economic forecast · yoy improvements also favor outdoors and small projects burns building product...
TRANSCRIPT
B U I L D I N G C O M P O N E N T M A N U F A C T U R E R S C O N F E R E N C E
Handout Sponsor
Economic ForecastTodd Tomalak, John Burns Real Estate Consulting
1
HO
US
ING
IN
DU
ST
RY
OU
TLO
OK
–B
UIL
DIN
GP
RO
DU
CT
S
Todd
Tom
alak
SVP
–Re
sear
chtt
omal
ak@
rea
esta
teco
nsul
ting.
com
920-
373-
6727
2
JBR
EC
Res
earc
h M
ix
Priv
ate
Build
er14
%
Publ
ic B
uild
er11
%
Deve
lope
r9%
Inve
stm
ent
Fund
13%
Priv
ate
Equi
ty18
%
Build
ing
Prod
ucts
18%
Lend
er6%
Sing
leFa
mily
Ren
tal
3% Oth
er8%
3
87%
of
CF
Os
Exp
ect
a R
eces
sion
in
Nex
t 2
Year
s
4
Our
Eco
nom
ic L
eadi
ng I
ndic
ator
Poi
nts
to 7
5%C
hanc
e of
Rec
essi
on i
n 2
Year
s
5
Hou
sing
and
Bui
ldin
g P
rodu
cts
Hav
e Le
ssD
ebt
Tha
n O
ther
Sec
tors
(Lo
wer
Ris
k)
-2%
12%
12%
28%
3%
24%
23%
23%
15%
31%
33%
33%
57%
-27%
35%43
%50%
38% 51
%
141%15
3%
171%
192%
245%
308%
370%
136%
Build
ing
mat
eria
ls
Rea
l est
ate,
hom
e bu
ildin
g
Con
sum
er g
oods
and
reta
il
Auto
mot
ive
Ener
gy
Serv
ices
Hea
lth c
are
Tech
nolo
gy a
nd e
lect
roni
cs
All c
ompa
nies
Deb
t gro
wth
Nom
inal
GD
P gr
owth
Job
grow
th
Sour
ce: J
ohn
Burn
s R
eal E
stat
e C
onsu
lting
, LLC
; Ban
k of
Am
eric
a M
erril
l Lyn
ch; B
EA; B
LS (D
ata:
Dec
-18,
upd
ated
qua
rterly
†)
Publ
icly
Trad
ed C
ompa
ny D
ebt
2009
–201
8
6
Nea
r Te
rm:
Fav
orab
le C
omp
Will
Mak
e Q
4an
d 1H
202
0 N
umbe
rs L
ook
Bet
ter
Sour
ce: J
ohn
Burn
s R
eal E
stat
e C
onsu
lting
, LLC
pro
prie
tary
sur
vey,
sam
ple
size
of ~
16-2
0% o
f new
hom
e sa
les
mon
thly
7
We
Exp
ect
Mod
est
‘Hic
cup’
in
New
Con
stru
ctio
nV
olum
e –
Rat
her
than
Maj
or D
ownt
urn
Four
Maj
or D
ownt
urns
Smal
l ‘H
iccu
p’
Smal
l‘H
iccu
JB
RE
C M
AR
KE
T H
OT
NE
SS
IN
DE
X F
OR
50
LA
RG
ES
T M
AR
KE
TS
2%
28%
70%
New
Hom
e Sa
les
and
Pric
ing
Tren
ds V
ary
By
Mar
ket
Sour
ce: J
ohn
Burn
s R
eal E
stat
e C
onsu
lting
, LLC
(Pub
: Nov
-18)
Mat
urin
g
Gro
win
gD
eclin
ing
Botto
min
g
Rec
over
ing
Fallin
g
4 M
arke
ts
1 M
arke
t
16 M
arke
ts +
4 W
atch
Lis
ted
2 M
arke
ts
6 M
arke
ts
Cyc
lical
Con
ditio
ns V
ary
by M
arke
t.
