An interesting note popped to my inbox today: the final tally from the International Home Builders Show. The National Association of Home Builders, which runs the show, reports this year’s show was the largest in history, by number of exhibitors - more than 1,900 - and by space - one million net square feet of exhibits. Attendance did not break last year’s record, just over 105,000, but it only missed it by a thousand or so.
Given the downturn in the housing market this year, and the scary stats coming from the nation’s public home builders in their quarterly earnings reports, you would have thought this annual trade show would be a bit of a downer this year. Housing starts are down, home builders are struggling to get rid of unsold homes, cancellations are very high, and negative price appreciation in some areas of the country are limiting the amount of money consumers can take out of their homes for improvement projects. But the builders and the companies that make the stuff with which to build, renew and improve were out in full force.
I spoke with NAHB president David Pressley next to the Sears display at the Orlando show:
“We recognize that in the past 12 months there’s been a change in the housing market. Indeed permits are down, sales are down, they’re not down significantly though – they’re down to the level in ’03, or ’04, but the builders are coming to the show to sharpen their skills – go to these educational seminars, these training seminars, to see these new products here on this great trade show floor, so that they can indeed incorporate the newest, the most technical, the most sophisticated techniques into their homes for their consumers.”
Mr. Pressley, of course, has to be optimistic; after all, he represents thousands of builders. But the builders themselves have shown increased optimism over the past few months, buoyed by increased traffic through their homes and a slight uptick in sales. They also understand that whatever the cyclical bumps in building, demographics drive the industry, and demographics are in their favor. Again, Mr. Pressley:
“We have an internal demand of about 1.8 million units per year. Last year we did about 2.1 million units. This year we’ll do about 1.7, 1.75 million units, which is right under the demand. Which says – across the country – there is a significant demand for homes. Interest rates are still relatively low and that demand will sustain many builders across the country.”
And that explains the crowds at the show. I have to say I love this particular trade show: not just the opportunity to ogle the latest in outdoor kitchens (I officially apologize to the Viking company for drooling on their display), but the unique opportunity to see bare-knuckled builders rubbing elbows with Fendi-toting interior designers…both equally intrigued by a Kohler toilet seat that literally washes you from beneath (retail value $1300).
Now if you’re skeptical of the builders’ sentiments, you might listen to an expert from the Harvard Joint Center for Housing. I spoke with Kermit Baker by the Gaggenau display (they had this really unreal oven: press a button and its bottom slowly descends to counter level, allowing you to insert your baking dish without any heavy lifting. Divine!)
“We’re looking at the industry over the coming decade, and there’s concern in remodeling just like in housing that we’ve kind of overextended ourselves. We’re finding quite the contrary, that the household growth we’re expecting and the willingness of people to spend on remodeling projects – we’re expecting very strong growth – 40, 50% over the coming decade - stronger than we’ve seen over the past decade.”
So onward you Boschs, Thermidors, Jenn-airs! Let your butane flames dance in our imaginations and your front loading washers lure our laundry. No matter what the macro stats, your microwaves will not fail to entice. As for you Andersen Windows and Dow insulation, you provide warmth in an otherwise cold and unfriendly housing sector cycle.
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