Housing Market

Trend Watch: The Rise of Outdoor Living Spaces

Popularized during the financial crisis of 2008, the term “staycation” was added to our lifestyle vocabulary when people began enjoying vacation time in their own places of residence, in order to save money.


Pavilions like this one from Walpole Outdoors
are just one example of luxury outdoor living spaces.

Today, that trend continues to grow for reasons beyond mere economics, including lifestyle choices, avoiding the hassles of travel, and finding innovative ways to increase existing home value.

A key indicator of this trend is  the burgeoning popularity of outdoor living spaces and the upscale features that dress them up.

Need proof? The American Institute of Architects (AIA) noted in a 2014 survey that outdoor living spaces have emerged as the most popular special function room among homeowners. The AIA survey also noted that 69-percent of homeowners increased outdoor living options along with landscaping—an increase of six-percent since 2013. A Better Homes and Gardens study found homeowners view outdoor living spaces as an expansion of the home and a vital family-time venue.

Pinterest—the fastest-growing social media site—ranks “Home” as its top category and “For the Home” as its most popular Pinterest board name. Within these, outdoor kitchens, landscaping ideas, and porch and deck projects receive plenty of pins and repins from the Pinterest audience (87/17-percent women/men in the U.S.; 56/44-percent men/women in the U.K.).

Outdoor Spaces Enhance Home Value

While spending time in personalized outdoor living areas is a source of great enjoyment for many, homeowners are often motivated to focus resources on outdoor living in order to enhance overall atmosphere of the home and increase resale value, as Kleber & Associates found in a recent survey. Other motivations are spending more time at home with friends and family, enjoying outdoor spaces even in inclement weather and connecting with nature.

This outdoor space features built-in appliances from Danver Stainless Outdoor Kitchens.

This outdoor space features built-in appliances
from Danver Stainless Outdoor Kitchens

Outfitting these outdoor spaces can be as simple as placing a portable charcoal grill on the patio or as elaborate as equipping the space with an extensive outdoor living room, complete with a kitchen, fireplace, high-definition television and surround sound audio system. This phenomenon is fueling multiple industries that manufacture products for the outdoors: appliances, furniture, lighting, landscaping, insect repellent systems, water features, electronics, garden products, fire pits, sunrooms, screened porches, hot tubs, heat lamps, pools, decks, ponds, gazebos, pizza ovens and more.


Demographics Driving the Trend

Millennials (those born between 1980 and 2000) and Baby Boomers heading into their retirement years, are fueling the popularity of outdoor living spaces. Studies show that Millennials are optimistic about the future and place a high value on owning their own homes. According to a survey from the National Association of Home Builders (NAHB), 90-percent of Millennials prefer to live in rural or suburban areas rather than in an urban atmosphere. As a result, most Millennials have either purchased a house in the last three years, or plan to buy a house within the next three years.


Feeney DesignRail® systems and
LED Rail Light Kits add sleek design
and ambience

What This Means to Marketers

At Kleber and Associates, we’re always looking for trends that affect the marketing of home and building products. With the advent of spring and rising outside temperatures, we expect homeowner interest in outdoor living spaces to continue to increase—potentially driving sales across multiple product categories.

All indicators point to the fact that outdoor living upgrades and renovations are not just a limited-time trend or movement, but a well-loved staple of the American home, and here to stay. And, personalized outdoor living spaces make a “staycation” more competitive with expensive, exotic resorts.

Want to know more? Click here to download our latest Outdoor Living white paper. Or better yet, let’s discuss how we might leverage these trends in your current marketing efforts. Contact us today at info@kleberandassociates.com.

Optimism was all the buzz at IBS 2015

DCW 2015: Smarter, Leaner Organizations a Cause for Optimism in US Building Market

We’re a couple weeks removed from the biggest trade event of the year –  Design and Construction Week 2015.  In year’s past, we took this time to digest what we saw, follow-up on press opportunities and take a collective sigh of relief.  As we discussed in our recent newsletter, our team walked the equivalent of a 1/2 marathon in three days. It’s an exhausting grind physically but even more so mentally. It takes time to truly process what we saw and offer insight to the big trends our team noted during the show. Individual products are only a piece of a larger pattern – what was the overall macro trend?

