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OCTOBER 25–27, 2016OCTOBER 25–27, 2016
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US Housing & Remodeling Market Outlook
SHERATON | KANSAS CITY, MO | OCTOBER 25–27, 2016
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MACRO ECONOMICOUTLOOK
US Housing Outlook
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Unemployment Has Returned to a Normalized Rate
US Housing OutlookSource: Moody’s, U. S. Bureau of Labor Statistics
3.0%
5.0%
7.0%
9.0%
11.0%
13.0%
15.0%
17.0%
19.0%
Unemployment Rate Trend
Source: U. S. Bureau of Labor Statistics
4.9%
9.7%
Official
Unemployment Rate
Expanded
Unemployment Rate
(U-6)
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Job growth has leveled off a bit
US Housing Outlook
(8,000,000)
(6,000,000)
(4,000,000)
(2,000,000)
-
2,000,000
4,000,000
Year-over-Year Job Growth, NSA, 2008-2016
Source: U. S. Bureau of Labor Statistics
+2,522,000 YOY
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Service sectors have led the job recovery
US Housing Outlook
Government
Natural Resources & Mining
Information
Other Services
Manufacturing
Financial Activities
Construction
Leisure & Hospitality
Education & Health Services
Transportation, Trade &
Util ities
Prof & Business Services
(200,000) (100,000) - 100,000 200,000 300,000 400,000 500,000 600,000 700,000
Employment Growth by Industry, 2Q 2016
Source: U. S. Bureau of Labor StatisticsSource: U. S. Bureau of Labor Statistics
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Job quality a factor service
sectors have led the job recovery
US Housing Outlook
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
Em
plo
yee
s, i
n T
ho
usa
nd
s
Manufacturing Workers vs. Waiters/Bartenders, 1990-2016
Waiters and Bartenders Manufacturing Workers
Source: U. S. Bureau of Labor Statistics
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GDP HAS BEEN UNDERPERFORMING
THE LAST FEW QUARTERS
US Housing Outlook
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%GDP Quarterly Growth Rate
1.2%
AVERAGE SINCE 1980 = 2.5%
Source: U. S. Bureau of Economic Analysis
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Consumer Confidence still strong, just below 100.0
US Housing OutlookSource: The Conference Board Consumer Confidence Index
0
20
40
60
80
100
120
140
160
Consumer Confidence
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STATE OF THE ECONOMY
US Housing OutlookSource: The Conference Board Consumer Confidence Index
Slowly Improving Job Picture
Unemployment Gradually Shrinking
Housing Production Recording Solid Gains
So-So Consumer Confidence
Interest Rates Remain Low Despite Hike
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THREATS TO THE ECONOMY
US Housing OutlookSource: The Conference Board Consumer Confidence Index
Eventual Rise In Interest Rates
Volatile GDP Growth/Decline
Quality of Jobs Being Created Not Especially Good
International Events Impacting US Economy
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RESIDENTIALOUTLOOK
US Housing Outlook
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0
100000
200000
300000
400000
500000
600000
700000
800000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F 2017F
$ M
illi
on
s
Maintenance Remodels New SF Construction New MF Construction
2017 Will Be the Strongest Year in Residential Spending Since 2006
US Housing Outlook
2017 Spending To Be
Up 6%, Supported By:4% Growth in
Remodeling11% Growth in Single
Family
Multi-Family is expected to slip down 5% as
Single Family continues to ramp up.
