BMATWT 352 - Building Materials and Forest Products Marketing

Demographics

Schuler,Al and Craig Adair. 2005. Demographics the housing market, and demand for building materials. Forest Products Journal 53(5) May, 2005 8-17

Notes:

Repairs, renovations and additions consume “almost as many lumber and panel products as new housing.”

Demographics

How demographics explains “activity”?

(Number of people in an age group) X (Participation Rate)

Peak spending for various construction/purchase activities occurs at different age levels.

Current trends influencing US Housing and Building Materials Demand.

• Immigration: Counteracting the declining population from baby bust (Gen X) has been phenomenal growth of IMMIGRATION. Increased immigration rates of the 1980s and 1990s are beginning to impact demand for Starter Homes.
• Housing demand: Increase to 2 million units annually (from about 1.6 million units)
• Aging house stock: Needs to be replaced
• Increased home size: Increases overall demand for wood products
• Aging baby boomers: Increased demand for vacation and retirement homes.

Housing and the Economy

20% of GDP associated with housing:

investment in new housing and remodeling 4%

rental payments and benefits of home ownership 12%

Heat, utilities, appliances and furnishings 4%

Wood demand by housing type (2001)

Single family 19 Billion bd-ft

Multi-family 1.7 BBF

HUD-Code 1.1 BBF

General labor shortages in the Housing Industry

Waste

Approx. 8,000 pounds (38% is wood) of waste generated for each single family home constructed.

New Building/Material Trends

NAHB recommendations:

• new management techniques and computer technologies to reduce cycle time of building
• integrate housing components on-site (modularity)
• combine functions of formerly separate sub-contractor trades
• prefabricated housing components under factory conditions (improved consistency and quality)

Conventional solid wood products are losing share to EWP including I-joists, LVL, Glu-lam, roof trusses and wall panel systems.

Site built “stick” building declines from 90% share in 1980’s to 69% share 2001.

Panelized housing doubled in recent 4 years 1997 – 7%, 2001 – 15% (due to 2 factors, 1) improved quality, and 2) labor shortages

Consolidation in the Homebuilding Industry

Pulte rationale:

• lower capital costs
• operating and overhead efficiencies
• land control
• brand recognition
• deeper pockets for R& D and product development

Produced and maintained by David T. Damery
Building Materials and Wood Technology
Department of Natural Resources Conservation
College of Natural Resources and the Environment
University of Massachusetts, Amherst.