united states housing market and hardwoods · united states housing market and hardwoods “among...

United States Housing Market and Hardwoods

The Future of the Hardwood Lumber Industry

Wood Education Resource Center

Princeton, WV

November 3, 2016

Delton AldermanForest Products Marketing Unit

Forest Products Laboratory

Madison, WI

Northern Research Station-01

Princeton, WV

USDA Forest Service

304.431.2734

[email protected]


Outline

• Where we’re at

• Demographics

• GDP projections

• Summary


“Never make predictions, especially about the future.”

The late, great Casey Stengel

and

“It's tough to make predictions, especially about the future.”

The late, great Yogi Berra


in thousands

Housing Units and Starts – 1880 to September 2016

Source: US Census & DOC-Construction

1946: US population: 141.4 mm 2016: US population: 324.1 mm


September 2016 –Housing Stock & Age

644,434

3,349,216

19,541,438 18,890,642

18,363,586

20,924,027

14,547,538 14,182,503

6,865,918

17,484,363

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

Built 2014or later

Built 2010to 2013

Built 2000to 2009

Built 1990to 1999

Built 1980to 1989

Built 1970to 1979

Built 1960to 1969

Built 1950to 1959

Built 1940to 1949

Built 1939or earlier

Houses Percent

2.5%

0.5%

97% of houses built: 2009 and earlier

14.5% 14.0%

13.6% 15.5%

10.8% 10.5%

5.1%

13.0%

Source: http://factfinder.census.gov/; 10/31/16

Total: 132,741,033 units


NAHB - Housing's USD Percentage Contribution to GDP

Source: https://www.nahb.org/en/research/housing-economics/housings-economic-impact/housings-contribution-to-gross-domestic-product-gdp.aspx; 10/31/16

6.1

3.5

14.1

12.2

19.3

15.7

0.0

5.0

10.0

15.0

20.0

25.0

1975 1980 1985 1990 1995 2000 2005 2011 2012 2013 2014 2015 2016Q1 2016Q2

Residential Fixed Investment Housing Services Residential Fixed Investment + Housing services

in percent

Q2 2016 US GDP: $18.6 trillion

Q2 2016: $652.8 billion


Source: http://www.census.gov/construction/nrc/pdf/newresconst.pdf; 10/19/16

0

250

500

750

1,000

1,250

1,500

1,750

2,000

2,250

0

250

500

750

1,000

1,250

1,500

1,750

2,000

2,250

Total Starts SF Starts 2-4 MF Starts ≥5 MF Starts

Total starts 57-year average: 1,443 mm units

SF starts 57-year average: 1,025 mm units

MF starts 52-year average: 420 m units

SAAR = Seasonally adjusted annual rate; in thousands

September 2016 – Total Housing Starts


Sources: http://www.census.gov/construction; 10/1916h; ttps://fred.stlouisfed.org; 10/31/16

New SF Housing Starts –Civilian Non-Institutional Population

0.0029

0.0000

0.0020

0.0040

0.0060

0.0080

0.0100

0.0120

0.0140

1959-2006 average: 0.0066


September 2016 –Total Housing Permits

Source: http://www.census.gov/construction/nrc/pdf/newresconst.pdf; 10/19/16

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

Total Permits SF Permits 2-4 MF Permits ≥5 MF Permits

SAAR; in thousands


Source: http://www.census.gov/construction/bps/pdf/2015statepiechart.pdf; 8/17/16

Total 1-unit 2-unit 3 - 4 units ≥5 units

1 South 572,779 378,203 5,864 4,625 184,087

2 West 277,235 160,707 3,702 4,357 108,469

3 Midwest 170,584 104,673 4,238 3,363 58,310

4 Northeast 161,984 52,415 3,178 2,750 103,641

United States 1,182,582 695,998 16,982 15,095 454,507

Building permits by region: 2015


Source: http://www.census.gov/construction/bps/pdf/2015statepiechart.pdf; 8/17/16


September 2016 –Total New SF Housing Sales

0

200

400

600

800

1,000

1,200

1,400

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Jan

2016

Feb

2016

Mar

2016

Apr

2016

May

2016

Jun

2016

Jul

2016

Aug

2016

Sep

2016

Total SF Sales

1963-2000 average: 633,895 units

1963-2015 average: 652,679 units

September 2016, 609,000

SAAR; in thousands

Source: http://www.census.gov/construction/nrs/xls/newressales.xls; 10/26/16


92.4%

71.7%

7.6%

28.3%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

% of Sales: < $400m % of Sales: > $400

New SF Housing Sales Ratio of ≥$400m:≤$400m

Source: http://www.census.gov/construction/nrs/xls/newressales.xls; 10/26/16


0.0023

0.000

0.001

0.002

0.003

0.004

0.005

0.006

0.007

1963-2006 average: 0.0039

Sources: http://www.census.gov/construction/nrs/xls/newressales.xls; 10/26/16https://fred.stlouisfed.org; 10/31/16

New SF Housing Sales:Civilian Non-Institutional Population


0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

5500

6000

6500

7000

7500

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

5500

6000

6500

7000

7500

U.S. NE MW S W

Existing House Sales

Source: NAR® http://www.realtor.org/news-releases/2016/10/first-time-buyers-steer-existing-home-sales-higher-in-september; 10/20/16


1.74

1.76

1.78

1.80

1.82

1.84

1.86

1.88

115,000

120,000

125,000

130,000

135,000

140,000

U.S. Housing Inventory Ratio: Inventory to Noninstitutionalized Population

Housing Inventory: Civilian Non-Institutional Population

Source: NAR® http://www.realtor.org/news-releases/2016/10/first-time-buyers-steer-existing-home-sales-higher-in-september; &

https://fred.stlouisfed.org/; 10/20/16


Sources: 1http://www.census.gov/housing/hvs/files/currenthvspress.pdf; 10/27/162 http://www.themreport.com/daily-dose/10-27-2016/homeownership-rate-claws-back-wait; 10/27/16

Homeownership Rate Claws Back Up, But Wait . . .

