Most Millennial Buyers Want Single-family Home in the Suburbs

After rising for four consecutive years, the average size of new homes declined in 2014. The expectation for 2015 is for this receding trend to continue, as more Millennials enter the housing market and demand smaller, more affordable homes. Strong job growth and new lending rules that will allow for smaller down payments and lower mortgage insurance premiums will help drive demand from these buyers.

So where do these mostly first-time buyers want to live?

• 75% want to buy a single-family detached home.
• 66% would prefer to live in the suburbs.
• 24% would opt for rural areas.
• Only 10% would choose to live in the central city (a larger share than among Gen X’ers, Baby Boomers, or Seniors, but still a minority share).

What home features top their wish list?

• Laundry room
• Exterior lighting
• Energy-efficient appliances and energy rating for whole home
• Storage options like linen closets, walk-in pantry, and garage storage

In addition, most Millennials would be seriously influenced to move to a community if it had:

• Park area
• Walking trails
• Playground
• Outdoor swimming pool

If faced with a choice between a highly energy efficient home with lower utility bills over the life of the home, and one without those features costing 2-3 percent less, the vast majority of Millennials (84%) would opt for the energy-efficient home. Translation: this generation will understand and accept the cost of energy-efficiency options as long as the benefits are clearly spelled out in dollars and cents.

All of these findings were presented during the 2015 International Builders’ Show in Las Vegas. A complete copy of the presentation can be downloaded here .

What Homes Do Millennials Buy?

New NAHB research shows that millennials tend to buy homes that are smaller, older and less expensive than homes bought by older generations. Being the youngest home buyers with little or no accumulated wealth also affects how millennials shop for and buy their homes.

(View a Dec. 10 Fox Business news report where NAHB CEO Jerry Howard discusses millennial home buyers and the housing landscape.)

The majority of millennials are buying homes for the first time in their lives. Three out of four millennials who purchased a home were first-time buyers, but a quarter traded their existing homes.

Compared to older generations, millennials are less likely to buy a new home. Less than 9% of millennial home buyers bought a new home. The share was close to 12% among older home buyers.

More than two-thirds of millennials who bought homes purchased single-family detached properties. Nevertheless, compared to older home buyers, the millennial generation shows a slightly higher preference for multifamily condominiums. Close to 9% of millennial home buyers bought a multifamily property compared to less than 6% of older home buyers.

Consistent with being the youngest and largely first-time home buyers, millennials tend to buy homes that on average are smaller and concentrated in the lower price ranges compared to homes purchased by older generations. Half of all homes purchased by millennials averaged less than 1,650 square feet of living space and cost less than $148,500.

 

The most common reason for moving reported by millennial home buyers is to establish their own household, followed by the desire to have a larger unit and own it.

When choosing a particular home, millennials are more likely to let financial reasons influence their choice, while older generations consider the right size most often.

When selecting a new neighborhood, the right house most often influences the decision for both millennial and older home buyers. However, millennials are more likely to also pay attention to proximity to work and having good schools.

Compared to older generations of home buyers, millennials are more likely to finance home purchases out of current income rather than out of accumulated wealth, and when taking out mortgages they are more likely to use unconventional zero-down mortgages.

The research is based on the 2013 American Housing Survey (AHS), the most recent release of this ongoing biennial housing data collection. Only housing units purchased in the two years preceding the 2013 AHS interviews are considered. Housing unit characteristics are tabulated by the age of the household of head, a person in whose name the housing unit is owned. Millennial home buyers are householders that were 33 years old or younger in 2013 and bought homes within the two years prior to the AHS interviews.

Yes, Millenials aspire to own a home

A recent survey of younger Americans illustrates that the goal of homeownership remains an important part of the American Dream.

The economic future of Millennials is key to the future of housing demand. A record number of individuals aged 18 to 34 years are delaying household formation as a consequence of the Great Recession. In a recent Eye on Housing blog post, this situation was referred to as the “Great Delay,” as slow wage growth and rising student loan burdens have reduced attainment of traditional goals associated with the American Dream, including marriage and homeownership.