Source: Metrostudy Forecast
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0
500
1,000
1,500
2,000
2,500
Residential Starts History and Forecast
Single Family Multi-family 55 Year Average
Finished at 1.11M Starts for 2015 with 7% growth FOR 2016
US Housing OutlookSource: Commerce Department; Metrostudy Forecast
55 year average
1.432 million
Fore
cast
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Resales Are at Strong Levels, While New
Home Sales Are Still relatively Low
US Housing Outlook
0%
5%
10%
15%
20%
25%
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
Ne
w H
om
e Sh
areHo
me
Clo
sin
gs
National Annualized Home Closings by Type, 2007-Jun 2016
Regular Resale REO Sale New Sale New Sale ShareSource: Metrostudy
New Sale
Share
Stabilized but
below 10%
Tax
Cre
dit
Exp
ira
tio
n
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Existing Home Sales Remain Above Normal Levels
US Housing OutlookSource: Commerce Department, National Association of Realtors, Metrostudy Analysis
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
SF Home Sales, 1968- Jun 2016 (SAAR Thousands)
New Existing
45 year average
4.4 million
4.171 million
sans 2002-2006
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Observed Starts Up 7.6% over Q2 2015
US Housing Outlook
Source: Metrostudy
0
20,000
40,000
60,000
80,000
100,000
120,000
Quarterly Starts Quarterly Closings
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Most Indicators Are IMPROVED Vs. Q2 2015
US Housing Outlook
13.0%
8.4%9.9%
8.8%10.5%
9.6%
19.6%
16.5%
-3.1%
6.0%
-14.3%
0.6%
10.6%
2.8%
-0.2%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Improvement Deterioration Neutral
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Nationwide Price Increases Continue with
Moderate Appreciation Expected Ahead
US Housing Outlook
$
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
Measures of Median Home Prices
Regular Resale REO Sale New Sale Reg Resale + REO NAR Median Existing (SF)
Source: Metrostudy, NAR, Moody's Analytics
pre
sen
t
New Home Median
Price Surprassed
$300k For The First
Time
Existing Home
Price Forecast
Calls for Gradual
Levelling
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In New Home Market, Lower Priced
Homes Continue to Diminish in Share
US Housing Outlook
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
201620152014201320122011201020092008200720062005
New Closings by Price Distribution, Nationwide, 2005-Jun 2016
$0k-$200k $200k-$400k $400k-$700k $700k+Source: Metrostudy
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Investors Helped Fix the Foreclosure
Induced Excess Supply in the Resale Market
US Housing Outlook
0%
10%
20%
30%
40%
50%
60%
Investor Purchase Share by Sale Type
Regular Resale REO Sale New Sale
Source: Metrostudy
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Consolidation Continues
0%
10%
20%
30%
40%
50%
60%
70%
0
100,000
200,000
300,000
400,000
500,000
600,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Ma
rke
t Sh
are
Ne
w H
om
e C
losi
ng
s
Closings for Top 10, 100, & 200 Home Builders Over Time & Market Share
Nationwide
Top 10 11-100 101-200 Top 10 Share Top 100 Share Top 200 Share
US Housing Outlook22
Source: Metrostudy
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Challenges In Several Areas Today but Labor is the #1 Concern
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
US Housing Outlook
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Builders Are Having Trouble Finding Framers
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
What Positions Are You Having the Most Trouble Filling?
US Housing Outlook
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Labor Issues Are Driving Up Labor Costs
and Increasing Delivery Times
0%
10%
20%
30%
40%
50%
60%
70%
80%
Increasing Delivery
Times
Increasing Labor
Expenses
Reducing Quality Loss of Other
Subcontractors
Disrupting Pro
Formas
Limiting Ability to
Sell New Home
Contracts
Increasing Material
Expenses
Loss of Home
Contracts In Progress
How Are Labor Shortages Affecting You?
US Housing Outlook
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REMODELING
US Housing Outlook
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Read All About It!
