october 25 27, 2016 · 1. greeley, co 2. naples-immokalee-marco island, fl 3....

OCTOBER 25–27, 2016OCTOBER 25–27, 2016

US Housing & Remodeling Market Outlook

SHERATON | KANSAS CITY, MO | OCTOBER 25–27, 2016

MACRO ECONOMICOUTLOOK

US Housing Outlook

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)

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


+2,522,000 YOY

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

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


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

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

STATE OF THE ECONOMY


Slowly Improving Job Picture

Unemployment Gradually Shrinking

Housing Production Recording Solid Gains

So-So Consumer Confidence

Interest Rates Remain Low Despite Hike

THREATS TO THE ECONOMY


Eventual Rise In Interest Rates

Volatile GDP Growth/Decline

Quality of Jobs Being Created Not Especially Good

International Events Impacting US Economy

RESIDENTIALOUTLOOK

US Housing Outlook

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

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

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

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

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

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

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

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

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

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

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

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

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

REMODELING

US Housing Outlook

Read All About It!

-

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

Dollars tracking with number of projects

Aging Housing Stock Is Key Contributor

Closings Are Key Indicator

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

Remodeling Market Project Counts: DOORS


5.3 5.4

0

1

2

3

4

5

6

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Millions

Remodeling Market Project Counts: ADDITIONS


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

Remodeling Market Project Counts: KITCHEN & BATH


6.1 6.3

0

1

2

3

4

5

6

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Millions

Remodeling Market Project Counts: HVAC


3.7 3.8

0

1

2

3

4

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Millions

Remodeling Market Project Counts: ROOFING


5.3

6.3

0

1

2

3

4

5

6

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Millions

Remodeling Market Project Counts: SIDING


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

Remodeling Market Project Counts: BATHROOMS


5 5.1

0

1

2

3

4

5

6

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Millions

Remodeling Market Project Counts: KITCHENS


4.8 4.9

0

1

2

3

4

5

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Millions

Remodeling Market Project Counts: DECKS


3.4 3.5

0

1

2

3

4

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Millions

Remodeling Market Project Counts: INSULATION


3.6 3.7

0

1

2

3

4

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Millions

Remodeling Market Project Counts: BASEMENTS


7.3 7.5

0

1

2

3

4

5

6

7

8

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Millions

Alignment with the right consumers

TOP MARKETS

US Housing Outlook

Growth Is Most Reliable in Healthy

Markets, and MOST MARKETS ARE DOING WELL

US Housing Outlook

Source: Metrostudy Home Building Outlook Report

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

Best Markets for NEW Home Building

US Housing Outlook

Source: Metrostudy Home Building Outlook Report

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


7. Provo-Orem, UT

8. Minneapolis-St. Paul-Bloomington, MN-WI

9. Orlando-Kissimee-Sanford, FL

10.Dallas-Fort Worth-Arlington, TX


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


9. Orlando-Kissimmee-Sanford, FL

10.Denver-Aurora-Lakewood, CO


Biggest Multi-Family Construction Markets(2016 MF Starts)



3. Los Angeles-Long Beach-Anaheim, CA


5. Washington-Arlington-Alexandria, DC-VA

6. Denver-Aurora-Lakewood, CO



9. Seattle-Tacoma-Bellevue, WA

10.Miami-Fort Lauderdale-West Palm Beach, FL


Best Markets for Remodeling

October 27, 2016

US Housing Outlook

Source: Metrostudy Residential Remodeling Index

Top 10 Remodeling Markets

US Housing OutlookSource: Metrostudy Residential Remodeling Index

1. San Jose-Sunnyvale-Santa Clara, 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

Biggest Remodeling Markets


2. Los Angeles-Long Beach-Anaheim, CA

3. Chicago-Naperville-Elgin, IL-IN-WI


5. Washington-Arlington-Alexandria, DC-VA-MD-WV

6. Philadelphia-Camden-Wilmington, PA-NJ-DE-MD


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

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.

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.

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.

1,265,000 STARTS

638,000 NEW HOME SALES

11,935,833 REMODELING PROJECTS

2017 CURRENT FORECAST

OCTOBER 25–27, 2016OCTOBER 25–27, 2016

See you next year at

The 2017 Remodelers Summit!

october 25 27, 2016 · 1. greeley, co 2. naples-immokalee-marco island, fl 3....

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