Some Positive Housing Market Foundations to Build On

Posted by Steve Kleber on May 04, 2007

The continuing “Chicken Little” talk in some housing market circles has had implications on our economy. We want to highlight some housing market segments that are doing quite well according to the latest research.

“Residential Design and Build” is the only high-end custom home publication dedicated to both residential architects and construction professionals. They recently announced their 2007 Market Trends Survey in April and the results show that the custom home business is healthy. More than 90 percent of the survey respondents plan to hire more staff in the coming months or maintain the status quo. Also, the number of clients that pay cash, as opposed to financing a new home, has remained at a steady 33% over the past four years. This market segment is less affected by market fluctuations adding to market stability.

More telling, the percentage of architectural design firms, construction firms and design/build firms posting profit margins between 11 and 25 percent has increased steadily from 2004 and projected to continue through the rest of the year. There has also been no change in the number of homes designed or built by the readers of Residential Design and Build.

The remodeling market segment also appears to be holding its own based on reports from the field. It has almost doubled in size over the past decade, with the upper-end projects exhibiting the fastest growth. “Remodeling retained strength across most of the country compared to late last year,” said NAHB Remodelers Chairman Mike Nagel. “Certainly regional economies and housing markets play an important role, but overall we see maintenance of high levels of remodeling activity and solid future prospects.”

The boomers control unprecedented wealth and Home Depot’s latest research shows that they want to remain in their current homes with 65% planning to remodel in the near future. Boomers also put kitchen and bath projects at the top of their list and these remodeling projects are and will continue to be in full swing throughout the year.

Even the bears in the market have got to admit that things can’t be that bad with continued low interest rates on the horizon, conservative job growth, gains in household income, and high home ownership rates. The economy has not stalled out and panic is not warranted as some might hope to project.
 

This entry was posted by Steve Kleber on Friday, May 4th, 2007 at 1:42 pm and is filed under Housing Market, Marketing. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.