“From Despair Comes Improvement”

The overall consensus of both our clients and other attendees was renewed optimism about the marketplace as a whole. Few believe we’ll ever return to the levels saw before the market collapse and to be frank – that’s a good thing. Companies are emerging from the recession smarter and more efficient on all facets of their business. When production and demand slowed, organizations had to re-think their operations and approach. What we’re seeing now are organizations better structured for sales optimization and better controlled supply chain. Several sales professionals at the show said their company had invested, or were making plans to invest, in CRM systems to better track their output and offer better alignment with marketing to close leads. In one particular booth, I was given a demo of their leads gathering process. The tried and true card scan remained the first step. From there though, the data was exported directly into the company’s CRM system and an automated email, based on the person’s geographic location, was sent from the sales professional covering the territory’s own email.  No sifting through hundreds of Excel files after the show. The company was able to strike while the iron was hot. Marketing and Sales working in-step? Now there’s a trend this agency can get behind.

It’s hard to find a positive from the economic downturn. This said, companies appear to have taken this time to look in the mirror and improve from within. The result?  A smarter organization.


Design and Construction Week 2015: Our Team’s Top Trends, Observations

So what were the prevailing trends at Design and Construction Week? With four team members on the floor, K&A was fully immersed in the experience. We asked our associates to compile their observations on what seemed prevalent and what resonated with them.

Kevo by Kwikset allows users to send a code via a product mobile application which can open a door wherever there's internet connectivity.

Kevo by Kwikset

Joey Peters – Account Director
“The continued integration of technology amazes me. It seemed like every manufacturer had some sort of mobile application you could download for a variety of functions. From selecting color/textures to opening your front door from thousands of miles away, technology is king. And it’s no longer a frivolous extra for consumers – retailers I spoke with said these products are being expected now – particularly from younger buyers. The digital native’s influence is omnipresent – manufacturers are scrambling to keep up with their needs. The mobile application is a powerful connection and opportunity for these brands, however. Downloading an app puts a brand into the user’s digital dashboard where they essentially live their life from communications to banking and beyond. It wasn’t just applications either. Places to charge mobile devices in genius locations also caught my eye. Where you can put a USB port, companies were taking advantage. I spoke with one countertop manufacturer  experimenting with a powered surface – making the entire countertop a charging station. You adhere a sticker to the phone’s back and place it on the surface wherever you like. Meeting the demands of a modern  consumer isn’t just for electronics – it’s here to stay with our industry as well.”

GE made waves with its' new Keurig machine integration

GE made waves with its’ new Keurig machine integration

Dominique LesCallet –  Account Executive
“Bright colors were everywhere.  I saw several manufacturers display brightly colored products, e.g. Feeney, Masonite, Electrolux (KBIS), Kohler (KBIS), Dacor (KBIS), True (KBIS). Kitchens and bathswith bold, bright colors allow homeowners to customize their spaces based on personality. “It wasn’t just colors – fashion-inspired patterns were a popular attraction as well. Manufacturers are incorporating fashion design into interiors decorating more than ever before, e.g. tiles and flooring, kitchen and bath backsplashes, etc. With advances in technology, manufacturers can replicate natural textures with amazing accuracy. One of the cooler trends on the KBIS side were Espresso and Coffee Makers Integrated into Kitchens – Several manufacturers, including GE and Gaggenau, are now offering in-home coffee and espresso makers for convenience. This was a pretty powerful validation the single serve coffee phenomenon is here to stay.”

Jasmine Gurley
Integrated lighting remains a big trend – particularly with the deck and railing category. With LED technology, manufacturers have the ability to integrate lighting versus a stand-alone accesorry. Within rails or sunken into deck panels, these lighting surfaces minimize space but offer a bold design element.


LED Rail Light for DesignRail by Feeney

Bold Colors: Individual style was a big theme in the booths. From doors to interior roof panels, color was huge. And not just primary colors, either. Bright blues, deep reds and vibrant yellow could be found on all sorts of surfaces. It was an interesting premise – using an object not normally considered a style surface and making it a focal point. Consumers want to express themselves and these colors reflect that. Stock whites and browns are blank canvases – adding these colors starts the portrait.