10
Hom
e P
rice
App
reci
atio
n M
oder
atin
g
Hom
e Pr
ices
Gre
w w
ith
Inco
me
Unt
il 20
00
Hom
e Pr
ices
Gre
w w
ith
Fast
er T
han
Inco
mes
Sin
ce
2012
, Unt
il Af
ford
abili
ty
‘Lim
it’ R
each
ed in
201
8/19
Slow
dow
n in
HPA
11
Tho
ught
Exp
erim
ent:
Ear
ly R
ead
on M
igra
tion
Thou
ght
Expe
rimen
t:•
Whi
ch m
arke
t has
mor
e ou
tmig
ratio
n?(p
eopl
e m
ovin
gAW
AY)
Regi
onal
Shi
fts t
o Af
ford
able
Mar
kets
Pivo
tto
Affo
rdab
le S
econ
dary
Mar
kets
UH
AU
L R
EN
TAL
PR
ICE
S
SAN
FR
ANC
ISC
O
SEAT
TLE
SAC
RAM
ENTO LA
S VE
GAS
AUST
IN
$2,3
72$7
54
$290
$95
$1,8
77
$153
$3,2
85
$1,0
12
Sour
ce: J
ohn
Burn
s R
eal E
stat
e C
onsu
lting
Met
ro A
naly
sis
and
Fore
cast
13
Piv
ot t
o S
outh
ern
and
Aff
orda
ble
Mar
kets
Sour
ce: J
BREC
Inde
pend
ent A
nalys
is o
f U-H
aul D
ata
(Pub
: Sep
201
9)
14
Hom
e B
uild
ers
Hav
e R
aise
d P
rice
s fo
r P
ast
Sev
en Y
ears
…W
ell A
bove
Res
ale
Pri
ces
15
Bui
lder
s P
ivot
ing
to E
ntry
Lev
el
Sour
ce: B
uild
ers’
mos
t rec
ent q
uarte
rly e
arni
ngs
calls
LGIH
:IP
O
3Q13
DH
I:Ex
pres
s Hom
es D
ebut
2Q14
NV
R:
Sim
ply
Ryan
De
but
2Q15
MD
C:Se
ason
s by
Rich
mon
d Am
eric
an D
ebut
4Q15
TPH
:Pa
rdee
in L
as V
egas
(R
espo
nsiv
e Ho
me)
Deb
ut
1Q16
MTH
:LI
VE N
ow D
ebut
NW
HM
:An
noun
ced
~
Ent
ry-
Leve
l Pro
duct
3Q16
CCS:
Cent
ury
Com
plet
e De
but
MH
O:
Anno
unce
d En
try-
Leve
l Tar
gete
d Pr
oduc
t
TOL:
Anno
unce
d T
| Se
lect
; ent
ry-le
vel
bran
d
4Q16
TPH
:Re
spon
sive
Hom
es in
mor
e m
arke
ts
MH
O:
Roll-
out o
f Sm
art S
erie
s in
to m
ore
mar
kets
2Q17
This
yea
r, m
ortg
age
rate
s ha
ve p
lum
met
ed.
Sour
ce: F
redd
ie M
ac, u
pdat
ed th
roug
h 10
/3/1
9
3.5
3.6
3.7
3.8
3.9
4.0
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
5.0
1/18
2/18
3/18
4/18
5/18
6/18
7/18
8/18
9/18
10/18
11/18
12/18
1/19
2/19
3/19
4/19
5/19
6/19
7/19
8/19
9/19
30-y
r Fix
ed R
ate
Mor
tgag
es4.
94
3.65
0.1%1.
0%2.
5%9.
