicator (RAI) previously released by the Joint Center. The LIRA is released quarterly (April, July, October and January) by the Joint Center’s Remodeling Futures Program during the third week after each quarter’s closing.
Nine Marrokal Designers get Green Certified
Nine Designers with Marrokal Construction Company have successfully completed the “Certified Green Building Professional” certification process and are now entitled to personally use this professional designation.
Marrokal Construction Company, a Design-Build firm, is once again on the cutting edge of progress within the San Diego community. These are the first green certified designers in San Diego and some of the first to be certified green in the State of California.
Sponsored by Build it Green, a professional non-profit membership organization whose mission is to promote healthy, energy and resource-efficient buildings in California, this two-day course focused on the overarching principals of Green Building and the systems approach to the design, construction and operation of buildings including energy, resource conservation and indoor air quality.
Committed to professionalism and quality design, Marrokal Construction Company is proud to support its designer’s ability to offer their clients green or “sustainable” options in the remodeling process.