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News for Product Manufacturers from Hanley Wood CEO Frank Anton
Stop Dreaming
Businesspeople in every industry are trying to answer this question: Are the disruptive, negative forces affecting their businesses purely cyclical? (A function of the great recession). Or are they secular? (A function of fundamental, long-term changes).
Hanley Wood is in two businesses: media and housing. In media, the big question revolves around the steep drop in print (magazine and newspaper) advertising. Those who see the problem as cyclical believe print advertising will bounce back when the economy recovers. Those who see the problem as secular believe print advertising will never return to its peak, because more and more advertising dollars will be directed to electronic media. At Hanley Wood we see the problem as more secular than cyclical.
In the housing industry I think the big question revolves around the decline in homeownership. This year will be the fifth year in a row that the rate has declined. It peaked at 69.1 percent and has now dropped to 67.3 percent. Those who see the decline as cyclical believe that when the employment picture improves and housing prices stabilize, realizing the American dream of homeownership will once again hold sway and homeownership rates will improve. Wait a minute, argue those who see the decline as secular. As they see it, the collapse of housing prices, the crush of foreclosures, and tightening of lending standards figure to make members of the Echo Baby Boom far more reluctant than their Baby Boomer parents to rush into buying a house. Why take a chance; why not play it safe and rent instead of buy?
I grew up the child of Depression-era parents. They'd seen the banks seize their parents' property and destroy their businesses. So, they wouldn't borrow from banks. My father bought cars with cash. Cash, not even checks, and certainly not credit. He borrowed money from his siblings to buy two houses, and he paid them back — in cash — in a few years. He wasn't alone. The Depression caused secular changes in behavior.
Now I wonder if the Great Recession, as it's come to be called, will cause my daughters, card-carrying members of the 75-million member Echo Baby Boom generation, to think more than twice about buying their first home. I think it will. And that means that nobody in the housing industry should sit back and wait for that generation and the eventual economic recovery to come to the rescue of either the industry or their business. Assume the decline in homeownership will continue unless and until the housing industry develops products and business practices that convince gunshy young home buyers that the American dream isn't just their parents' fantasy.
Send e-mail to Frank Anton |
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News and Trends from Hanley Wood Magazines
The 2008 BUILDER 100
After a tumultuous 2008, surviving Builder 100 companies prepare to regain old ground. Read the full coverage, including searchable, sortable charts. (BUILDER, May 2009)
The 2009 Public Builder Report Cards
BIG BUILDER’s 2009 Public Builder Report Cards compare, analyze, and grade the ’08 performance of the biggest builders. Which builders’ financials are holding fast despite the pressure, and which are showing stress fractures? (BIG BUILDER, May 2009)
Introducing the All-New MULTIFAMILY EXECUTIVE Online
With a new design, new interactive features, and a richer, broader pool of multifamily news, data, and sources, the Web site for MULTIFAMILY EXECUTIVE is better than ever.
The ProSales 100
The Long Climb Out: ProSales 100 dealers are struggling to recover from a steep fall, often by making painful cuts of people, operations, and facilities. (ProSales, May 2009)
The 2009 REMODELING Big50
For the 23rd consecutive year, REMODELING magazine announces the newest members of the Big50, an elite group of remodeling professionals whose exemplary business practices, management skills, community service, and craftsmanship distinguish them from their competitors and elevate the stature of the profession overall. (REMODELING, May 2009)
The ARCHITECT 50
ARCHITECT inaugurates a new annual firm ranking. Because the biggest aren't always the brightest, we ranked firms not according to revenue or number of employees, but according to their profitability, commitment to sustainability, and caliber of design. (ARCHITECT, May 2009)
rada 2009
residential architect salutes 44 projects that exemplify the best in design, in the 10th annual residential architect Design Awards. (residential architect, April 2009)
ARCHITECTURAL LIGHTING 2009 Product Guide
With the arrival of Spring comes a flurry of conferences and trade shows, and there's sure to be a plethora of new product releases. But for now, check out the latest lighting offerings. (ARCHITECTURAL LIGHTING, April/May 2009) |
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Top Developments Affecting the Nation's Biggest Public Builders
Builder Confidence Rises for 2nd Month
Builders continued growing more confident in the market for new single-family homes in May, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).
Multifamily Starts Pull Down April Figures
Housing starts fell in April to 458,000, 12.8 percent below March’s estimated 525,000 starts and 54.2 percent off the April 2008 pace. This time, it was multifamily that pulled down the residential building sector. But single-family starts and permits both showed small gains.
Retail Giants See Glimmers of Hope in Quarterly Results
But revenue for The Home Depot and Lowe’s continued to slip over the past three months.
Stock Building Supply Closing More Facilities
Operations in north Texas and Las Vegas join N.Y. state yards on the hit list.
Census: Population Becoming Older, More Racially Diverse
Americans 65 and older account for 30 million people, which represents 12.8% of the U.S. population.
Managing the Supply Chain Pays Off
For big builders, the real work of improving margins through purchasing involves developing honest and transparent partnerships with manufacturers and suppliers. More and more are finding the effort pays off.
Expert: Multifamily Has More Pain Ahead
David Crowe of the National Association of Home Builders said at the Urban Land Institute’s “Financing Workforce Housing in a Stimulated Economy” forum that he expects approximately 129,000 multifamily starts in 2009 and 126,000 starts in 2010.
LP Recalls Composite Decking
48 million feet of product affected; decking said to deteriorate prematurely and crack.
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Housing Statistics and Analysis from Hanley Wood Market Intelligence
- With most of the earnings season already behind us and 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.
- Recent stress tests revealed that 10 out of the 19 banks reviewed may need to raise additional capital if economic conditions were to worsen. The bank stress tests and April employment data were greeted with enthusiasm which continued to fuel the recent market rally. Results were apparently better than the market anticipated helping the S&P 500 close trading at its highest levels since January 6. Expectations for a stabilizing economy has driven up crude prices in recent weeks, with the rally continuing, as oil trades at around $60/barrel.
- There are additional clouds looming on the horizon. Housing remains the primary concern, being unable to maintain healthy levels of sales activity even with rates at all-time lows and government tax credits. The National Association of Realtors reported recently that single-family home prices fell 13.8% in the first quarter year-over-year period as foreclosures and short sales pressured median metro area home prices. Commentary in the report stated that foreclosures and short sales accounted for nearly half of the transactions in the first quarter. Foreclosures have begun rising sharply again now that various moratoriums have expired, and banks have once again begun to repossess houses owned by delinquent borrowers.
More from Hanley Wood Market Intelligence |
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CONSTRUCT2009, June 16-19 in Indianapolis
CONSTRUCT2009, held in conjunction with the 53rd CSI Annual Convention and The TFM Show, brings architects, engineers, specifiers, facility managers, building owners, general contractors and commercial construction professionals together for education, product resources, CSI membership and networking. Between the two shows, 125 educational sessions are offered with LUs, credit and points for AIA, CSI CEN, IFMA, BOMI, and CEFPI, as well as technical tours, a student design competition, and networking via golf and baseball events. Additional educational opportunities take place on the exhibit hall floor, surrounded by over 250 companies displaying the latest products and services. For more information, visit the Web site. |
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