4%24
.1%
22.2
%17
.0%
8.1%
4.8%
3.1%
2.6%
1.4%
1.1%
0.6%
2.0%
0%5%
10%
15%
20%
25%
<22.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9.0
Mor
tgag
e D
istr
ibut
ion
by R
ate
(201
8)
17
Sour
ce: U
S C
ensu
s AH
S, F
redd
ie M
ac, J
ohn
Burn
s R
eal E
stat
e C
onsu
lting
LLC
(Pub
: Apr
201
9)
Octo
ber 2
018
~60
% “l
ocke
d in”
Octo
ber 2
019
Only
~13
% “l
ocke
d in
”
Ope
ned
Up
the
Mov
eup
Mar
ket A
gain
CCOMM. COUNTS
5%5%
4%
1%
4%4%
2%2%
1%
-2%
3%
2%
-3%
-2%
-1%0%1%2%3%4%5%6%
Jan-17
Apr-17
Jul-17
Sep-17
Jan-18
Apr-18
Jul-18
Sep-18
Jan-19
Apr-19
Jul-19
Sep-19
Com
mun
ity C
ount
Gro
wth
But
don
’t ex
pect
a s
urge
in s
tart
s du
e to
lack
of
entit
led
land
in g
ood
loca
tions
.
Sour
ce: J
ohn
Bur
ns R
eal E
stat
e C
onsu
lting
, Oct
ober
201
9
•Citi
esw
ant i
t•
Effic
ient
use
of l
and
•M
ore
taxa
ble
inco
me
with
mor
e re
side
nts/
acre
•Con
sum
ers
wan
t it
•Pr
oxim
ity to
eve
ryth
ing
(exp
erie
nces
/ em
ploy
men
t)•
Bette
r affo
rdab
ility
in a
des
irabl
e lo
catio
n
•Bui
lder
s an
d de
velo
pers
wan
t it
•Le
ss ri
sk in
a d
esira
ble
loca
tion
•M
ore
hom
es/a
cre
mea
ns h
ighe
r rev
enue
/acr
e
The
U.S
.Is
Shift
ing
to M
ore
Hig
h-D
ensi
tyS
rban
™ L
ivin
g
Cent
erho
use
by T
rum
ark
Hom
esDe
signL
ens™
Fea
ture
Fe
brua
ry 2
019
Ont
ario
, CA
•De
signe
d to
be
atta
inab
le a
ndch
arm
ing.
•Sm
alle
r hom
es w
ithsq
uare
foot
age
in a
llth
e rig
ht p
lace
s•
Smal
l yar
ds a
ndco
vere
d de
cks
Youn
g Si
ngle
(N
o K
ids)
956
resp
onse
s
Youn
g Si
ngle
s ar
e bu
ying
mor
e ro
w to
wnh
omes
.
15%
Sour
ce:
Empt
y N
este
r4,
380
resp
onse
s
Villa
s at L
egac
y W
est
by B
ritto
n Ho
mes
Desig
nLen
s™ F
eatu
re
Dece
mbe
r 201
8Pl
ano,
TX
•2
and
3-st
ory
hom
esth
at p
rovi
de a
low
mai
nten
ance
lifes
tyle
, in
a vi
bran
tSu
rban
com
mun
ity•
Dram
atic
cont
empo
rary
elev
atio
ns•
Low
mai
nten
ance
•En
tert
ainm
ent-
cent
ric fl
oor p
lans
Empt
y N
este
rs A
re B
uyin
g M
ore
Low
Mai
nten
ance
H
omes
with
Ent
erta
inm
ent-C
entr
ic F
loor
Pla
ns.
11%
Sour
ce:
Flat
s ov
er th
e ga
rage
Mul
tigen
erat
iona
l Liv
ing
is o
n th
e R
ise
East
on P
ark
Qua
dsAu
stin
, TX
23
Opp
ortu
niti
es t
o F
ocus
On
24
2% G
row
th i
n R
&R
202
0 -
Sour
ce: J
ohn
Burn
s R
eal E
stat
e C
onsu
lting
, LLC
(Dat
a: A
ug-1
9, P
ub: S
ep-1
9)
Hot
ness
fact
ors:
80%
indu
stry
fund
amen
tals
and
20%
nea
r-ter
m in
dica
tors
Prod
uct C
ateg
ory
Heal
th V
arie
s Dr
amat
ical
ly
OOutd
oors
Sour
ce: J
ohn
Burn
s R
eal E
stat
e C
onsu
lting
, LLC
(Dat
a: A
ug-1
9, P
ub: S
ep-1
9)
Hot
ness
fact
ors:
80%
indu
stry
fund
amen
tals
and
20%
nea
r-ter
m in
dica
tors
Prod
uct C
ateg
ory
Heal
th V
arie
s Dr
amat
ical
ly
SSmal
ler
Proj
ects
Sour
ces:
Joh
n Bu
rns
Rea
l Est
ate
Con
sulti
ng (D
ata:
Aug
-19,
Pub
: Sep
-19)
Bur
ns B
uild
ing
Prod
uct C
ateg
ory
Rat
ings
: Aug
ust 2
019
Ran
k ch
ange
vs.
