Millennials Will Shape Housing Preferences

The millennial generation is poised to make a significant impact on home design with its strong preferences for energy efficiency and smart-home technology; comfortable and workable kitchens; and more casual spaces, said speakers today from NAHB and Better Homes and Gardens.

But first, they have to move out of their parents’ homes and into a place of their own, said NAHB Assistant Vice President for Surveys and Research Rose Quint. About 15% of adults ages 25-34 live with a parent, about 3% more than the highest share of 12% between 1983 and 2007. That translates into 1.3 million people who normally “would be out there, forming their own households, demanding their own units,” either as buyers or renters, she said.

Quint had anticipated the new mortgage programs and looser mortgage insurance requirements that were unveiled a year ago would have led to an increase in consumers buying homes for the first time. But a look at the size of the typical new single-family home in 2015 found the opposite: home sizes grew to an average of 2,721 square feet, the highest yet, and an indication that the new-home market continues to be dominated by move-up buyers, rather than first-time buyers.

“Before we see that expected pullback in square footage and price, we’re going to have to see a significant return of the first-time buyer,” who is more likely to buy a smaller home at a lower price point, Quint said.

This year, home buyers say they are looking for homes with separate laundry rooms, Energy Star-rated appliances and windows, exterior lighting and a patio.

What they don’t want are rooms with cork flooring, elevators, pet washing stations, expansive outdoor kitchens and fireplaces, and two-story entryways and family rooms. And their countertops should be granite, but never laminate, according to a fall 2015 survey of potential buyers.

In terms of house type, buyers want a detached, single-family home: 65% of all buyers and 68% of millennials expressed that preference. That number rises to 72% among Gen-Xers (born between 1965 and 1979) but falls somewhat to 55% of those born before 1945, Quint said.

Better Homes and Gardens Brand Executive Editor Jill Waage echoed Quint’s findings on preferences for well-equipped kitchens and casual, comfortable living spaces – especially outdoor living rooms, where millennials want to entertain their families and friends.

What’s important about this generation is their comfort with technology. Millenials are “leading the way on this,” Waage said. “They are the first generation to walk into homeownership with a smartphone in their hands.”

These millennials want to use technology to make entertainment choices easier, monitor the comings and goings of packages, repairmen and their children, and improve their health and well-being. When it comes to product choices, “they’ve read the ratings, comments and reviews, and they know what it’s worth,” and have probably created a Google alert so they know when it’s on sale, she said.

Their home improvement preferences center on home organization and workspaces, as the separation between working in an office and telecommuting continues to blur.

“This generation is searching out ideas, following bloggers,” and creating Pinterest boards with their preferences, Waage said. “They’ve already curated their dream home online, saving it on their boards so they can [be ready] when the day finally comes.”

Positive Outlook for Housing Market

A firming economy, solid job growth, rising consumer confidence, higher household formations and pent-up demand are helping to bring buyers back into the marketplace, and these factors will bode well for housing in 2016, according to economists speaking at the NAHB International Builders’ Show in Las Vegas.

“There are a number of positive indicators that provide solid evidence this will be a good year for housing and the economy,” said NAHB Chief Economist David Crowe.

Private sector job growth has been averaging 240,000 per month over the past two years, GDP growth is expected to climb slightly above last year’s level and consumer confidence is nearly back to its pre-recession peak, Crowe noted.

Builders report their top concerns in 2016 include the cost and availability of developed lots and labor, federal environmental regulations and policies that are making it more expensive and difficult to build homes, and building materials prices.

Solid Gains for Single-Family Production
NAHB is forecasting 1.26 million total housing starts in 2016, up 13.4% from a projected 1.11 million starts in 2015.

Single-family production is expected to reach 840,000 units this year, an 18 percent increase from a projected tally of 711,000 units in 2015. Using the 2000-2003 period as a healthy benchmark when single-family starts averaged 1.34 million units on an annual basis, Crowe said the ongoing housing recovery will see single-family starts steadily climb from 55% of normal production at the end of the third quarter of 2015 all the way up to 87% of normal by the end of 2017.

On the multifamily side, NAHB is anticipating 417,000 starts in 2016, up 5% from an expected total of 397,000 units last year.

Meanwhile, residential remodeling activity is expected to register a 1.1% gain this year over 2015.

A Bright Regional Outlook – With One Exception
Delving below the national numbers, David Berson, chief economist at Nationwide Insurance, said that most regional housing markets look healthy.

Labor market conditions, a key driver of housing demand, are strong in many metropolitan statistical areas (MSAs) – supporting faster household formations and boosting local housing activity through rising incomes. These factors indicate that most of the 400 local housing markets “should see sustained growth in the coming year,” Berson said.

With the unemployment rate declining in 90 percent of the MSAs over the past year, Berson said that the housing fundamentals are the strongest in over a decade, a trend supported by the labor market, demographics and consumer preference to own.

However, Berson noted that many MSAs with strong ties to energy exploration and production in states including Louisiana, Texas, Wyoming and South Dakota are expected to see limited housing expansion in the near term, as low oil prices are reducing employment.

Mortgage Rates: From ‘Cheap’ to Low
Frank Nothaft, chief economist of CoreLogic, foresees solid fundamentals for housing in 2016. With 30-year fixed-rate mortgages running at or below 4% during the past year, Nothaft called them “cheap.” He said mortgage rates are expected to gradually rise one-quarter to one-half a percentage point this year up to 4.5%, going from “cheap to low.”

Nothaft added that overall home sales will rise 4-5 percent in 2016, led by a 13 percent gain for new home sales, with sales volume and growth strongest in the South and West. “There is stronger growth in households, population and demand for new housing” in these regions, he said.