An important research question is whether these delays represent deferrals due to economic conditions or true changes in preferences and goals.

A recent survey from the Demand Institute provides new evidence. The study surveyed 1,000 18- to 29-year-olds about current conditions and market preferences. The findings indicate that homeownership remains an important long-term goal.

Among the findings for Millennials:

• Over the next five years, 8.3 million new Millennial households will form.
• 74% plan to move over the next five years, with the top reason being need for better housing.
• 64% expect to be married in five years and 55% expect to have kids.
• 75% believe homeownership is an important long-term goal and 73% believe ownership is an excellent investment.
• 24% currently own a home and another 60% plan to purchase.
• 36% expect their next home to be a multifamily rental, while another 36% expect it to be a single-family owner-occupied residence.
• 48% prefer their next home to be in the suburbs, while 38% want urban locations.
• 88% own a car.
• Student loans do delay homeownership (but college raises lifetime incomes).
• 44% think it will be difficult to qualify for a mortgage.

For more details, read the survey findings from the Demand Institute.

Building With Next Gen: Attracting and Retaining Gen X/Gen Y Employees

By Juli Bacon

If you are used to working with your hands and using tools for your craft, you may wonder how you are going to teach the younger generation the tricks of the home-building trade. If you are in a supporting business in the construction industry, you may have also found yourself frustrated by the new generation’s constant reliance on technology. You watch them texting on their phones, checking their Facebook page, playing on their iPads and watching television all at the same time. Electronic gadgets are their tools.

Rather than think of this as a problem, think of it as an opportunity. Generation X (Gen Xers) and Generation Y (Millennials) are your new workforce. Learning to work with their unique style and tapping into their specific skills just may give you the edge on your competition as labor shortages become the norm in the construction industry.

Looking back through the generations, I imagine that we would hear some common phrases used in one form or another such as: “kids today….”, “I don’t know how this company will survive with the next generation”, “This new generation doesn’t know what work is!” The cold hard truth for current and future business owners; however, is that if you do not learn how to work with each “new” generation, your company will not survive. The construction industry can ill afford to miss an opportunity for new labor. Those who take the time to listen and learn from the Gen Xers and Millennials will have an advantage when the labor shortage is hitting their competition. If you, as an employer, take the time to learn what drives them rather than making assumptions about their work ethics based on their seeming desire for “wasting time” on Facebook and other technology, you will increase your chances of attracting and retaining employees.

Understanding some basic background, characteristics and traits of each generation is the first step in attracting and retaining the Gen Xers and Millennials. Of course, employers need to look at the individual and avoid stereotyping, as each person’s upbringing and unique experiences shape the way he or she lives and works.

Gen X: No Hand-Holding Needed
Gen Xers, typically born between 1965 and 1977 (some say up to 1980), are the children of Baby Boomers, a generation that believes in working hard, paying your dues, and working your way to the top with or without an education. Some Baby Boomers became teenagers in the 1960s and created their own upheaval in America with their “wild” ways. However, they were mellowed by double-digit unemployment, starting families and new responsibilities.

Gen Xers’ parents typically lived to work and were defined by their work. They were dedicated to their jobs and loyal to their employers. Gen Xers were the first children to grow up with two working parents. The first latchkey kids, they came home from school to empty houses. They had to learn to be self-reliant; they did their homework without help, took care of their younger sibling(s) and cooked for themselves. They saw their parents divorce, often more than once. Their parents’ loyalty to their employers crumbled with corporate scandals that depleted their retirement accounts.

Gen Xers were shaped by myriad events that occurred while they were growing up; from the assassination of Robert Kennedy to the fall of the Berlin Wall; from the beginning of the AIDS crisis to the savings and loan crisis; from the Vietnam War to the Persian Gulf War. They saw the rise of the computer age. They remember rotary telephones, eight-track and cassette tapes and DOS-based computer systems.

