DWM - 2006 - December

Volume 7, Issue 11 - December 2006

From the Publisher

The “Duh” Factor
by Tara Taffera

You know you’ve done it. You know something inherently, but when you hear someone else say it or when you hear it from a few experts, you think, “Duh.” Or, maybe you just get stuck in your own bubble and don’t take time out to view the big picture.

Well, here’s a few of my “duh” moments recently, many of them related to the state of the housing industry and to a conference I attended recently on the construction outlook for 2007 (see article, page 28).

We all get caught up talking about rising home prices, but sometimes don’t take the time to think about what’s occurring in other parts of the world. But two of the economic and housing experts who spoke at the construction conference, pointed out that what’s happening here in terms of home prices is comparable to what’s happening around the world. This isn’t just a U.S. phenomenon. Duh!

And when we talk about these rising home prices, do we always take the time to point out that the homes are much bigger than they were decades ago? You know you’ve noticed it. You live with your two kids in a four-bedroom house with a finished basement, but complain about the lack of space. But then you think about your grandparent’s house that has less space and they had five kids. Yes, prices are higher, but it’s 50-some years later and the houses are bigger and more elaborate than years ago. Duh!

Housing starts are coming down from their record levels: we’re upset, but we all knew those record numbers couldn’t last forever. And, as the market has been cooling off in recent months, the investment boom is cooling off along with it. With rising home prices, investors aren’t snatching up one, two and even three additional properties as investments, which experts at the conference, confirm is contributing to the slow down. So, with higher prices than say five years ago, investors are pulling back. Duh!

One presenter at the conference commented on the fact that those who are making millions on books that talk about an impending oil crisis, are selling these books because, “gloom and doom sells.” Duh!

Okay, if I’ve annoyed you, let me get to my point. Yes, the housing industry is slowing down and this will continue in 2007. But it’s returning to the levels seen before the “boom,” not numbers associated with a bubble burst or crash of the market. And, though new starts will decrease remodeling will increase as many homes are now entering their remodeling years, and many components, including the windows, will need to be replaced.

I’m not making light of the situation, as I know your business will have to make adjustments.

Just remember that when you see articles in various publications, or reports on CNN, that gloom and doom sells. So, if need be, review the forecast article on page 28, to remind yourself that this might not necessarily be representative of the entire picture. And, remember that DWM magazine will be here to present all sides of the story, additional forecasts and articles to help your business thrive, no matter what the state of the market may be. Duh!