Qualified Remodeler Magazine

JUL 2019

Qualified Remodeler helps independent remodeling firms to survive, become more professional and more profitable by providing must-have business information, namely best business practices, new product information and timely design ideas.

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WITH THE NATION'S economy on sound footing and incomes on the rise, the number of people forming households in the U.S. has returned to a more normal pace. Housing production, however, has not. The 2019 State of the Nation's Housing report, released on June 25 by the Harvard Joint Center for Housing Studies, documents how the housing shortfall is keeping pres- ĨĪħĚĤģĝĤĢĚĥħĞĘĚĨĖģęħĚģĩĨĚħĤęĞģĜĖŻĤħęĖėĞġĞĩĮěĤħĢĤęĚĨĩÇĞģĘĤĢĚĝĤĪĨĚĝĤġęĨĞģ many markets. The report found that household growth is now back from post-recession lows, but new-home construction remains depressed, with new homes barely keeping pace with the number of new households. Several factors may be contributing to the slow con- struction recovery, including excess supply following the housing boom—which took years to absorb—and persistent labor shortages. ţďĝĚĢĤĨĩĨĞĜģĞŽĘĖģĩěĖĘĩĤħĨĝĤĬĚīĚħĖħĚħĞĨĞģĜġĖģęĥħĞĘĚĨĖģęħĚĜĪġĖĩĤħĮĘĤģ- straints on development," says Chris Herbert, managing director of the Joint Center for Housing Studies. "These constraints, largely imposed at the local level, raise costs and limit the number of homes that can be built in places where demand is highest." Meanwhile, a large percentage of new housing being built is intended primarily for the ĝĞĜĝĚħĚģęĤěĩĝĚĢĖħĠĚĩăĚħėĚħĩĨĖĮĨďĝĚġĞĢĞĩĚęĨĪĥĥġĮĤěĨĢĖġġĚħĢĤħĚĖŻĤħęĖėġĚ ĝĤĢĚĨĞģĩĝĚěĖĘĚĤěħĞĨĞģĜęĚĢĖģęĨĪĜĜĚĨĩĨĩĝĖĩĩĝĚħĞĨĞģĜġĖģęĘĤĨĩĨĖģęĩĝĚęĞƄĘĪġĩ ęĚīĚġĤĥĢĚģĩĚģīĞħĤģĢĚģĩĢĖĠĚĞĩĪģĥħĤŽĩĖėġĚĩĤėĪĞġęěĤħĩĝĚĢĞęęġĚĢĖħĠĚĩ Market Indicators Remodeling Beneting from Housing Shortfall, Stronger Existing-Home Sales Market Indicators Existing-home sales rebound According to the National Association of Realtors (NAR), each of the four major U.S. regions saw a growth in existing-home sales in May, with the Northeast experiencing the biggest surge. Total existing-home sales—complet- ed transactions that include single-family homes, townhomes, condominiums and co- ops—jumped 2.5 percent from April to an annual rate of 5.34 million in May. Lawrence Yun, NAR's chief economist, says the 2.5 percent jump shows that con- sumers are eager to take advantage of the favorable conditions. "The purchasing power to buy a home has been bolstered by falling mortgage rates, and buyers are responding." The median existing-home price for all housing types in May was $277,700, up 4.8 percent from May 2018 ($265,100). May's price increase marks the 87th straight month of year-over-year gains. Although inventory is up, the supply numbers remain near historic lows, which ĝĖĨĖęĞħĚĘĩĚŻĚĘĩĤģĥħĞĘĚĖĘĘĤħęĞģĜĩĤĔĪģ "Solid demand along with inadequate inven- ĩĤħĮ Ĥě ĖŻĤħęĖėġĚ ĝĤĢĚĨ ĝĖīĚ ĥĪĨĝĚę ĩĝĚ median home price to a new record high," he says. Properties remained on the market for an average of 26 days in May, up from 24 days in April and equal to the 26 days in ĈĖĮĤě#!")āĞƁĮÇĩĝħĚĚĥĚħĘĚģĩĤěĝĤĢĚĨ sold in May were on the market for less than a month. Given that housing and properties have been selling so quickly, Yun continues his call for new construction. "More new homes need to be built," he notes. "Otherwise, we risk worsening the housing shortage, and an increasingly number of middle-class families will be unable to achieve homeownership." Realtor.com's Market Hotness Index, measuring time-on-the-market data and listing views per property, revealed that the hottest metro areas in May were Rochester, New York; Fort Wayne, Indiana; Lafayette- West Lafayette, Indiana; Boston-Cambridge- Newton, Massachusetts; and Midland, Texas. "The month of May ushered in the home sales upswing that we had been ex- pecting," says NAR President John Smaby, a second-generation realtor from Edina, Share of Recently Sold Homes Aordable to Median-Income Households (Percent) Note: Median incomes are estimated at the core-based statistical area (CBSA) level—only CBSAs with at least 30 home sales in the past year are shown. Recently sold homes are dened as homes with owners who moved within 12 months prior to the survey date. Monthly payments assume a 3.5 percent down- payment, property taxes of 1.15 percent, property insurance of 0.35 percent, and mortgage insurance of 0.85 percent. Aordable payments are dened as less than 31 percent of monthly household income. Source: JCHS tabulations of U.S. Census Bureau, 2017 American Community Survey 1-Year Estimates, and Freddie Mac, PMMS. 024 2549 5074 75100 IN BRIEF 8 July 2019 QualifiedRemodeler.com

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