AS THE ECONOMIC CYCLE CHANGES, THE QUESTION COMES TO MIND, HOW ARE WE DOING AS COMPARED TO PAST YEARS PERFORMANCE , HOW FAR CAN HOME SALES AND RESIDENTIAL BUILDING RUN
Since 2006 which was the peak in residential sales and 2003 was the peak in permits for new construction we have been in a wild ride, first a market driven by first time buyers tax credits 2009, then a market driven by a tax credit to anyone that bought a home 2010 and now a market driven by historically unheard of interest rates the low 3’s for 30 year and the mid 2’s for 15 year mortgage money, yet with that low cost money have come much tighter requirements to qualify for a loan and a financial collapse. So I guess the question becomes is there such a thing as a “normal” market? My belief is that we have a market driven a direction by the overall economy and whichever way the direction is I would consider “normal”. Since 2012 is drawing to a close and most probably the economy won’t radically change in the last two months of year thought it might be worth taking out the dart board and try some aspects of 2013.
First we look at building permits and sales so far in 2012 if the market continues to perform as it has so far in the last two months it should move single family sales to the 1350 to 1370 range which means single family permits should end the year about 370 and with duplex adding about 400 units total. While that is a huge improvement from 2011 and beats each year back to 2008, it still leaves us below the year of 2000. When looking at 2013 it would be extremely unusual for the market to match its unit sales increase that we have seen in 2012. So ignoring the wild card of the election of next Tuesday, I would venture that we should see solid yet not spectacular increase in the 7 to 9% range. Knowing there is still most probably some latent unmet demand in the market place caused by the events of the recent past. After 2013 demand will be driven only by jobs, population and interest rate so all things being equal, sales will follow that path.
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