Generation X Characteristics and Traits

• Self-reliance, resourcefulness and working independently
• Adaptable to change
• Little patience for meetings without purpose
• Comfortable with technology
• Desire for a challenging workplace with accountability
• Emphasis placed on the quality of the work and accomplishing the work rather than the number of hours worked
• High value on family and personal time and working to live rather than living to work. Seek companies with work/life benefits.
• More likely to ask for flexible schedules to meet family needs or ask to work from home

Employers can attract and retain Gen Xers by:

1. Creating a work/ life balance in their workplaces. Employers need to set aside the idea that if they don’t see the employee, they aren’t working. Gen Xers have strong work ethics, but will not sacrifice their family life for it. They like the ability to work from home if needed.
2. Challenge them with interesting projects, make sure they understand the deliverables, performance measures, and then get out of their way. They may find a faster, more efficient way of completing the task that increases production and efficiencies.
3. Invest in technology to help them complete their jobs in a timely manner; take time to ask what tools the Gen Xers would use.
4. Appoint them as team leaders and let them do the leading.
5. Allow for flexible schedules, ability to work from home as it pertains to their jobs. Reward them with additional paid time off.
6. Motivate by direct positive feedback, while providing clear direction and goals to be met. Quarterly, to annual, performance evaluations are important. However, Gen Xers will need immediate feedback on their assigned projects to keep moving and complete their work.

Gen Xers are loyal to their employers, provided their employers allow them to work to live, but will jump ship if they feel that balance is being interfered with or being taken away from them.

Gen Y: Let’s Do This Together
Millennials, born in the mid to late 1970s up to mid to late 1990s, have been referred to as the “Me” generation. Millennials are the children of late-end Baby Boomers and early Gen Xers. Their parents negotiated with them and gave them choices rather than consequences. They were told everything they did was great, and everyone on their team received a trophy. Their parents kept them busy with endless extracurricular activities and team sports. They often have good relationships with their parents and may live with their parents until they are married. They went to college and their parents paid for it.

They don’t just use technology, they embrace it. They grew up with it, use it regularly, rely on it, and seem to be unable to live without it. They often work to buy more electronic gadgets and to play. For Millennials, technology is an integral part of their lives and they use it to make their life more pleasant and to make their work easier.

Millennial Characteristics and Traits:

• Often those that are “caught” on Facebook or texting at work, but they are actually managing their workload, as well as managing their busy electronic social lives.
• Make good team players and like working in teams, but that may not be a face-to-face team. They may want to work via web-based tools such as Skype or video conferencing. They will instant message or text a colleague in the next cubicle rather than get up and meet with them face-to-face.
• Appreciate mentors that don’t preach to them, but rather those that gently guide them with questions and choices.
• Need regular, and consistent, positive reinforcement on a daily, weekly, or monthly basis. They need to be told when they are doing a good job.
• They ask first about the money or benefits of a job rather than about the company.
• Lack loyalty to an employer that stifles their creativity or will not allow them the use social media or electronic devices in the workplace.

Attract and retain Millennials by:

1. Creating social media and electronic media usage policies, with generous allotment of time for personal use, provided their essential job functions are completed in a timely manner.
2. Create a team-based atmosphere and provide recognition and reward for a job well done.
3. Invest in cutting-edge technology with input from the Millennials.
4. Assign mentors to new employees, with specific instructions to the mentors on how to guide the new employee.
5. Enlist Millennials in researching new products, procedures and best practices. They may find a new program that streamlines your production process or more accurately estimates the amount of material you use on a job.
6. Ask them for their input on new benefits and compensation plans and offer them something that allows them the freedom to “work to live”.
7. Engage them in assisting with social media and other e-media marketing.
8. Motivate them with positive reinforcement and constructive correction, rather than criticism.