Nationwide home prices this year will increase about 4-5% above last year’s level and are projected to reach the 2006 peak by mid-2017, Nothaft said. Tight mortgage credit for consumers is expected to ease slowly this year, but remain relatively tight compared to 15-20 years ago.

Office Closed 1/22

Due to the icy and snowy weather conditions, the Home Builders Association of Greenville office will be closed Friday, January 22. We plan to reopen Monday with regular business hours. If you are in need of assistance from your Home Builders Association, you may find the answer among the many resources on our website at hbaofgreenville.com, or send us an email and we will get back to you as soon as possible.

Get Verified on Houzz with Our New Alliance

NAHB has formed a strategic alliance with HouzzInc., the online platform for home building, renovation and design, to help home buyers easily identify and connect with NAHB expert home builder, remodeler and trade partner members.

As part of the alliance, Home Builders Association of Greenville members in good standing will have membership badges added to their Houzz profile. The 35 million monthly visitors to Houzz will have more confidence that they are working with Home Builders Association members who have specialized expertise, many of whom have received additional education or professional designations to further their proficiency.

“This strategic alliance will give our members more exposure as well as access to the technology and tools they need to succeed in the 21st century,” said NAHB Chairman Tom Woods in announcing the agreement.

Home Builders Association members can visit the Houzz NAHB member portal to create or update their free professional profiles, which include their verified NAHB national badge, as well as state and local association badges if those HBAs also have a Houzz page. Members can also access the Houzz concierge for assistance and read this NAHBNow post for additional ideas.

Visit the Home Builders Association of Greenville's Houzz page by clicking here.

The Deadline for the EPA Lead Paint-Re-certification Extension is Coming Up

The issue: An estimated 380,000 remodelers and others who must re-up their Lead-Safe Certifications from the Environmental Protection Agency to comply with its Lead: Renovation, Repair and Painting (LRRP) rule are staring at some important deadlines.

NAHB Remodelers Chairman Robert Criner met with White House officials Monday to, again, plead the industry’s case for a simplified re-certification process for NAHB members and others who do work in homes with lead paint.

March 31, 2016, marks the end of an unprecedented extension granted last year for some of these remodelers. It’s the deadline by which those remodelers and other contractors who received their EPA Lead-Safe Certified Renovator certifications on or before March 31, 2010, must complete a refresher training course to maintain their status.

After March 31, 2016, the clock resumes ticking for the second phase of renovators, one day at a time. Those who became certified between April 1, 2010, and March 31, 2011, must be re-certified within six years from the date they completed the original training course.

The extension did not apply to renovators operating under one of the 14 state-delegated programs.

Complicating matters is the uncertainty of regulatory action regarding re-certification training requirements.

A draft final rule – proposed by the EPA and supported by your Home Builders Association – to remove the hands-on training requirement is pending review by the White House Office of Management and Budget (OMB). When Criner met with OMB officials Jan. 11 in Washington, D.C., he urged them to expedite review and finalization of this common-sense improvement to the LRRP rule.

Without this regulatory action, the first wave of remodelers who received their initial certification on or before March 31, 2010, must renew their EPA Lead-Safe Certified Renovator certifications with in-person refresher training by March 31, 2016.

Your Home Builders Association will inform members immediately when the agency issues its final regulation on re-certification training.

If you were certified by March 31, 2010, or live in one of 14 delegated states that have their own unique set of rules, use and share this map to help you through the lead paint regulatory maze.

Home Builder and Remodeler Cost Breakdown

An analysis of the latest Economic Census data by NAHB economist Natalia Siniavskaia shows that, on average, residential construction establishments were able to cover their hard and soft construction costs and generate positive profits in 2012.

The 2012 data show that the direct costs of construction – consisting of construction payroll, costs of construction work subcontracted out to others, and costs for materials/supplies – vary from 65% of total revenue of specialty trade contractors to 87% of the business receipts of multifamily general contractors without land costs. For single-family general contractors (who build on land customers own), the direct costs of construction consume on average 81% of the total revenue.

For single-family general contractors, 7% of total business receipts go to pay wages of construction workers. Specialty trade contractors, who maintain larger construction payrolls and subcontract out a minimum amount of work, spend on average 19% of total revenue on construction payroll.

In sharp contrast, multifamily general contractors who subcontract out most of the work, spend only 3% on the construction payroll. Their biggest expenditure is the cost of construction work subcontracted out to others, 63% of the total revenue. This far exceeds the typical spending by single-family general contractors on subcontractors, which amounts to 36% of outlays.

For a more detailed breakdown, click here.

Thank you to our terrific volunteers!

This past Saturday, January 9, was a wonderful day for our Community Service Committee, Rebuild Upstate, and especially for one of our Greenville neighbors. Ms. Ruthie Jones is an elderly woman whose home was in need of repair and rejuvenation. Andrew Woodford, APB, of ABW Construction, donated his time and tools to lead our team of volunteers in repairing Ms. Ruthie's stairs and building her a ramp. McGee Brothers will also be stopping by Ms. Ruthie's home this week to pour a concrete path from her driveway to her new ramp. Thank you to both companies for their donations and to all of our wonderful volunteers for their hard work.
Below are the members and friends of the HBA who volunteered:

Nick Kulick

Tuck Williams

Sarah Noel Ratcliff

Gabe Halka

Rachel Halka

Jeff Vanderwood

Andrew Woodford

Johannes Erdmann

Crystal Yanes

Abbey West

Although it was cloudy, the weather was mild and the rain held off long enough for us to complete the project and enjoy each other's company.

The stairs before construction began--rickety, old, and mildewy, making them slippery and dangerous.

The back yard before the ramp and walkway were added.

Andrew and his team begin the planning process.

Removing the old stairs and preparing for the new.

Everyone had a job while preparing to start construction of the ramp.

The ramp completed!

The final touches being put on the stairs.