The best year in the history of America's housing industry is heading toward the home stretch now, continuing to provide fuel for a kitchen and bath industry that's every bit as hot.
But while the race for the record books will inevitably end with the 2005 calendar in December, the end of housing's vibrant growth cycle seems, fortunately, far from over.
That's very good news for kitchen and bath manufacturers, dealers, designers – and everyone up and down the industry's distribution chain.
All everyone's got to hope for, of course, is that the bubble doesn't burst.
First the good news: Housing, which has led the nation's economic expansion for more than three years, has posted record performances for the past two years – and this year should be better than ever. In fact, more than 7 million new and existing single-family homes are expected to be sold by the time 2005 closes, while new construction is on pace to yield more than 2 million housing starts. At the same time, residential remodeling expenditures saw record growth last year – rising by the largest year-to-year increase in more than a decade – with continued growth seemingly in the cards.
That's a lot of new homes, a lot of resales, and a lot of kitchens and baths.
Better news yet is that market fundamentals remain extremely solid. The economy, by all accounts, is strong and growing, along with employment and household income. Housing production is meeting demand. Mortgage rates remain low. Demographics and lifestyle factors remain positive. The current homeownership rate is at its highest level ever, and on top of that, the nation's housing stock – more than 100 million occupied units currently averaging 32 years old – continues to age, prompting the need for maintenance, repairs and big-ticket, discretionary improvements.
In addition to all of this, property values – along with owner equity – continue, in
most markets, to rise. Inevitably, the housing market will cool. In fact, the latest numbers suggest that the cooling process may have already begun.
Which leads to the single potential cloud, and most-asked question, hanging over the market.
Specifically: Will the housing bubble burst, similar to the way the stock market bubble burst several years ago, ravaging Wall Street and the portfolios of millions of Americans?
The answer to that question depends on who's doing the talking.
If it's the National Association of Home Builders – and their opinion is as good as any – the answer to the bubble question is a resounding, and encouraging, no.
According to a newly released analysis by the NAHB, in fact, the prospects for a nationwide housing price "bust" are remote.
The Washington, DC-based trade association points out, for example, that while most local home price booms in the past were followed by periods of price-appreciation slowdowns, home prices nationally have never declined. Moreover, the limited number of documented price "busts" that have taken place in the past took place in markets where the local economy was under considerable stress. In contrast, virtually all the nation's local economies are now fairly robust. And because all individual housing markets are highly local – with sales and price appreciation based on demand, supply constraints, topography, consumer preferences and other factors – the possibility that there will be any nationwide decline in home values is quite remote, even if some of the country's super-hot markets cool.
In other words, the housing industry should remain as hot as the past few summer months have been, for quite awhile.
Enjoy the ride, and make the most of it, for as long as it lasts.