Kleber & Associates is an Atlanta-based integrated marketing communications agency serving the home and building products industry for 25 years. Visit the Kleber & Associates website for the latest news and information about marketing for home and building products for consumers, architects, builders, remodelers, designers and manufacturers. Through our marketing, advertising, public relations and digital marketing expertise — we build better brands that build a better home.



Smart Home Trends from the 2015 Consumer Electronics Show

If there is one thing we know from the 2015 Consumer Electronics Show it’s that the smart home is no longer something from a sci-fi flick; it’s existing in neighborhoods today. Imagine waking up and your lights have already turned on and the coffee has already begun brewing. You wash your face and then check your LinkedIn from your bathroom mirror. These are all concepts explored in Las Vegas this week.

Kwikset Kevo and LG are both showcasing their capabilities to work with Nest at this year’s Consumer Electronics show. Nest is a learning thermostat that studies your preferred temperatures for every time and scenario of your day. It detects when you are home and when you are away, all the while paying attention to your temperature preferences and creating a schedule based on your daily habits.


Kwikset Kevo is the industry’s first smart lock that allows keyless entry with the touch of a finger. Upon locking the door the user is prompted to set Nest to the away mode where less energy is used. When the user returns and unlocks the door, Kevo will prompt Nest to adjust back to Home mode where temperature is returned to the user’s preferred temperature.













LG also has big plans to integrate its dryers with Nest. When the user is away, Nest will communicate with the LG dryer that it can lower the heat to save energy.These partnerships with Nest bring the importance of interconnectivity to the forefront of the conversation. In order for a home to truly be smart, its devices have to be in sync. Devices and appliances that communicate make for a home that flows intelligently and efficiently throughout each day.

Wearables are a big topic at CES this year for this exact reason. They provide a channel for us to communicate with our smart homes. For instance, a wearable that senses when you get up for a bathroom trip in the middle of the night and alerts a nightlight to turn on or even a coffee maker that brews when the wearable detects that you are awake.


The smart home is here to stay and companies are predicting where an interconnected home can take us in the future. Whirlpool imagines a kitchen that syncs devices and kitchen appliances with access to internet, social media and live video chat. The Interactive Kitchen of the Future 2.0 is on display at CES this year that demonstrates what this digital media hub will look like. The interactive backsplash and cook top allow the user to access favorite recipes, websites, or social media without added devices or having to leave the kitchen. This display demonstrates live video chat capabilities- so you can get step by step directions from grandma for her secret pound cake recipe. This kitchen also features an oven that turns on at the perfect time to ensure dinner is ready and a refrigerator that notifies you when your food is freshest. The display allows CES attendees to imagine a kitchen that anticipates the user’s needs and provides solutions on its own. These products and predictions make for an exciting trend in home devices and appliances.


“The Trillion Dollar Opportunity – Marketing to Hispanic Americans”

imgresDue to the increased prominence and impact of Hispanic Americans across the country, Kleber and Associates has published a white paper discussing Hispanic Americans’ influence on, not only our culture, but, also on consumerism. As the largest minority group in the country – a group of now more than 50 million – Hispanics represent a rapidly increasing level of purchasing power, currently more than $1 trillion. For those of us in the home and building products channel, Hispanic Americans are a highly targeted group, as they have both increasing population and purchasing power on their side, more so than any other minority group in the U.S. All consumer product marketing for that matter should pay special attention to what their audiences think and how they buy. Given the new sphere of influence minority groups have created, marketers must ensure the appropriate messages are reaching them. Read more…

International Woodworking Fair in Atlanta Draws Large Crowd

The next stop in Kleber & Associates’ 2014 summer media tour was a homecoming for the International Woodworking Fair in Atlanta held August 20-23. Regarded as one of the largest trade shows in the world, IWF features more than 1,000 exhibitors in the woodworking industry regardless of size or scale. It’s this unique component that makes IWF one of the more fun shows each year. Artisans, handcrafting turned bowls or chiseled furniture, share the same floor space as multi-million dollar CNC machines that can churn out thousands of pieces in an hour. It’s an excellent opportunity to see and experience an entire industry under one roof.