If you are a Baby Boomer, or an early-era Gen Xer, you are rolling your eyes about now. You are thinking that you don’t have time to babysit. But this is your new workforce. Tap into their knowledge and use of technology. Teach them that the tools of your trade are as necessary to construction as their electronic “tools” are to them. Your new customers are Gen Xers and soon will be Millennials; you will need like-minded individuals to help you reach your target audience and to speak the new customers’ language.

Teach them the trade skills of your business, while allowing them to put their unique spin on the execution. They can learn from you as well; for instance, there is value to staying focused on one task at a time and completing without interruption. New ideas and new approaches are crucial to the survival of any business and especially for construction. You will always need the artisans, but you need the new ideas and excitement of the current generations.

The construction industry is facing serious labor shortages. Embrace the change now and get used to it because Generation Z— as the toddlers who are playing with their parents’ smart phones are called — will be entering the workforce before you know it. Who knows what challenges they will bring to the table.

This article first appeared in Building Women magazine, a publication of NAHB Professional Women in Building.

Home Buyer Age Impacts Home Size Preference According to NAHB Survey

A recent study from the National Association of Home Builders (NAHB) shows variations in home buyer preferences with regards to home size when it comes to age, race and ethnicity.

NAHB’s “What Home Buyers Really Want,” surveyed more than 3,600 home buyers across the country on various characteristics of new homes. Based on the results, the median desired home size is 2,226 square feet. However, a closer look at the data broken down by buyer characteristics shows significant differences in how large a home different types of buyers want.

Age plays an important role in a buyer’s preferences, with the amount of space requirements dropping steadily as the age of the buyer increases. Among those younger than 35, the desired home size is 2,494 square feet, compared to 2,065 square feet among those 65 and older.

“The building industry wants to know how much space buyers want in their homes” said Rose Quint, NAHB’s assistant vice president for survey research, and one of the study’s authors. “This study provides us with new insight into the home size preference of home buyers as a whole, but also across different demographic groups.”

Race and ethnicity also impacted home size preferences, with minority buyers desiring more space than White, non-Hispanic buyers. White, non-Hispanic buyers report wanting about 2,197 square feet, while Asian buyers desire 2,280 square feet, Hispanic buyers want 2,347 square feet, and African-American buyers prefer 2,664 square feet.

According to the U.S. Census Bureau, after peaking in 2006, median home size fell in 2007, 2008 and 2009, but reversed course and has risen for the past three years. Estimates indicate that the median size of all single-family homes started in 2012 was 2,309 square feet, and the average was 2,521 square feet.

The primary reason for the reversal in home size actually built has to do with buyers’ ability to access credit. Due to overly stringent mortgage lending requirements in recent years, the less financially-solid buyers have been shut out of the market. As a result, homes built in the last few years, largely reflect the preferences of those who are still able to obtain credit and put down larger down payments—typically wealthier buyers who can afford larger homes.

Emerging Workforce Stats

According to XYZ University, a demographics consulting firm specializing in organizational dynamics, the U.S. Workforce will change in significant ways in the next five years:

• By 2015, Generation Y (born since 1982) will out number Baby Boomers (born between 1946 and 1964) in the workforce.
• On average, 10,000 Baby Boomers retire each day.
• Generation X (born between 1965 and 1982) will make up 65 percent of the workforce by 2020.
• 70 percent of college grads leave their first job within two years.
• 75 percent of employed Americans are looking for a job.
• One in three college students and young professionals under the age of 30 prioritize social media freedom over salary in accepting a job offer.

The U.S. Bureau of Labor Statistics predicts a shortage of 10 million workers due to the retirement of Baby Boomers.

Education Forum: Marketing 101--Who Is Your Customer--September 5th

Education Forum: Marketing 101: In an age of the Internet, who is your customer and how are you  reaching your demographic?

After so many great comments and questions from our August Education Forum, "Where the Sales Are," we will spring board into an in depth series about a basic element of marketing: buying demographics. 

During the education forum on Wednesday, September 5, we will discuss how to identify your buyers and target them now that you know Where the Sales Are. We will also take a look at social media and how to utilize the Internet to grow your business.

