I attended the International Builders’ Show in Las Vegas late last month. The mood was decidedly upbeat. Though cautious, optimism prevailed in both the classroom and on the exhibit floor.
Most suppliers I spoke with said they had twice the number of visitors in their booths than they did in 2012. On the other hand, attendance was down about 5% from last year’s event, and exhibit space was off 10% from 2012. In fact, IBS exhibits, measured by square feet of space, have nose- dived from a peak of 1.2 million square feet before the crash to 360,000 at last month’s show.
The decline in attendance was attributed to stay-at-home small and medium-size builders. While big production builders are on the rebound, a significant number of smaller contractors are prudently skipping the annual event, held this year in Las Vegas. Even so, the show is hard to resist and not only because of the Vegas venue. It’s an attractive and useful package of education, entertainment and networking events. Seminar topics included green building, marketing via social media, concept houses and the “reinvention” of our industry and our business selves.
As it happens, the biggest reinvention in Las Vegas came from the show’s producer, the National Association of Home Builders (NAHB), which announced that its flagship event, formerly the grandest of its kind in the housing industry, will merge with the Kitchen and Bath Industry Show in February 2014. The two largest residential design and construction industry trade shows, both shadows of their former selves, will combine into one big extravaganza and try to reclaim their former glory. I estimate the new event will measure 500,000 square feet of exhibit space when it debuts next year.
Everyone is poised for a continued rebound in housing construction. The restoration of housing prices, up 6% nationally in 2012, makes a big difference. According to the NAHB’s chief economist, David Crowe, two-thirds of the markets measured by the NAHB, just over 240, are improved year over year
Household formation is on the rise. Although nowhere close to the robust two million-plus formations in 2005, the number did grow from an average of 500,000 a year between 2007 and 2009 to 850,000 in 2011-2012. The NAHB correlates all-important job growth with growth in household formations.
The multi-family rental market showed the most growth in 2012, up 38% over 2011, on top of a 56% increase the prior year. This trend is projected to continue until the rental market segment reaches the average recorded between 1995 and 2003, a high water mark of more than 315,000 units.
The new normal for single-family starts is ugly but gradually getting less so. Back in 2000-2003, when I was young and handsome, the “normal” pace of housing starts per year was about 1.3 million. The actual numbers and predictions for the period between 2010 and 2014, according to the NAHB, aren’t nearly so rich.
2010 471,000 housing starts
Residential remodeling will show “slow and steady improvement,” according to NAHB economists. Contrary to widely held perceptions, remodeling is not counter cyclical to new construction, although it is more buoyant. After a peak of $140 billion, the remodeling market dipped below $100 billion in 2011 but is expected to climb back up to $110 billion by next year.
So the recovery moves ahead, slowly but surely. The rate of job creation continues to improve modestly, the stock market looks stronger, housing values are on the mend and consumer confidence is better. Quite aside from these numerical indicators, however, I learned about a very different kind of recovery when I visited during the convention with Stephen Giumenta of the Architectural Grille Company.
In the warm Las Vegas sunshine, 2,500 miles from Stephen’s hometown of Brooklyn, NY, I heard how Hurricane Sandy had devastated Architectural Grille’s factory, which sits along the Gowanus Canal, adjacent to the East River in New York. The storm surge filled Stephen’s factory with 5 feet of salt water and shorted electrical power for 12 days. All the machinery, used to make beautiful ornamental grilles and grates, was destroyed, and orders in production were ruined.
Despite the devastating blow, Architectural Grille Company is persevering. Employees and management have worked 24/7, replacing damaged equipment, completing orders in production prior to the flood and even filling new orders. Its perseverance was on display at the IBS, where it had a beautiful exhibit manned by cheerful and knowledgeable salespeople. Led by the indefatigable Stephen Giumenta, they were making their own recovery, on their own brave terms.