“On the optimist’s side, household formation – whether it’s from new renter or new owner

households – is good for both the housing market and the general economy, as some renters

eventually become owners and new households drive demand for home-related goods and services.

On the pessimist’s side, there are headwinds for those that want to own a home but can’t: prices and

rents have outpaced incomes, credit standards are higher, and a high share of young households are

still living with their parents. On the neutral side, the homeownership rate is not different from last

year or last quarter when seasonally adjusted.”2 – Ralph McLaughlin, Chief Economist, Trulia

63.5%


36.5%

63.5%

Source: https://fred.stlouisfed.org/; 10/20/16

https://fred.stlouisfed.org/graph/?g=87K4

https://fred.stlouisfed.org/graph/?g=87K4


0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

52.0

53.0

54.0

55.0

56.0

57.0

58.0

59.0

60.0

61.0

62.0

Owner Occupied Housing Units (%) Renter Occupied Housing Units (%)

in percent

Percentage Change: Owner- vs. Renter-Occupied Housing

Since Q2 2000 – 59.6% of all household formations are/were renters.

Source: http://www.census.gov/housing/hvs/files/currenthvspress.pdf/; 10/31/16


Demographics


Sources: NAR® http://www.realtor.org/news-releases/2016/10/first-time-buyers-steer-existing-home-sales-higher-in-september; &

http://www.freddiemac.com/finance/report/20161012_why_are_experts_pessimistic.html; 10/12/16


Source: http://www.freddiemac.com/finance/report/20161012_why_are_experts_pessimistic.html; 10/12/16


Projected U.S. Households

Source: http://www.kansascityfed.org/publicat/econrev/pdf/13q4Rappaport.pdf



Occupied U.S. Single-Family Housing Units



Occupied U.S. Multi-Family Housing Units



Projected U.S. Single-Family Starts


Projected U.S. Multi-Family Starts



“… a gradual rebound in single-

family housing starts, reaching the

logarithmic trend line by 2020:

± 1.1 million

close to the long-run historical

norm and within the range of

current housing expectations

but much lower than recent RPA

scenarios with similar or higher

population growth.”

Source: http://www.fpl.fs.fed.us/documnts/fplgtr/fpl_gtr219.pdf

Annual U.S. single-family housing starts, along with 2012 baseline

and 2010 RPA A1B and HFW scenario projections.


“At the current pace, 52 million Americans, or one in seven residents, will be foreign-born by 2025… .

The pent-up demand for households for young adults will radically reshape land-use policy, according to Williams. The report predicts that a staggering 86 percent more households will form between 2015 and 2025 than the previous decade. That translates into 13.7 million new homes and apartments being built to meet the demand.” – Patrick Sisson, Senior Reporter, Curbed

“Demographic Strategies for Real Estate” – John Burns Real Estate Consulting for the Urban Land Institute

Source: http://www.curbed.com/2016/10/12/13255596/suburb-urban-planning-millennial-immigration-report-baby-boomer; 10/11/16


“Millennial buyers are coming, and they’re coming relatively soon.” –Frank Nothaft, Chief Economist, CoreLogic

Source: http://www.housingwire.com/articles/38432-housings-new-normal-low-interest-rates-shifting-demand-coming-wave-

of-new-homebuyers; 11/2/13


“Among the 117 million households in 2015, 68% of those are white households, while 13% are Hispanic, 12% are black, and 7% are Asian or others. For the next 10 years referenced, 2015-2025, the household formation will shift to minorities, as 40% of the share of household growth during that time period will be from Hispanics, while 24% will come from whites, and 18% will come from each blacks and Asians.” – Frank Nothaft, Chief Economist, CoreLogic

Source: http://www.housingwire.com/articles/38432-housings-new-normal-low-interest-rates-shifting-demand-coming-wave-

of-new-homebuyers; 11/2/13


Sources: https://www.federalreserve.gov/monetarypolicy/fomcprojtabl20160921.htm;https://www.ecb.europa.eu/pub/pdf/other/ecbstaffprojections201609.en.pdf;http://www.imf.org/external/pubs/ft/weo/2016/02/;http://www.worldbank.org/en/publication/global-economic-prospects

2015 2016 2017 2018 2019Longer

Run

United States

Board of Governors of the

Federal Reserve System1.8 2.0 2.0 1.8 1.8

IMF 2.6 1.6 2.2

World Bank 2.4 1.9 2.2 2.1

World Economies

European Central Bank 3.2 3.0 3.5 3.7

IMF 3.2 3.1 3.4

World Bank 2.4 2.4 2.8 3.0

Economic Projections

U.S Housing

• Aggregate market has improved

• Beginner or starter home starts/sales lag below normal

• Demographic composition of house ownership is going to change

• U.S. cues to watch: Job creation & salaries and housing affordability

• Global cues to watch:

• Will the Eurozone economies continue to improve?

• Geopolitical tensions

• Some large banks appear to be in trouble; and

• Global debt – companies, countries, and personal

Summary


Questions?

Thank you

Delton AldermanForest Products Marketing Unit

Forest Products Laboratory

Madison, WI

Northern Research Station-01

Princeton, WV

USDA Forest Service

304.431.2734

[email protected]

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