Housing Starts to Improve in 2011

I've just returned from the International Builder's Show where we heard a bit of good news. According to NAHB economists, Housing will see gradual improvements in activity this year as the nation's economy and job market continue to move to higher ground. NAHB Chief Economist David Crowe said, "This year's spring selling season will be better than last year's with job growth providing a stronger stimulus in the housing market than last year's tax credits for home buyers." Crowe forecasted 575,000 single-family home starts in 2011, a 21 percent climb over the estimated 475,000 units started in 2010, which in turn showed a 7 percent gain from the 442,000 homes started in 2009. Multifamily, which is poised to profit from a disproportionate number of Gen Y members moving into the housing market, has seen the bottom of the cycle, he said, and will see its starts rise 16 percent this year to 133,000 units, with a further 53 percent increase in 2012 to 203,000 units. Trends among Gen Y are of definite interest to me. I spoke at the Builder's Show on Gen Y and their technology preferences. It will be fun to watch as they enter the housing market! Builders will need to continue to embrace technology including mobile sites, text messaging, QR Codes and social media to meet the buying preferences of this demographic. Crowe stated that builders' access to the credit they need to start new homes remains the fragile component of the NAHB forecast. So far, small builders have experienced extreme difficulty in obtaining financing, and rectifying the situation as soon as possible is the top priority of the association. More encouraging is a rebound in the confidence of consumers, who mid-2010 "froze in place, faced with a lot of uncertainty," he said. A recent pickup in durable purchases for such items as automobiles and furniture indicates that consumers are less afraid today of losing jobs and income. New-home sales, Crowe projected, "will struggle" but begin following employment gains, reaching 405,000 for the year, up from an estimate of about 320,000 for 2010. This news is not all sunshine and light, but it is a nice start on the road to recovery in the housing market!