Chicago Tribune on HB's. Kb does their optimism indicate a peak or...? 'current period "a unique housing cycle"', sounds a lot like "It's different this time."
Home builders expect sweet year
Single-family market withstands terrorism and recession
By Genevieve Buck
Tribune staff reporter
Published February 9, 2002
ATLANTA -- While one economist said Friday that recent housing industry figures have been "darn good numbers," another said "we'll probably be calling them `boring' by the end of 2002."
Which means, said the second economist, "We'll be happy as clams."
Addressing home builders, architects and developers at the International Builders' Show here Friday, a trio of economists said housing will remain strong in 2002, setting further construction records.
Standard & Poor's chief economist David Wyss said that "despite three quarters of an economic recession and the aftershock of the terrorist attacks, single-family housing starts were up by nearly 4 percent for last year, while multifamily starts fell by 3 percent--but that was a very strong showing."
Favorable mortgage financing conditions and solid increases in house prices were the key supports for demand, he said.
The "boring" observation came from David Seiders, chief economist for the National Association of Home Builders, sponsor of the annual builders' show, which is expected to attract 70,000 attendees.
Seiders, marveling at December's stunning new-home sales increase of 5.7 percent, said that record-setting pace brought 2001 up to 900,000 single-family homes, 2.6 percent above the previous year's 877,000.
"Then, here we are today," said Seiders, "forecasting a total of 904,000 for the year 2002. We're beginning to sound boring, aren't we?"
Many at the show spent Friday streaming through show houses, in particular a modular home built in six days right on the exhibit floor. The house can be built on a regular lot in about three weeks, according to the manufacturer.
A product of Michigan-based Genesis Homes, a nationwide producer of modular housing, the 2,595-square-foot homeincludes a network capable of handling rapid changes in technology and a system that lowers heating and cooling costs.
The house sells for about $320,000, not including land costs.
Seiders, with 25 years of experience as a housing industry analyst and economist, called the current period "a unique housing cycle. We have maintained growth. We usually lose builders during a recession . . . inventories build up." Those negatives did not occur, he said.
He said many builders were cautious after the terrorist attacks of Sept. 11, and some rolled out incentives to attract buyers. That likely boosted sales near the end of last year, he said.
Those on the panel said the recession will be ending soon, probably by early spring. The recovery, however, may be somewhat slower.
The economists said the Federal Reserve likely will start raising interest rates, perhaps in the third quarter, while long-term mortgage rates should remain around 7 percent for the year, with home prices remaining stable.
David Berson, chief economist for Fannie Mae, was more pessimistic. "Of course, housing has been very strong. It has broken records, but my forecast is that home sales will be down this year by 2 percent, which will take place in the second, third and fourth quarters."
He sees mortgage rates rising to 7 1/2 percent later this year.
Also at the trade show Friday, Pulte Homes and Del Webb Corp. announced a new type of active adult community, inspired by a Baby Boomer survey conducted since the two companies merged last year.
Called Solera, the developments will be smaller than the current Sun City communities, which are based on thousands of single-family homes and townhouses with recreation centers, swimming pools and golf courses.
The Solera plan will be introduced in 20 metropolitan areas, closer to larger cities than the current crop of Sun City developments.
Soleras will have a new feature: "Casitas, small rooms detached from the main home, that can serve as an office for consulting purposes or even a place for housing children or grandchildren for visits," the company said.
Builders at the show said profits on home construction remain robust.
Copyright © 2002, Chicago Tribune
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