We were also pleased to see the continued positive energy and increased attendance at IWF like we’ve seen all year at trade shows nationwide since IBS in January. A slow, albeit steady, economic recovery certainly plays a role, but it’s also people getting back to work that is fueling the renewed optimism we feel.


Despite the smell of sawdust permeating the air, the K&A team challenged itself to find companies offering unique alternative materials to highlight. We walked the halls of the World Congress Center and found three we felt brought some truly innovative products.

As one of America’s leading manufacturer of stainless steel cabinetry. Danver provides a chic, stylish alternative to traditional wood cabinetry by forgoing wood completely in favor of state-of-the-art stainless steel; Danver provides custom and standard powder coated finishes and treatments for their stainless steel products that will enrich and accent any project. With both outdoor and indoor applications, the company has set the standard of the blend of contemporary looks and innovation in outdoor living.  We loved the use of a steel application in multiple color options –  it helps marry the home’s décor to the outside living area but with year-round durability.

Blum Inc.
Blum’s new LEGRABOX, a line of stainless steel cabinets and cabinet products, are built to meet the latest trends and demands of consumers seeking professional grade performance but fashionable design. LEGRABOX features a new, sleek design using modern materials like aluminum and stainless steel with matte color finishes. Featuring its own smooth closing BLUMOTION technology, Blum guarantees a silent close every time. LEGRABOX also features several organizational tools such as inner pull outs and removable boxes in the drawers, giving users multiple options for storage optimization. We expect LEGRABOX to be a standout product in 2015 and in the future.

A long-time favorite of K&A, Rev-A-Shelf always brings an innovative suite of products to their trade show booth, For IWF, the company was highlighting its lineup of Tresco Lighting enhancements for cabinets in a variety of installation configurations. With cutting edge LED advances, Rev-A-Shelf is able to illuminate previously shaded storage areas for easier use and access.

Rev-A-Shelf  of course had their legendary kitchen cabinet products and designs on display as well. Several of their designs feature smooth open and close drawers, state-of-the-art pull downs and pull outs featuring dynamic hinges utilizing previously unusable space. A new drawer mounted utensil and knife organizer was a crowd favorite.


Kleber & Associates is an Atlanta-based integrated marketing communications agency serving the home and building products industry for 25 years. Visit the Kleber & Associates website for the latest news and information about marketing for home and building products for consumers, architects, builders, remodelers, designers and manufacturers. Through our marketing, advertising, public relations and digital marketing expertise — we build better brands that build a better home.

Homeowners Choosing Popular Upgrades as the Economy Recovers

In this current recovery, homeowners are becoming more confident, demonstrating pent-up demand for home and building products. The remodeling industry is experiencing a steady uptick, as the nation’s recovering economy encourages renewed homeowner investment. Following one of the most significant plunges in the U.S. real estate channel’s history, homeowners are now opting to consider their existing space for their residential upgrades.

“During past recessions we experienced mortgage applications declining while interest rates rose resulting in a drop of new homes being constructed,” explains Steven Kleber, president of the National Remodeling Foundation. “Remodeling permits by contrast during those cycles traditionally increased, as homeowners sought to capture equity in the rising values of their homes. However, during the most recent housing crisis, remodeling permits simultaneously decreased in concert with new home construction as foreclosures and declining home values combined negatively to shake homeowner confidence. The good news is we’re finally seeing evidence of that long anticipated turn around.”

In fact, The Conference Board this week reported that their July Consumer Confidence Index soared to 90.9, the highest level since October 2007 while they forecast that the trend was likely to continue.

Stainless Steel and the “Pro-sumer”
A new type of consumer – the “pro-sumer” – has emerged during this current wave of remodeling. These homeowners desire commercially proven, professional grade products that are fabricated and re-purposed for specific residential applications.

