‘Housing Is Not a Fad’ nor Are Wood Products
By Rich Christianson | Posted: 09/09/2011 11:05AM
Housing starts in July tracked at a seasonally adjusted average of 604,000 units. That’s way below the 50-year average of 1.5 million new homes a year but at least it’s a slight improvement over the 587,900 units constructed in 2010.
Making the U.S. housing start trend even more disturbing is that mortgage rates remain at historically attractive lows.
In comparison, Canada, which experienced a housing slump but not a meltdown, is projecting 200,000 housing units to be built this year. The notion that Canada will build one third as many new homes to service a population one tenth as large as the U.S. speaks volumes about the relative strength of its housing market.
The fortunes of many wood products, most especially including kitchen cabinets and residential furniture, are inescapably determined by the performance of the housing construction industry. The collapse of the cabinet market is captured in the last few years’ worth of monthly Trend of Business Surveys compiled and disseminated by the Kitchen Cabinet Manufacturers Assn. These reports, which have mostly been bathed in double digit red declines since 2007, underscore the industry’s steep descent and the dozens of cabinet plants that have closed magnify the tumble.
Down but Not Out
Watching President Obama’s September 8 jobs plan speech before a rare joint session of Congress, I was reminded of viewing his inauguration on jumbo screens along with several thousand home builders at the opening session of the 2008 International Home Builders’ Show in Las Vegas. Even more than the standing ovation that the President received after taking his oath of office, I remember the live keynote speech delivered by former Notre Dame Football coach Lou Holtz, which immediately followed.
In short, Holtz exhorted to the audience of down-trodden home builder executives to hold their heads up high because, “Housing is not a fad!” How simple, how true.
The combination of population growth, first-time home buyers, pent-up demand, the desire of some for a second residence and the retirement of aging homes deemed beyond remodeling will help contribute to the next building boom.
But while that gives reason for hope, it does not address the current sad state of housing market affairs that are tethered to a 9.1 percent unemployment rate.
About the Author
Rich ChristiansonRich Christianson is Associate Publisher and Editor at Large of Woodworking Network. During his 25+ years covering the wood products industry, Rich has toured hundreds of manufacturing plants throughout North America, Europe and Asia. His reporting has covered everything from the state of the industry and impact of wood imports to technology and environmental issues. In his current capacity he is responsible for editing the daily Woodworking Network Update newsletter and coordinating events including the annual Cabinets & Closets Conference & Expo and Canada’s biennial Woodworking Machinery & Supply Expo. He can be contacted at firstname.lastname@example.org
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