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News for Product Manufacturers from Hanley Wood CEO Frank Anton
Housing's Silver Bullet Bailout
"Housing is so important. It led us into this ... We need to move the houses we've got around. When that gets done and we hit equilibrium, the world will change in a big way."
Who do you think said that? Was it:
A) the president of NAHB
B) Warren Buffett
C) Ben Bernanke
Warren Buffett's the right answer, and what he said I hear echoed at every meeting of housing industry leaders that I go to. Believing that, nobody in the housing industry can understand why the federal government hasn't done more to save the industry, which accounts for about 21 percent — that's $14.3 trillion — of the nation's GDP. And many in the industry seem particularly frustrated because they think there is a silver bullet for housing. Namely, they think expanding the current federal tax credit for home purchases to $15,000 (up from $8000) and liberalizing so it would be available to all home buyers (not just relatively low-income first-time buyers) would be a catalyst to a housing recovery.
Would that really help? I think so. A somewhat similar state program in California definitely triggered a surge in home sales there. So why isn't the federal government rushing to the rescue? Well, I don't think it's the program's almost $40 billion price tag (government printing presses are running overtime). No, it's because the housing industry has by its very nature put up some of its own roadblocks.
First, while the auto industry has its struggling Big Three and an epicenter in distressed Detroit, the housing industry is almost hopelessly fragmented. It doesn't have a company or a city to act as a poster child for its problems.
Second, while this famously fragmented industry has been fairly united in appealing to Congress and the Obama administration for help, fissures have developed in the lobbying effort. NAHB and the nation's biggest builders crossed swords over something called the net operating loss provision in the tax credit legislation. NAHB opposed it. The big builders favored it. NAHB won, but it was a bruising battle, and Congress no doubt noticed the lack of unity.
Third, in the end the auto industry, organized labor, and the Big Three joined forces, creating a powerful political coalition. In housing, labor is disorganized, which is how most manufacturers and builders like it. But now that means that the workingman's voice — the voice of those on the assembly line or the jobsite — is not being heard in Washington, which I think hurts housing's case.
Fourth, remember what Warren Buffett said: ..."It (housing) led us into this." In other words, housing is to blame for the country's current financial catastrophe. That means housing isn't going to get much of a sympathy vote in Washington.
The next round of lobbying for housing is being spearheaded by a housing working group from the Business Roundtable. A white paper from the group persuasively argues its position, which is that housing needs help now if it's to play its traditional role of recession buster. But this group, and everybody who supports it, will have its work cut out for it.
Send e-mail to Frank Anton |
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News and Trends from Hanley Wood Magazines
The New Basics
Home builders reach for a rediscovery and re-engineering of value -- both emotional and practical -- in new-home ownership. (BIG BUILDER, June 2009)
REMODELING's Special June Stimulus Issue
This special issue of REMODELING focuses on the American Recovery and Reinvestmant Act of 2009 and the associated tax credits -- and how it all will affect your customers. (REMODELING, June 2009)
Favorite 50
Find out what products piqued builders' curiosity over the course of 2008 with this list of products, chosen by our readers. (BUILDER, June 2009)
Visit the Relaunched Eco-Structure Online
Totally redesigned, the new Web site for eco-structure magazine brings you expanded coverage of trends, products and design aimed at improving the envorinmental performances of buildings and their surroundings.
2009 Editors' Choice Awards
Among this year's 12 award-winning tools are new corded and cordless hand tools, breakthrough blades, stationary shop equipment, a framer's "persuader," and a one-of-a-kind drywall cutter. (TOOLS OF THE TRADE, Spring 2009)
Spiral Bound
What standards do dealers and distributors use to recommend green products? ProSales found stark differences. And the deeper you go into the selection process, the trickier the choices get. (ProSales, June 2009)
Follow the Money
A look at how the economic stimulus plan will affect America's built environment. (ARCHITECT, June 2009)
2009 CUSTOM HOME Design Awards
The winners of this year's CUSTOM HOME Design Awards reflect widely varied programs, tastes, and budgets, but they share an elusive quality of design that marks them as a breed apart. (CUSTOM HOME, May/June 2009) |
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Housing Statistics and Analysis from Hanley Wood Market Intelligence
- Both new and existing home prices posted gains in May, and with the highly anticipated results of the government's stress tests of the nation's largest banks already released, the market will turn to key economic data for direction in the coming weeks. April retail sales dropped a seasonally adjusted 0.4% after a 1.3% drop in March. This was the second straight month that retail sales have declined, which diminished hopes of a quicker economic recovery. The data show that consumers remain wary about the state of the economy in the face of weaker income trends and rising unemployment. The weaker data put pressure on equities.
- New home sales eased a slight 0.6% in May to a seasonally adjusted 342,000 homes from a downwardly revised April figure of 344,000. Sales for the previous three months were also revised lower by 32,000 units. In May, new home inventories declined to 289,000 from an April figure of 298,000 on a non-seasonally adjusted basis. Non-seasonally adjusted units of unsold inventory have not recorded a monthly increase since May 2007, and are now at their lowest levels since April 2001, as builders continue to scale back building activity. There are now 10.2 months of supply on a seasonally adjusted basis based on the current sales pace, which is the lowest it has been since July 2008. In May, median new home prices increased to $221,600 from a revised April figure of $212,600. Median new home prices increased 4.2% from last month but are still down 3.4% from the same year-ago period. Rising rates and prices pushed new home affordability down for the second straight month in May after hitting an all-time high in March.
- Annualized sales of total existing homes in May increased 2.4% from April levels to 4.77 million units. This was the first time since January-February 2007 that existing home sales have posted consecutive month-over-month gains. Sales of existing homes are still down 3.6% from the 4.95 million units in May 2008. Median existing home prices in May increased to $173,000 from $166,600 in April. This is the highest that median existing home prices have been since December. Existing home inventory declined from the previous month as lower prices helped to spur buying activity and reduce the number of homes for sale. Inventory of existing homes declined 3.53 percent to a preliminary 3.798 million units from 3.937 million units in April. At the current sales pace, there are 9.6 months of supply of existing homes on the market. Months of existing home inventory are back to the lowest they have been this year.
More from Hanley Wood Market Intelligence |
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Reinvention 2009, September 14-16, Seattle
The New, New Reality: Expanding the Architect's Role through Outreach,
Innovation & Collaboration
The model for nearly everything architects do is being
rewritten. It's not just "more with
less," it's also "more with more" — more complexities, risk, and
innovation than anyone thought possible.
Join us for the sixth annual Reinvention Symposium and find out how
architects are already redefining the scope, capacity, and relevance of
their practices. For more information, visit the Web site. |
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