prio
r yea
r
YOY
Impr
ovem
ents
Also
Fav
or O
utdo
ors
and
Smal
l Pro
ject
s
4.9
7.1
9.6
4.0
6.3
7.6
6.1
Cat
egor
y R
anki
ng
6.4
5.6
4.3
4.4
5.2
6.7
5.7
8.1
-3.1
-2.0
-1.2
-0.9-0
.8
-0.5-0
.3
-0.3-0.3-0
.1
0.00.1
0.4
0.91.
1
-4.0
-3.0
-2.0
-1.0
0.0
1.0
Lum
ber
Roof
ing
Floo
ring
HVAC
Ligh
ting
Kitc
hen
Sidi
ng
Smal
l plu
mbi
ng p
roje
cts
Cabi
nets
Bath
room
Insu
latio
n
Pain
t and
wal
lpap
er
Win
dow
s an
d do
ors
Law
n an
d ga
rden
Deck
ing
28
Exi
stin
g H
ome
Sal
es H
as B
een
Slo
win
g fo
rTw
o Ye
ars
Exis
ting
Hom
e Sa
les
Slow
ing
–Pe
aked
in 2
017
29
Hom
eow
ners
Mov
e F
ar L
ess
Oft
en
10.8
12.0
19.2
19.6
0510152025Impl
ied
Year
s Bet
wee
n Ho
meo
wne
r Mov
es (I
nver
se o
f Mob
ility
Rat
e)
Ow
ner
Mob
ility
Ra
te
9.3% 19
898.
3% 1999
5.2%
2009
5.1%
2018
Sour
ce: U
S C
ensu
s C
PS, J
ohn
Burn
s R
eal E
stat
e C
onsu
lting
, LLC
(Pub
: Mar
ch 2
019)
30
Exa
mpl
e S
cena
rio:
Dec
k P
urch
ase
Scen
ario
: 10
ftx
20 ft
Deck
31
Scen
ario
: 10
ftx
20 ft
Deck
$350
Woo
d$1
,000
-$2
,100
Com
posit
e3-
6xM
ore
Expe
nsiv
e Th
an W
ood
Exa
mpl
e S
cena
rio:
Dec
k P
urch
ase
32
Ho
use
ho
lds
Wh
o S
tay
Lo
ng
er i
n T
hei
r H
om
e ar
e M
ore
Lik
ely
To
Sp
end
on
Pro
du
cts
wit
h ‘
Lo
ng
Ter
m’
Val
ue
Pro
po
siti
on
“How
Lon
g A
re Y
ou P
lann
ing
on S
tayi
ng in
You
r Hom
e?”
33
Ho
me
Pri
ce ‘
Bo
tto
m’
Las
t C
ycle
Co
inci
ded
wit
hR
amp
Up
in
Sin
gle
Fam
ily
Ren
tal
Inve
sto
rs
Rece
ssio
n
SF R
enta
l In
vest
ors B
egin
Ac
quiri
ng
34
Pub
lic I
nves
tors
Now
in
Sin
gle
Fam
ily R
enta
l
35
Que
stio
n to
Hou
sing
Indu
stry
Inve
stor
s:
The
best
, ris
k-ad
just
ed h
ousi
ng
indu
stry
inve
stm
ent i
s…?