The forum will be held 11:30 a.m. until 1 p.m. at Hubbell Lighting Headquarters.

Presented by Progress Lighting and GBS Building Supply

NAHB: Pent Up Housing Demand Can Be Measured by Increase in "Shared Households"

According to a report by NAHB, the number of "shared households" grew between 2007 and 2010.

In the spring of 2007, 27.7% of adults lived in shared households. By the spring of 2010, that percentage had risen to 30.1%.

Perhaps surprising, the increase in shared households was not concentrated among the youngest of adults. The number of people aged 18 to 24 who were classified as an “additional adult” rose 5.9% over the 2007 through 2010 period. For those aged 25 to 34, the increase was even higher – 18.1%, or 45% of the total increase in shared households. For those aged 35 to 65, there was a still significant 9.7% increase in additional adults.

Those moving in with relatives accounted for 68% of the increase, making moving in with family members the most common occurrence. And adult children moving back in with their parents accounted for 46% of the increase, making that the most common specific event.

Read the complete report at Eye on Housing by clicking here.

Graphs and Laughs: White births down, Hispanic births up

It's official, white non-Hispanic births are less than 50 percent of all births. Of the 4 million babies born during the year ending July 2011, 50.4 percent were to minorities, up from 48.6 percent a year earlier. Among adults over 50, African-Americans are the largest minority while among those under 50, Hispanics dominate. Non-Hispanic whites comprise 63.4 percent of the US population, but are aging fast with a median age of 42. I'm feeling old.

Elliot F. Eisenberg, Ph.D.
GraphsandLaughs, LLC

Greenville is the ninth fastest growing city in America

According to a report by CNNMoney, Greenville was the ninth fastest growing city in America between 2000 and 2010.  CNN Money analyzed U.S. Census data to arrive at its report.

Read the entire report at CNNMoney.com by clicking here.

Below is a list of the top 10 fastest growing cities in America:


Charlotte, NC, population 1.25 million, grew 64.6 percent
Raleigh, NC, population 884,891, grew 63.4 percent
Cape Coral, FL, population 530,920, grew 60.8 percent
Provo, UT, population 482,819, grew 59 percent
Austin, TX, population 1.36 million, grew 51.1 percent
Las Vegas, NV, population 1.89 million, grew 43.5 percent
McAllen, TX, population 728,825, grew 39.3 percent
Knoxville, TN, population 558,696, grew 33.1 percent
Greenville, SC, population 400,492, grew 32.5 percentSan Antonio, TX, population 1.76 million, grew 32.4 percent

Eight of the ten cities are in Southern states.  Greenville is the smallest city on the list, but if the entire metro area is included (Greenville/Spartanburg/Anderson), the area's population is about 1 million.

NewGeography: South Dominates U.S. Population Growth

Population estimates released by the U.S. Census Bureau show that Southern states continue to dominate the country in terms of population and growth during the last year.  According to New Geography, Southern states accounted for more than half of the population growth from 2000 to 2011 while having just one third of the country's total population.  In fact, 95 percent of all migration between states resulted in migration to Southern states.

Read the entire report a NewGeography.com by clicking here.

Did You Know: Household Income

Did You Know?

According to Demo Memo, a blog about demographic trends, household income for dual-income couples rose 5 percent between 2000 and 2010, adjusted for inflation, while income for all households fell 7 percent during the same period.

South Carolina ranked sixth in domestic migration in 2010

In a study by New Geography, South Carolina ranked sixth in net domestic migration in 2010, and has not ranked lower than seventh since 2001.

Read the report at newgeography.com by clicking here.

Brookings: It is official; more nonwhites are being born than whites in America

The most recent 2010 Census data to be released confirms what has been implied for some time: virtually half of all recent births in the U.S. are "minorities." This is a fundamental change in the U.S. population that is expected to ultimately redefine which groups are defined as "minority" in America.