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-
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Pro-Worthy Remodeling Projects
Remodeling Projects Expected to Reach a New HIGHS
Rate of Activity Will Be Up 4.2% in 2017
US Housing Outlook
Fore
cast
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Dollars tracking with number of projects
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Aging Housing Stock Is Key Contributor
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Closings Are Key Indicator
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Remodeling Market Project Counts: WINDOWS
1.8 1.8
0.0
0.5
1.0
1.5
2.0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Millions
Source: Metrostudy, RRI Report, August 2016
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Remodeling Market Project Counts: DOORS
Source: Metrostudy, RRI Report, August 2016
5.3 5.4
0
1
2
3
4
5
6
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Millions
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Remodeling Market Project Counts: ADDITIONS
Source: Metrostudy, RRI Report, August 2016
1.6 1.6
0.0
0.5
1.0
1.5
2.0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Millions
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Remodeling Market Project Counts: KITCHEN & BATH
Source: Metrostudy, RRI Report, August 2016
6.1 6.3
0
1
2
3
4
5
6
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Millions
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Remodeling Market Project Counts: HVAC
Source: Metrostudy, RRI Report, August 2016
3.7 3.8
0
1
2
3
4
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Millions
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Remodeling Market Project Counts: ROOFING
Source: Metrostudy, RRI Report, August 2016
5.3
6.3
0
1
2
3
4
5
6
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Millions
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Remodeling Market Project Counts: SIDING
Source: Metrostudy, RRI Report, August 2016
1.6 1.7
0.0
0.5
1.0
1.5
2.0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Millions
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Remodeling Market Project Counts: BATHROOMS
Source: Metrostudy, RRI Report, August 2016
5 5.1
0
1
2
3
4
5
6
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Millions
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Remodeling Market Project Counts: KITCHENS
Source: Metrostudy, RRI Report, August 2016
4.8 4.9
0
1
2
3
4
5
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Millions
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Remodeling Market Project Counts: DECKS
Source: Metrostudy, RRI Report, August 2016
3.4 3.5
0
1
2
3
4
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Millions
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Remodeling Market Project Counts: INSULATION
Source: Metrostudy, RRI Report, August 2016
3.6 3.7
0
1
2
3
4
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Millions
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Remodeling Market Project Counts: BASEMENTS
Source: Metrostudy, RRI Report, August 2016
7.3 7.5
0
1
2
3
4
5
6
7
8
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Millions
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Alignment with the right consumers
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TOP MARKETS
US Housing Outlook
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Growth Is Most Reliable in Healthy
Markets, and MOST MARKETS ARE DOING WELL
US Housing Outlook
Source: Metrostudy Home Building Outlook Report
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Top 10 Healthiest Markets1. Greeley, CO
2. Naples-Immokalee-Marco Island, FL
3. Denver-Aurora-Lakewood, CO
4. North Port-Sarasota-Bradenton, FL
5. San Jose-Sunnyvale-Santa Clara, CA
6. Austin-Round Rock, TX
7. Provo-Orem, UT
8. San Francisco-Oakland-Hayward, CA
9. St. George, UT
10.Salt Lake City, UT
US Housing OutlookSource: Metrostudy Home Building Outlook Report
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Best Markets for NEW Home Building
US Housing Outlook
Source: Metrostudy Home Building Outlook Report
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Top 10 Best Home Building Markets1. Denver-Aurora-Lakewood, CO
2. Boise City, ID
3. North Port-Sarasota-Bradenton, FL
4. Salt Lake City, UT
5. Phoenix-Mesa-Scottsdale, AZ
6. San Francisco-Oakland-Hayward, CA
7. Provo-Orem, UT
8. Minneapolis-St. Paul-Bloomington, MN-WI
