Zelman talks, BMC listens

Henderson, Nevada – Back by popular demand, housing industry analyst Ivy Zelman delivered the single-family housing market verdict on 2014: “It was a disappointing year,” she said.Speaking quickly and covering large tracts of territory, the CEO of Zelman & Associates delivered the keynote address here at the BMC National Meeting just outside of Las Vegas. Single-family housing – essentially flat in 2014 – failed to live up to high expectations of 15% to 20% growth, she said.

But there was uplifting analysis as well, for instance:

• Home prices should maintain an upward trajectory, but at a slow pace;

• The credit environment appears to be loosening; and

• There are positive signs emanating from young adults, who may be just as interested as buying a house as previous generations.

On that last point, Zelman said some people question whether young adults strive for homeownership. Essentially, expect nature to take its course, she said.

“Lifestyle dictates whether people will be in a single family home, or live in an apartment,” she said.  “When you get to a certain age, 70% to 80% of the people are going to live in a single-family shelter, and we really do believe it has to do with love and marriage.”

Also, the 20 to 34 year-old age group – representing two thirds of all new households being formed -- has seen strong job growth, a key factor to household formation.

This huge market (there are roughly 82 million people born between 1985 and 2004, she said), however has a couple of headwinds. Massive student debt is one of them, but Zelman suggests it could be worse, from a home building standpoint. Consider she said that less than 5% of student debtors hold more than $100,000. And most young people are actually deleveraging, as they save money by living at home.

Also, those who are paying down their student loan debt are actually more likely to buy a house, she said.

Another highlight of Zelman’s presentation was a rundown of market conditions in those western states where BMC customers are most likely to live and build. Most of these cities beat the U.S. average for overall health of new home markets.

The Bay Area lead the way with a reading of 79, followed by Houston, 76; Los Angeles, 69; Dallas-Fort Worth, 68; and Austin, Texas, 65. The U.S. average was at 58. Las Vegas was at the low end, with a reading of 43.