Issue link: https://read.dmtmag.com/i/120608
At Last a Housing Recovery PRESIDENT'S POST 6 T he industry that was at the center of the financial crisis is poised to boost the economy after emerging as a bright spot in 2012. Prices for single family homes climbed in almost 90 percent of U.S. cities in the fourth quarter of last year as the housing recovery broadened. Record low interest rates and an improving job market are driving up prices by fueling demand for a tightening supply of houses for sale. Irvine, California-based Core Logic Inc. reported on February 5, "U.S. home prices rose 8.3 percent in December from a year earlier, the biggest jump since May 2006. " For all of last year, builders began work on 780,000 homes, a 28.1 percent increase from 2011. Even with the yearly improvement, housing starts remain short of the 2.1 million in 2005 at the peak of the boom, which was a three decade high. Firming prices also are helping to attract buyers who were reluctant to make purchases when property values were declining. The S&P/Case-Shiller index of house prices in 20 cities rose 5.5 percent during 2012, the biggest year-over-year gain since August 2006. The good news is that the nascent U.S. housing recovery is starting to show up in corporate results. Companies that lease construction equipment, sell power tools, air conditioners, furniture and cement mixers, to name a few, are reporting stronger sales, providing further evidence that a turnaround in the housing market is taking hold. "The housing recovery will help lift businesses that have been dormant," said Mark Vitner, senior economist at Wells Fargo. People will be fixing up homes to put them up for sale, buying air conditioning, appliances, painting, fixing roofs. The home market, as it picks up, will feed into the general economy, contributing to growth, instead of dragging the general economy as it has the past five years. Roger Terán IDA President 2012 Daniel Oppenheim, a Credit Suisse AG analyst, predicts that home improvement spending will rise seven percent this year and eight percent in 2014. He also expects construction of new homes to rise, and predicts that USG, a Chicago-based maker of gypsum wallboard, will record its first profit in 2013, after five years of heavy losses. Specialty truck maker Oshkosh's quarterly profits rose 20 percent in the end of 2012. Sales of the company's cement mixers rose 36 percent, while sales of its extended reach forklifts (telehandlers) increased 39 percent. This is great news to IDA members, in particular those with exposure in the residential construction market. Equipment rental, purchase of new and used equipment, as well as repairs of existing equipment, should translate into greater sales and profits to the majority of our members during the course of the current year. Roger Terán IDA President IDA UNIVERSAL March-April 2013