9. Orlando-Kissimee-Sanford, FL
10.Dallas-Fort Worth-Arlington, TX
US Housing OutlookSource: Metrostudy Home Building Outlook Report
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Biggest Home Building Markets (2016 New Home Sales)
1. Dallas-Fort Worth-Arlington, TX
2. Houston-The Woodlands-Sugar Land, TX
3. Phoenix-Mesa-Scottsdale, AZ
4. Atlanta-Sandy Springs-Roswell, GA
5. Washington-Arlington-Alexandra, DC-VA-MD-WV
6. New York-Newark-Jersey City, NY-NJ-PA
7. Charlotte-Concord-Gastonia, NC-SC
8. Austin-Round Rock, TX
9. Orlando-Kissimmee-Sanford, FL
10.Denver-Aurora-Lakewood, CO
US Housing OutlookSource: Metrostudy Home Building Outlook Report
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Biggest Multi-Family Construction Markets(2016 MF Starts)
1. New York-Newark-Jersey City, NY-NJ-PA
2. Dallas-Fort Worth-Arlington, TX
3. Los Angeles-Long Beach-Anaheim, CA
4. Houston-The Woodlands-Sugar Land, TX
5. Washington-Arlington-Alexandria, DC-VA
6. Denver-Aurora-Lakewood, CO
7. San Francisco-Oakland-Hayward, CA
8. Austin-Round Rock, TX
9. Seattle-Tacoma-Bellevue, WA
10.Miami-Fort Lauderdale-West Palm Beach, FL
US Housing OutlookSource: Metrostudy Home Building Outlook Report
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Best Markets for Remodeling
October 27, 2016
US Housing Outlook
Source: Metrostudy Residential Remodeling Index
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Top 10 Remodeling Markets
US Housing OutlookSource: Metrostudy Residential Remodeling Index
1. San Jose-Sunnyvale-Santa Clara, CA
2. San Francisco-Oakland-Hayward, CA
3. Seattle-Tacoma-Bellevue, WA
4. Cleveland-Elyria, OH
5. Philadelphia-Camden-Wilmington, PA-NJ-DE-MD
6. Indianapolis-Carmel-Anderson, IN
7. Sacramento-Roseville-Arden-Arcade, CA
8. San Diego-Carlsbad, CA
9. Bridgeport-Stamford-Norwalk, CT
10. Portland-Vancouver-Hillsboro, OR-WA
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Biggest Remodeling Markets
1. New York-Newark-Jersey City, NY-NJ-PA
2. Los Angeles-Long Beach-Anaheim, CA
3. Chicago-Naperville-Elgin, IL-IN-WI
4. Dallas-Fort Worth-Arlington, TX
5. Washington-Arlington-Alexandria, DC-VA-MD-WV
6. Philadelphia-Camden-Wilmington, PA-NJ-DE-MD
7. Houston-The Woodlands-Sugar Land, TX
8. Atlanta-Sandy Springs-Roswell, GA
9. Miami-Fort Lauderdale-West Palm Beach, FL
10.Boston-Cambridge-Newton, MA-NH
US Housing OutlookSource: Metrostudy Residential Remodeling Index
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Parting Thoughts
The employment situation is ok, with broad private sector gains across almost all
sectors, which is good for housing. However, labor force participation rate is still
very low from a historical perspective, and the quality of jobs being created is not
excellent.
With 2.8 million jobs created during the past 12 months, the economic expansion
continues to fuel strong demand for new housing.
Growth is continuing and is expected to proceed gradually in both remodeling and
new construction.
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Parting Thoughts
Low Oil Prices should give a strong multiplier on consumer expenditures. Retail
sales associated with Tourism, Remodeling, Replacement, Home Furnishings and
Health do especially well.
Metrostudy forecasts that 1.28 million residential permits will be issued in 2016,
translating to construction of 1.1 million homes and apartments. For every house
built in the U.S., 2.8 jobs are expected to be created.
Mortgage rates will begin to gradually rise by the latter part of Year 2016.
West coastal office markets – from San Diego to Seattle – will be very strong.
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Parting Thoughts
Select Texas markets are in or heading toward much slower market conditions.
Over the next five years, the state of housing is expected to stay healthy in terms of
transactions and volume, but demand will most likely continue to outpace supply.
We are expecting nationwide Total Housing Starts to gain 7% this year and, for
Single Family, we expect 13.7% pace, with Multi-Family declining by 5.3%.
Next year we are forecasting 10.5% Single Family growth and a 2.1% decline in
Multi-Family.
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1,265,000 STARTS
638,000 NEW HOME SALES
11,935,833 REMODELING PROJECTS
2017 CURRENT FORECAST
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OCTOBER 25–27, 2016OCTOBER 25–27, 2016
See you next year at
The 2017 Remodelers Summit!