Our 2018 Housing Market Outlook in Newport Beach was a huge success, with our strongest turnout ever! Thank you to all attendees and sponsors who helped us raise $45,000. To date, we’ve raised a grand total of $572,000 in net proceeds for HomeAid America.
We have spent the past 4 years partnering with HomeAid because we firmly stand behind their mission to provide housing for those that need it the most — homeless families. The organization builds and renovates multi-unit shelters for America’s homeless families and individuals (more than one million of whom are children) while the residents rebuild their lives. For over HomeAid’s 29 years in operation, they’ve built over 500 projects. This is a cause we are happy to support.
Presented by Robert Kleinhenz, Economist and Executive Director of Research at Beacon Economics
Everyone in the room was relieved to hear Robert’s bullish take on the national economy, supported by tax cuts and full employment. He urged the audience to make good use of these circumstances and look for ways to address the housing shortage to serve the robust demand. The highlights from the economic session are below:
The Economic Landscape Is Positive
- Consumer growth is steady due to gradually rising wages and constrained debt levels. It appears the Great Recession created a more cautious consumer
- We’ve reached the theoretical point of “full employment” with an unemployment rate of 4.3%. The unemployment rate would be lower if companies could find qualified workers
- The tax cuts will likely spur additional economic activity throughout 2018 and 2019 from both consumers and businesses. In particular, the favorable tax treatment will lead to more business investments
- As we work through trade talks, we need to maintain stability with Canada and Mexico, two of our strongest trade partners
- Tariffs on aluminum and steel will raise costs, but the impact will be minor for consumers
Positive Housing Demographics With Major Affordability Headwinds
- Home prices in California have come back nicely, steadily increasing since the trough. Apartment rents are also on the rise. While both of these are generally good for a market, home prices and rents are far outpacing income growth
- The housing shortage is a real problem in California. We need to build 200,000 homes in California annually to address the demand, but we’ve only hit 100,000. The dearth of housing inventory is a major factor contributing to the aforementioned price appreciation and subsequent affordability challenges
- We are waiting for a big boost in home sales; the sales trajectory hasn’t broken out of the narrow range since the start of the recovery. While demographics are in the housing market’s favor and Millennials are in a good shape to become homeowners, first-time homebuyers are struggling to both come up with the down payment and qualify for a loan.
Builder Panel Session
Moderated by Jeff Meyers, President at Meyers Research
Bert Selva, President and CEO at Shea Homes
Jeff Roos, Regional President at Lennar Corporation
Jim Boyd, Regional President at Toll Brothers
Emile Haddad, Chairman and CEO at FivePoint Communities
The major theme of the builder panel was adapting to change by addressing uncomfortable challenges. Adaptability and continuous reinvention were unanimously agreed upon as the key to staying relevant in the industry.
Lennar & CalAtlantic Merger Challenges
- Lennar is now in 38 markets, with top market share in many
- The merger came with some growing pains. Lennar is working to integrate the information technology of both operating platforms by summer
- There is a changing focus on Lennar’s digital marketing platform; they want to get to people before they buy a home
Upping The Game At Toll Brothers
- Toll Brothers thinks about their homes from a homebuyers’ perspective and considers objections before they even receive them. Hidden Canyon, a community in Irvine, is a great example of this. They spent roughly $1 million on landscaping to demonstrate what you can achieve with limited yard space
- Toll Brothers is also focusing dollars on merchandising their communities. One of their goals is to include 20+ flat screen televisions in each model home
Shea Homes Creates A Balance
- Shea doesn’t shoot from the hip. The company aims to create balance by creating a strategy. They spend the extra time to define the areas they want to be and reflect on their core markets
- Shea learned through consumer research that technology matters to some of their home buyers. As a result, they’ve invested in Ring as a new home technology
If you were unable to attend our Outlook, there are still plenty of ways to contribute to HomeAid America. Connect with your local HomeAid chapter to see how you and your colleagues can help with activities such as diaper drives or booking a shelter tour. There are currently 17 chapters in 12 states, with a continued effort to expand further. You can also donate to HomeAid directly to enable them to continue to build new facilities where America’s homeless can rebuild their lives.