Feeney, Inc. LED Rail Light Kits for DesignRail

Feeney, Inc. LED Rail Light Kits for DesignRail

For example, the Feeney, Inc. LED Rail Light Kits for DesignRail® provide unique illumination for outdoor living environments for consumers looking no further than their own backyards for home space to improve. Originally designed for use on sea-faring vessels to resist nature’s destructive forces upon sails, Feeney’s stainless steel CableRail railing products are finding a new market among homeowners who desire attractive deck railing that won’t impede views of their landscape.

Danver Outdoor Kitchens

Danver Outdoor Kitchens



Stainless Steel Cabinetry is Popular
Similar in attributes, stainless steel cabinetry is gaining popularity in weather-sensitive, outdoor living applications. Consistently specified by restaurant designers for commercial kitchen surfaces where durability and easy-to-clean performance has been critical for food preparation areas, stainless steel now is being fabricated into cabinetry by Danver – made in America in Wallingford Connecticut. For many consumers, not just any plain silver grey finish will suffice and responding to that demand, Danver has introduced coated stainless steel doors in designer color finishes including wood grain patterns that now provide homeowners with outdoor kitchens that feature every convenience of traditional interior environments.


Cellular PVC Pergola Outdoor Kitchen View 1 Canopy retracted

Walpole Outdoors Pergola

Social Cooking and Living Life Inside-Out
Recently the kitchen has become a room for communal activity, as food preparation and bartending bring people together in social gatherings and at parties. Today’s outdoor kitchen has followed suit, expanding far beyond the lone barbeque grill with appliances such as the Evo cooktop that connect multiple cooks and dining audiences to engage in social cooking experiences out-of-doors.

In an effort to enjoy outdoor living through all four seasons, homeowners are seeking greater year-round shelter from nature’s elements. Walpole Outdoors pergolas are an attractive choice among renovators and come in a variety of colors applied to easy-to-maintain cellular PVC available in convenient, ready to assemble kits and with retractable ceiling screens.

Sometimes Only Real Wood Will Do
When it comes to curb appeal, homeowners are making high impact home fashion trend statements with simple replacements of their front doors — increasing their homes’ energy efficiency, while setting architectural style highlights at their guests’ first point of contact when they visit.

Masonite Torrefied Door

Masonite Torrefied Door

While fiberglass and steel doors remain popular choices, some homeowners demand the authentic aesthetics that only real wood doors provide. Yet, wood doors traditionally have inherent maintenance costs that restrict greater audience acceptance. Not anymore. The collection of Masonite Torrefied doors are fabricated through a process that actually heats the door during manufacturing, increasing its resistance to natural rot, weather and termites. What’s more and as an added bonus, the doors take on an attractive toasty brown finish that accentuates natural graining patterns.

“Ultimately, consumers need to be aware of the industry’s leanings towards renovating and upgrading existing space,” states Kleber. “In coming years, smart homeowners will undoubtedly experience a significant return on investment for the improvements they’re making now.”



Kleber & Associates is an Atlanta-based integrated marketing communications agency serving the home and building products industry for 25 years. Visit the Kleber & Associates website for the latest news and information about marketing for home and building products for consumers, architects, builders, remodelers, designers and manufacturers. Through our marketing, advertising, public relations and digital marketing expertise — we build better brands that build a better home.

Homebuying Trends: First Comes House Then Comes Marriage

Welcome to the Kleber & Associates blog! Here’s the latest on Homebuying Trends: First Comes House Then Comes Marriage

Times have changed, and living together before marriage is becoming a popular home buying trend amongst couples in the U.S., with many couples buying a home long before their big day. In a recent study, Coldwell Banker Real Estate LLC uncovered that about one in six (17%) of couples between the ages of 18 to 34 purchased their first home together before their wedding date, compared to 14 percent of those aged 45 and older. With a greater percentage of people cohabiting today, some say it’s evidence that young couples have more faith in the economy, reflecting widespread consumer confidence that has now reached a five year high.

How has this new trend impacted the real estate market? It has affected both the financial and the contractual aspects of the typical real estate transaction. Defining separate and community property becomes more challenging; and arranging financing that reflects the unique financial position of each party is critical.

Home Buying Before Marriage by Couples is a Popular Trend Kleber & Associates Atlanta

Home Buying Before Marriage by Couples is a Popular Trend

Although studies haven’t definitively revealed the reasons why living together before marriage is becoming a popular home buying trend, most assume that it is simply more socially acceptable than it was five, 10 or even 20 years ago.