36
SF
Ren
tal
CLE
AR
FO
CU
S A
mon
g H
ousi
ngIn
vest
ors
Sour
ce: J
ohn
Burn
s R
eal E
stat
e C
onsu
lting
, LLC
pol
l of S
umm
it at
tend
ees
2019
37
SF
Ren
ts C
onti
nue
To G
row
Dur
ing
Rec
essi
ons
38
Tech
Mak
ing
it E
asie
r fo
r In
vest
ors
to P
ush
Cap
ital
to
Sin
gle
Fam
ily R
enta
l
39
Sin
gle
Fam
ily
Ren
tal
Inve
sto
rs T
arg
et ‘
Bu
y B
ox’
at
Lo
wer
Pri
cep
oin
ts…
Bo
ost
ing
Ho
me
Pri
ce
Ap
pre
ciat
ion
at
En
try
Lev
el
INVH
$298
k
TAH
$163
kAMH
$266
k
RESI
$124
k
Avg
SFR
Purc
hase
Pric
e
40
Labo
r S
hort
age
is N
ot G
oing
Aw
ay.
Labo
rW
ill G
et M
ore
Sca
rce
41
42
‘Bun
dle’
Inn
ovat
ion
Suc
cess
-To
ilet
43
Cos
tco
‘All-
in-O
ne K
it’ -
Koh
ler
44
Kat
erra
Bat
hroo
m K
it
Show
er S
urro
und
Floo
ring
Vani
ty
Plum
bing
Fix
ture
s
Trim
45
Wha
t is
Not
Off
ered
(Ye
t)?
Goo
d,B
ette
r,B
est.
##1: NN
ew H
ome
MMar
ket i
s on
Solid
Gro
und
•D
eman
d on
ly s
light
ly e
xcee
ds s
uppl
y at
toda
y’s
pric
es/re
nts
•Fe
w e
xces
ses
in c
onst
ruct
ion
or i n
finan
cing
•St
rong
est b
uild
er b
alan
ce s
heet
s ev
er•
1.4-
1.5
milli
on n
ew h
omes
per
yea
r is
wha
t is
need
ed fo
r she
lter
•W
atch
mor
tgag
e ra
tes
and
mor
t gag
epo
licy
clos
ely
##2: 44
New
Hom
e SSh
ifts H
ave
Alre
ady
Happ
ened
1.Sm
alle
r, m
ore
effic
ient
hom
escl
oser
to m
atur
e ne
ighb
orho
ods
2.M
ore
of th
e ho
me
will
be b
uilt
offs
ite, a
nd w
ill co
me
with
bet
ter
cons
umer
tech
3.O
ffsite
fram
ing
is a
lread
y he
re in
high
vol
ume,
exp
ensi
ve la
bor
mar
kets
•O
ppor
tuni
ty #
1: W
atch
mig
ratio
npa
ttern
s fo
r em
ergi
ng a
fford
able
mar
kets
##3: RR
epai
r and
rre
mod
elin
g gr
owth
will
vva
ry g
reat
ly b
y pr
oduc
t aan
d pr
ice
poin
t•
Youn
ger h
omeo
wne
rs w
ill le
ad a
ctiv
ity•
Low
er p
rice
poin
ts /
smal
ler p
roje
cts
•Ya
rds
and
low
-pric
ed in
terio
rsp
endi
ng w
ill gr
ow fa
ster
than
exte
riors
and
luxu
ry g
oods
•O
lder
hom
eow
ners
will
refre
sh th
eir
hom
es “p
ost k
ids”
•W
atch
real
inco
me
grow
th•
Ups
ide
Opp
ortu
nity
: New
form
s of
hom
e eq
uity
lend
ing
•O
ppor
tuni
ty to
‘Bun
dle’
priv
ate
labe
lpr
oduc
ts
Notes:
B est practices are shared by industry experts in every educational session.
C onversations with peers lead to ideas that transform individual businesses.
M eetings with suppliers give insight into opportunities for further innovation.
C oming together for one week every October generates ideas and energy that drive the industry forward throughout the year.
B est practices are shared by industry experts in every educational session.
C onversations with peers lead to ideas that transform individual businesses.
M eetings with suppliers give insight into opportunities for further innovation.
C oming together for one week every October generates ideas and energy that drive the industry forward throughout the year.
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