Read the full report at The Brookings Institution by clicking here.

Are 30 somethings abandoning the city for the suburbs

By Michael Dey, Executive Vice President

Home Builders Association of Greenville

The challenge of understanding how demographics impacts the housing market is not in the assessment of what has happened, but in the assessment of what will happen.

A couple of years ago I looked at some of the causes of the current housing market crisis. Clearly easy access to financing, access that was too easy, was a major factor. However, in my opinion, the catalyst was demand, or lack of it.

From 2006 to 2009 the population at prime first-time home buying age was extraordinarily small. That is because that age group was born during the lowest birth-rate years since World War II: 1973-1976.

In my opinion lack of demand from people that had to buy a home was the catalyst that created the chain reaction that brought down the housing industry.

Unfortunately that first-time home buyer demand is still lower than normal and is probably a couple of years away from strengthening. Low demand is compounded with the fact that many people who should have been in the market place in the last couple of years have deferred buying homes because they either don't have a job or are under employed, or they are not confident enough to enter the housing market at this time, or they are having difficulty qualifying for a loan, and perhaps a combination of the three. This one-two punch explains why the housing industry continues to "bounce along the bottom": lack of demand.

Demand is coming, but where?

The question I am often asked when I present this data, and one that I have not been able to answer, is where will the next generation of first-time home buyers want to live? That is a very good question and one that is hard to answer; until now.

The professional planners and smart-growth advocates say future demand will matriculate toward more urban settings. I have generally agreed with that assessment and I have wondered if we don't already have enough suburban housing to meet future demand.

However, analysis of 2010 Census data by demographer Wendell Cox demonstrates the opposite trend. According to Cox's analysis, 1.8 million 25-34 year-olds moved to the suburbs during the last decade. At the same time, 1.3 million25-34 year-olds moved away from urban areas around the country.

There is a lot of speculation about why this has happened, but a member of the HBA staff who falls into that age group gave me the most plausible explanation for this trend: "we can't afford to live in the city."

No matter the explanation, the answer to where first-time home buyers will settle may be answered: where their parents settled when they bought their first home.

Read a report on Wendell Cox's study by Joel Kotkin on the Forbes blog by clicking here.

Greenville Business Magazine features how generations affect home buying

In their July issue, Greenville Business Magazine featured a young couple that represents the next generation of home buyers. The article discusses their buying preferences and how the preferences of their generation will be different from those of previous generations.

The article also details research done by HBA Executive Vice President Michael Dey on how demographics have affected the home building industry. In the article Dey contends that reduced demand resulted in the housing market collapse and contributed to the financial market meltdown--that the financial market collapse was a victim of reduced demand, not the cause of it. He states that demand will recover when the next generation of first-time home buyers, Generation Y, begin buying homes in earnest in the next several years.

Read the entire article at Greenville Business Magazine by clicking here. Scroll to page 20 for the article titled "Generational Homebuying."

NAHB: housing outlook weak in the short-term, but strengthening in the long-term

According to NAHB's Chief Economist David Crowe, pent up demand continues to accumulate and create upward pressure on future housing demand. "Household formations, like older children leaving parents' homes and young adults giving up roommates, have fallen to very low levels," Crowe said.

NAHB estimates that more than 2 million households have postponed moving out on their own and bolstering housing demand, waiting for a stronger recovery. "An improving economy, stronger job growth, historically low mortgage rates and stable house prices will help turn this potential demand into actual demand," Crowe said.

In the longer term, Crowe says household formation can only be postponed temporarily. "The underlying demographic forces are undeniable. The industry will need to deliver 17 million homes over the next decade just to keep pace with demand from a growing population," Crowe said.

The main industry challenge now is to open up lines of credit for new housing production; a top NAHB priority. In addition, NAHB has made resolving problems with the appraisal process another top priority.