In the NPR articleStudy: Record Number of People Are Cohabiting,” Andrew Cherlin says, “In 1972, I went home to have dinner with my parents and told them about my girlfriend. And they asked where she was living and I said, with me. And they nearly had a heart attack. Today, when my daughter married a few years ago, I would have been shocked had she not lived with her boyfriend.” And that’s the difference seen in just a generation; couples are less interested in marriage, but ready to take the plunge and buy a home. Surprisingly, co-habitations are longer than they were a decade ago, lasting about 22 months compared with 13 months on average.

Why is home ownership transcending couples’ plans of marriage? Dr. Robi Ludwig, a leading psychotherapist and Coldwell Banker Real Estate LLC lifestyle correspondent says, “Buying a home has more of an impact on a couple’s relationship than any other purchase they will ever make. It bonds two people together and makes them a family.” This shift in order is a huge movement in American culture, influencing market trends and sales as more couples buy homes much earlier than they would if they’d gotten married first. Additionally, economic factors impact buying behavior. Marriage is expensive and couples now see it as something to do when everything else has fallen magically into place – when they have solid careers, good salaries and most importantly–their relationship with their partner is steady.

Still, 35 percent of all married couples purchased a home together by their second wedding anniversary, which is still the norm. Couples buying their first home, married or not, can take advantage of first time home buying offers and extremely low interest rates. Like marriage, buying a home is a big step, and the trend of couples living together before marriage is becoming a popular home buying trend. It seems that planting roots before tying the knot may be here to stay! (Image via stock.xchng)

The Marketing Home Products blog has been reporting on home and building industry subjects for more than six years, representing the well-honed marketing, advertising and PR expertise of Kleber & Associates of Atlanta.  Would you like to learn more about marketing and advertising strategies, or brand development for your home and building product? Visit Kleber & Associates on YouTube to learn how we can help you successfully compete in today’s exciting home and building product marketing milieu!

Best From KBIS Report by Kleber and Associates

Welcome to the Kleber & Associates blog! Here’s the latest on The Kitchen and Bath Industry Show 2013

Best From KBIS
Returning to New Orleans to commemorate the National Kitchen & Bath Association’s 50th Anniversary, The Kitchen and Bath Industry Show 2013 celebrated “Laissez Les Bon Temps Roulez” as the good times indeed continued to roll amid a backdrop of positive economic momentum. This annual home and building products trade show is attended by many of the top companies industry-wide.

A limited supply of housing is helping to propel home prices even faster than wage growth… based on land, labor and materials cost constraints. In fact, home prices rose over 7 percent in the first 2 months of 2013, representing the biggest gain since 2006. Wallboard giant, USG, reported its first quarter net profit in more than 5 years, with Q1 operating income more than doubling year-over-year. Industry publishing leader Hanley Wood recently noted that home plan sales were outperforming budget “by far”, with a reminder that builders buy plans only when they’re ready to build.

Remarkable highlights from the KBIS 50th Anniversary Show emphasized Outdoor Living, Modern Convenience and Fashion-Forward Style from around the world…

Outdoor Living
Cabinetry representing virtually every wood species was on display from notable brands including Wellborn and Wood-Mode; as well as new exhibitor, Elmwood.

However, most impressive was the Stainless Steel Cabinetry from Brown Jordan Outdoor Kitchens… with powder coated color finishes designed to perfectly match their iconic patio furniture line.

Countertop favorites included Silestone’s new Suede Texture, offering a striking matte, velvet surface; and Cambria’s Berkeley Waterstone collection with hints of copper and bronze highlights shimmering amid its bed of sandy quartz tones.

Nonetheless, Danver’s Italian Volcanic Lava Stone tops — glazed in a myriad of durable, hand applied ceramic colors — were clearly the show’s most luxurious surfaces.

Modern Convenience
SecuRemote technology was integrated with Belwith Products’ Keeler Architectural Door Hardware... now providing us the flexibility to operate their dramatic entry lock sets using remote Bluetooth smartphone access.

