Market Reports Remain Positive
Cabinet & Vanity Sales
Regional Shifts Seen as Less Dramatic Now
Washington, DC The once-popular "rolling recession" theory, which insisted that one or more regions of the country would be in dire economic straits at any given time, "has been thoroughly debunked" by the performance of the U.S. housing industry in recent years, a leading housing expert asserted.
According to David Seiders, chief economist for the National Association of Home Builders, dramatic region-to-region differences in the performance of new residential construction are apparently a thing of the past, with current regional differences "quite subtle compared with the dramatic episodes" witnessed in the decades of the 1970s and 1980s.
"This is fundamentally good news for the country," said Seiders,
noting, however, that the much milder regional shifts make it "more
difficult" for home builders and product manufacturers to pinpoint
future hot markets.
NAHB's projected 7.8% decline for housing starts in 2000 "does not involve sharp contractions in many states, but most areas should sag to some degree," Seiders said. He added that current forecasts anticipate "relatively good growth performance in New England, New Jersey, South Carolina, Florida, California, Nevada and Hawaii with a few of those areas possibly posting positive growth, even in the face of a national slowdown."
Remodeling Gained in '99, Report States
Cambridge, MA Residential remodeling expenditures by U.S.
homeowners rose 4.5%
in 1999 over the year before, reflecting "solid although erratic gains" in the remodeling industry over the course of the year, according to remodeling experts at Harvard University.
According to Harvard's Joint Center for Housing Studies, which tracks remodeling expenditures on a quarterly basis, homeowners spent $94.7 billion remodeling their homes in 1999, an increase over the $91.6 billion spent in 1998 (see graph, above).
The Harvard figures do not include expenditures by persons other than homeowners. If those expenditures are considered, the total 1999 U.S. remodeling market actually approached $160 billion about $30 billion more than government estimates said Kermit Baker, director of the Remodeling Future Program of the Joint Center.
Baker said that some 40% to 50% of American homeowners undertake some form of remodeling activity each year, with about 40% of those projects oriented toward structural renovation such as additions and new kitchens.
"The 4.5% increase in 1999 is a bit above the gains we were
seeing earlier in the year," noted Baker, adding, however, that it
is likely that growth rates will slow a bit during 2000.
"Recent increases in interest rates will continue to produce some easing in home sales, and the most popular time for home improvement projects is immediately following the sale of a home," Baker explained.
Baker also said that while the do-it-yourself market is large, it is currently declining in market share, as households move up in income and age. "There is tremendous growth potential for the professional side of the industry," Baker commented.
According to Nicolas Retsinas, director of the Joint Center, the 1999 result is a result of the nation's "remarkable prosperity."
"Given continued strength in home-buying numbers and an all-time-high homeownership rate, it is no surprise that Americans spent a record amount on home improvement in 1999," Retsinas said.
The Joint Center for Housing Studies uses a formula to estimate the size of the remodeling market based on four components: manufacturers' shipments of floor and wall tile products; retail sales at building materials and supply stores; sales of existing single-family homes, and the bank prime loan rate.