Looking forward, there are more signs that conditions in the housing market are showing modest improvement. Positive factors include:

1. The economy is improving and sustaining job growth
   
2. Low mortgage interest rates are keeping housing affordable
3. Sustained sub-normal household formation has created pent-up demand that is helping to reduce excess housing inventory

“Consumers have not yet reached a level of confidence that is strong enough to begin lifting the housing market while builders continue to experience a great number of challenges with regard to competition from foreclosed and short-sale properties, low appraisal values and tight credit conditions," said Crowe. Looking ahead, the fundamentals, such as economic growth and employment, are beginning to shape up and will eventually provide enough momentum to push housing forward at a healthy pace.”

New households being formed at the fastest rate since 2007

Millions of young adults are starting to leave their parents’ homes, creating households at the fastest rate since 2007. They are helping to provide a so-called shadow supply that may boost U.S. housing starts more than 50 percent by next year and spur consumption at a rate almost double that of the past two years.

Consistent with what NAHB Chief Economist David Crowe told us in March?

Read the entire report at Bloomberg.com by clicking here.

Are You A Part of the New Economy?

By Michael Dey
Executive Vice President

There is a lot of talk about shifting ways of doing business. A book titled “The Tipping Point” gives a good perspective on the changing nature of life and how, one day, suddenly there is a recognized shift in a new direction regarding whatever the subject may be.

For example, do you know exactly when it became taboo to smoke in most public buildings? Probably not. But if you are over 50 or just watch movies made before 1960, you know that every nook and cranny of every office and restaurant was filled with cigarette or cigar smoke because smoking in public places was an accepted practice. Today, it is almost hard to imagine that was true. But back then, it was hard to imagine that there would ever be such things as smoke-free workplaces or buildings. One day, the issue reached its “tipping point.”

Our industry needs to be cognizant of tipping points which impact housing. We’ve been moving toward a tipping point on green construction over the past decade. We hear more and more HBA members showing interest in green building as they recognize that more and more buyers are asking about it. We also hear that there will be a greater demand for higher density lifestyles in the years to come—both from necessity and personal preference.

There are thousands of foreclosed properties on the market. One person’s problem becomes another person’s opportunity. As prices adjust, we will reach a tipping point when a surge in demand for new housing will again occur.

America currently has about 110 million occupied housing units. About 75 million are owner occupied. Demographers say our population will rise by about 35 million over the next 10 years. We should be building about 1.5 million new homes per year to meet the growing demand. We are currently building at an annualized rate of only about 500,000. Very old homes deteriorate and a few burn down. Many people opt for newly built homes over their used ones for the excitement, the modern features and design as well as perceived long term financial benefits.

Children are still growing up and forming households and we have a large immigrant population adding growth as well. When we get through the foreclosure bubble, we should start to see this mix create a tipping point of strong demand for new homes. How soon will that come? Our industry built more than 2 million homes nationally in 2006 and 2007, a surplus of roughly 1 million homes. Add to that nearly 1 million foreclosures, and you will understand why it will take at least another year for that inventory to be absorbed.

Where will financing come from? New and creative sources are emerging as new players who made their money outside of housing look at home building opportunities. They will be alongside the traditional banking sources.

The very best way for you to keep up with the rapid changes is to stay in touch with your Home Builders Association—its website, its publications and its meetings. Add to that the same items from the National Association of Home Builders and you have at your fingertips the expert knowledge that you need to draw upon as we reach new “tipping points” in the home building industry.

Our HBA will remain on the cutting edge—just like our expansion this year into social networking—with our Twitter followers, our bloggers, and our Facebook page and friends. A site on LinkedIn is coming soon. We also are nearing an exciting announcement of a new website feature to connect builders with those who are searching the Internet for a new home.

Recent survey data shows that builders are largely still advertising and marketing the “old” way and not spending sufficient time connecting with buyers who are overwhelmingly starting their new home search on the internet. To operate profitably in the new economy, you better be prepared to stay informed. No where will you be better informed than through the HBA. Be sure to keep your membership up-to-date and invite your colleagues to do the same!