Rev-A-Shelf introduced a host of “necessories” including the only brushed aluminum door mount waste container system with patent pending Rev-A-Motion soft open / soft close slides. Their Tresco lighting options included L.E.D., Xenon and Fluorescent lighting innovations for the ultimate in cabinet and storage convenience. And, its co-branding relationship with ProMob 3D software imMetalsinosaging gave us the opportunity to view each functional opening from unlimited angles. I understand there’s even an interactive, ergo-dynamic video interface which ProMob is currently developing from its Brazilian headquarters.

Fashion-Forward Style
Speaking of Brazil, drama-seeking KBIS heads really turned for Metalsinos Hardware— featuring semiprecious jewel insets, mined exclusively from the Amazon region. They’re apparently all the rage in Abu Dhabi… recently spotted in the new Abu Dhabi Armani towers!

Challenger Brands White Paper
Yes, as you can see, challenger brands were certainly making their mark alongside industry leaders at KBIS 2013, the popular home and building products trade show. I invite you to download our new White Paper, “How to Win as a Challenger Brand” by Kleber and Associates to learn more about a host of proven competitive marketing success strategies, designed to help your team cross the finish line first.


Is China’s Housing Bubble Ready to Burst?

Welcome to the Kleber & Associates blog! Here’s the latest on China’s Growing Housing Bubble

China’s property market has been a hot topic in the news recently. Yes, property prices have been continuing to rise despite government intervention; but, are they close to overheating? Or instead does China’s housing represent a bubble that the government is actively and successfully deflating? I’m wondering what will come next — and most importantly, if there should be a pop, will it impact the global economy and the U.S. recovery?

Gillem Tulloch, a Hong Kong based financial analyst, was among the first to bring attention to this pending housing inflation in China. In his essay, “China’s Real Estate Bubble,” he points out a potential big problem: China may well be creating “ghost towns” with completely empty towers, neighborhoods and shopping malls. Although they’re adequately financed, hardly anyone lives there. Many in the middle class have been buying homes with fresh money to invest, as pure speculation. 15 years ago, the Chinese government revised its restrictive policy, allowing people to buy their own homes. And as the saying goes, be careful what you ask for. “[Real Estate] is the main driver of growth and has been for the last few years. Some estimates have it as high as 20 or 30 percent of the whole economy,” says Tulloch. He explains that citizens aren’t the only ones to blame. China’s government in fact, has spent some $2 trillion to get cities built as a stimulative means to grow the economy. And have we heard that scenario before? Those like Tulloch, who are close to the industry, agree that it’s devastating to ponder about what could happen if a China housing bubble were to explode.

Despite the negativity about housing’s elasticity and its potential fate, some official reports readily defend the evidence of rapid growth mode, recognizing that the momentum is well within sustainability standards. In “China’s Non-Bubble Housing Bubble,” Kenneth Rapooza, contributor for Forbes, argues that China’s housing escalation is a “non-bubble” and that the government there has done a admirable job of controlling prices. Those prices, he claims — while on the rise — are not out of control. Instead according to Rapooza,  Chinese restrictions have been set forth that require 20 to 30% down payments to buy a home, which provide far less debt for both builders and buyers (and less potential stress on banks).

Yet while the reported ghost cities continue to spread through China, builders are doing what they do best: continuing to build. Most remain confident rather than cautious and evoke instead, a national pride amid the robust economic backdrop. In fact, the larger homebuilders there seem to be immune to the reports of doom and gloom; rather, they are seizing the opportunity in the landscape to overtake smaller companies. Their deep pockets allow for them to better weather the vacancies than may their less-capitalized competitors.

The collective crystal ball here is of course, far from transparent. What will happen if we are witnessing a true bubble and it were to burst? Would the impending outcome be a disaster for the local economy, plunging home values and sparking social unrest? Would the result create serious implications for the international commodities markets from the world’s second largest economy, delivering a domino effect that could felt across the globe? China’s housing bubble isn’t likely to burst without an escalating warning; however, signs are clearly growing. Will the government be able to curb the housing enthusiasm? Some say absolutely, and others say no.

Which side are you on?