It may take another 42 months for employment levels to recover from the recession, a Mercer University housing economist warns. And perhaps even more worrying, the chief executive officer of Huttig says there are indications that future generations of potential homebuyers may not be nearly as interested as previous ones in owning a home.
Economist Roger Tutterow estimates it will take the economy three and a half years "and possibly until 2014, before we get back to the level of employment we had before the 18-month recession. Until businesses have clarity about where they are heading, the industry won't regain its footing." Tutterow made his comments in Orlando, Fla., Sept. 23 at a panel presentation on the future of the LBM industry during the Florida Building Material Association's annual meeting.
Huttig CEO Jon Vrabely was concerned about a potential development that's even further down the road.
"I don't know that homeownership will be as important to kids who are now 12 to 20 as it was to my generation," he said. "I just don't know whether they will buy into that American dream of homeownership."
Clarity--which panelists wanted to see coming from the government in terms of solid economic policy--and consumer confidence--or rather, the lack of confidence--cropped up time and again as panel members pondered what the future portends for the building supply industry. While panelists to a man said they believed the LBM industry is in the lifeboat and heading for recovery, indications were a lot less clear about what the future will look like once it gets there.
The built landscape of the future may feature a lot more multifamily homes and a lot fewer single family ones, if, as Vrabely speculated, potential homebuyers from Generation Y, aka Echo Boomers, as well as Generation Z, do turn away from home buying, regardless of what the market does.
"We don't know if the future generation will embrace home ownership as as a way to create wealth," Tutterow said.
Vrabely's speculations may be unwelcome news for LBM dealers, but George Judd, president and CEO of Bluelinx Holdings, said: "I believe there will be a strong market for housing coming along," adding that "a good deal of that growth may be in multifamily housing."
Judd also warned dealers about the "pig in the python," his term for the 7 million foreclosures that are still in the pipeline. While he noted that foreclosures are 35% cheaper than new homes, he added, "The good news is there is $6,800 in renovation costs for each foreclosure to get it ready for sale." That's money dealers can capture.