Housing is guiding us toward the light at the end of the tunnel
After a nearly three-month pause due to the coronavirus outbreak, parts of the country are beginning to open up in phases. Although it will take quite some time for the economy to get back on its feet, reports are showing a plethora of positive findings that pertain to homebuilding and the housing market.
In Patrick Duffy’s article for this issue, he mentions that the housing market has continued to surprise, adapting to the “new normal.”
“As of mid-June, mortgage applications for home purchases rose 21 percent year-on-year to their highest level in 11 years. For new homes alone in May, mortgage applications rose by nearly 11 percent year-on-year, and rebounded by 26 percent from April,” Duffy said. “Homebuilders have certainly taken notice, with their June sentiment bouncing up 21 points to 58 and the metric for buyer traffic nearly doubling to 43. In May, builders pulled 14.4 percent more permits than in April, although they were still down 8.8 percent year-on-year. Builders also started on 4.3 percent more homes in May versus April, although starts were still down 23.2 percent year-on-year”
A report from the United States Census Bureau indicated that new home sales climbed to a seasonally adjusted annual rate of 676000. This is a 16.6 percent increase above April’s rate of 580,000 and 12.7 percent above the year’s prior estimate of 600,000.
The reports speak for themselves and some economists are finding this astonishing, given the comparison to how the housing market collapsed back in the mid- to late-2000s. Nonetheless, the writing is on the wall: housing is going to lead this economy to robust recovery.
Part of the economic success that the housing market has had is the utilization of technology. This is a trend that was already emerging before the pandemic hit in March, and stay-at-home orders only avalanched technology into a given for homebuilders, rather than a perk.
In this month’s BD Interview, we chatted with Woodside Homes Utah President Brian Kartchner. He gave an update on how Woodside has been able to navigate through the pandemic, giving thanks to technology for keeping operations going and allowing his team to work from home.
“We got to the point where we said, ‘Hey, we’d like to have our customers, particularly the younger generation who are much more digitally capable—we’d like to do everything virtually.’ We started down that road of virtual models, 3D Matterport tours,” Kartchner said.
Through the use of virtual tours and videoconferences with realtors, prospective homebuyers were able to continue to search for their dream home without actually leaving the comfort of their home. So much that even contracts could be signed and deals would be able to be closed virtually via platforms such as DocuSign.
With coronavirus likely here to stay for the foreseeable future, another trend that’s been amplified within the homebuilding and housing sector is the push for wellness and health via energy-efficient features and green, sustainable building materials.
Amenities such as touchless, smart home technology allow prospective residents to lessen the chance of contamination, while solar panels allow homeowners to save an ample amount of money on energy bills while using renewable energy.
In regards to the use of sustainable materials, take Newport Beach-based Trumark Homes for example. Founders Michael Maples and Gregg Nelson shared with us how they use oriented strand board (OSB) and how it’s sourced.
“One of the benefits of oriented strand board (OSB) is that it uses small-diameter logs from a fast-growing species chosen for its mill and plant geography, such as Aspen, Southern yellow pine, poplar, or black poplar,” Maples said. “We use manufacturers that work with forests that are managed responsibly (such as FSC- or SFI-certified land) and gather raw materials from a close radius (say, 50 to 150 miles). Once the logs are on site, they are stacked or, in northern areas during colder months, placed in large ponds that are heated by wood burners powered by the mill’s scrap wood. These ponds unfreeze, wash, and soften the logs.”
Despite a rocky road that the industry experienced in first part of 2020, the homebuilding industry and the housing market are poised for a robust recovery—one that will likely lead the rest of the economy. Technology and energy-efficiency are helping builders in a bundle of ways, whether it’s helping operations going or catering to a specific target buyer demographic. The past is behind us and it’s time for a long-awaited rebound.