Where is the housing market going in comparison to where it has been? What does it mean for building products manufacturers?
For the entire building products industry, closely monitoring the trends in the housing industry can be a fantastic indicator of potential future success. These trends also supply a benchmark to go by in order to get an idea of a company’s performance relative to the industry as a whole. We are frequently examining this data for that very reason and decided to share some of our insights.
After the market crash of 2008, the housing industry saw a rapid decline with single family home completion over 1,000,000 units each year from 1993-2007 down to 819,000 in 2008 as the crash happened. The market bottomed out in 2011 with only 447,000 units completed, the lowest in at least 40 years. This rapid decline spelled nothing but trouble for the building products industry as fewer homes being built naturally means fewer location for products to be utilized.
While the market has yet to recover to the point of peak levels, the numbers continue to trend upwards, always a positive sign. As an aside, we are confident in guessing that many building products companies have a sales history chart that looks eerily similar to this graphic… there is a definite relationship!
The multi-family sector of new building shows a similar pattern to single family units for much the same reason. On the multi-family side, the drop-off was not quite as dramatic in 2008, likely due to the more substantial construction time associated with a large scale multi-family projects. Instead, the drop-off was more methodical, falling off slowly before bottoming out in 2010-2011.
Interestingly enough, the recovery of the multi-family sector looks a bit different than the single-family sector. As you can see above the overall buildings completed has not even returned to half of the buildings completed just ten years ago. However, if we look at Multi-Family units completed (the individual dwellings within a larger structure) we see that the 2017 number has actually surpassed all other years in the data set.
This clearly illustrates an interesting trend wherein fewer buildings are being completed for multi-family purposes, but developers are making the most of the land they obtain by building structures capable of housing more individuals via a higher concentration of units.
For building product manufacturers this presents a unique set of circumstances. On one hand, larger buildings obviously mean more building products. However, with fewer buildings going up, manufacturers must ensure that they continue producing products that flow in a cohesive manner on large structures. They must also ensure that they are diligent in creating quality solutions to ensure they are involved in as many as the limited number of projects as possible. In other words, modern trends have made being a part of each project more critical than in years past.
In short, this data showcases what many are already aware of: the housing industry is on an upward trend which is great news for virtually all parties, including building product manufacturers such as Superior Aluminum Products. Projections for the future of the housing market remain positive, clearly a good sign for the industry as a whole…. but that is a discussion for another day.
At Superior, we are excited about what the future holds in the building industry in general, but especially in the housing market. If you or an associate are in need of more information about how Superior can contribute to your project, please contact us today!
All data presented in this post is courtesy of the United States Census Bureau.