CONEXPO-CON/AGG VIP SHOW GUIDE contains Floor Plans and a complete listing of companies exhibiting at the ConExpo-Con/Agg 2014 trade show in Las Vegas March 3-7, 2014. It also contains 2014 forecasts for the Aggregate, Concrete and Cement industries

Issue link:

Contents of this Issue


Page 40 of 93

CONCRETE & CEMENT MARKET REPORT er sentiment. Housing starts are expected to reach more than 1 million units, with single family construction near 750,000 starts during 2014—expected to reach nearly 1 million starts by 2015. Strong multifamily construc- tion is expected to persist throughout the forecast horizon. Single family sales increased by 9.6 percent in 2012 and are on pace to grow another 11 per- cent in 2013. PCA expects single family sales will increase another 10 percent in 2014. The dynam- ics shaping single family sales, however, are rap- idly changing. The combination of low mortgage interest rates and declining home prices in the context of steady job growth resulted in a dra- matic improvement in home affordability mea- sures. This affordability improvement was ampli- fied due to the large presence of distressed properties in the market resulting from short-sales and property defaults. According to the National Association of Realtors, the price discount for foreclosed properties ranged from 14 to 34 percent, depending on the condition of the home. For short-sale prop- erties, the price discount ranged from 12 to 22 percent, again, depending on the condition of the property. At its peak, roughly 36 percent of total single family sales during 2010 involved dis- tressed properties. These "bargains" enabled marginal prospec- tive buyers an unprecedented opportunity to purchase a home. In addition, the "bargains" attracted cash-paying real estate inves- tors. Both factors played a significant role in single family sales gains of the past two years. Single family distressed properties accounted for 36 percent of total single family sales. Currently, distressed properties account for 18 percent of total sales, and it is likely that distressed sales will account for an even smaller share of overall sales into the future. This assessment is based on the reduction in foreclosure activity, the ability of distressed homeowners to refinance and avoid default, as well as the improvement in the job market—all working to reduce the amount of distressed properties coming on the market in the near term. This implies that the burden for generating sustained gains in home sales going forward will increasingly fall on the underlying improvement in homebuyer fundamentals. PCA believes the fun- damentals support continued strong gains when the following are considered: • Job Growth: Job creation is critical in generating household formation and favorable homebuyer affordability. The U.S. was on pace to create 2.2 million jobs in 2013. Looking ahead, PCA expects roughly 2.2 million additional jobs to be created during 2014 and roughly 2.5 million in 2015. • Lending Standards: Tight lending standards have been a hindrance to the housing recovery. From 2007 through 2010, lending standards tightened dramatically in response to rising home loan defaults. Through 2011 and the first half of 2012, neither the tightening nor loosening of lend- ing standards materialized. Since the second half of 2012, lending standards for conventional mortgages have eased on a significant and sustained basis. Recently, some easing has also begun to materialize for non-traditional mortgag- es. Lending standards for home mortgages are expected to ease throughout the foreseeable furture as the perceived lending risks subside, but are not expected to return to pre-bubble levels and instead are expected to remain more in-line with long-term norms. • Consumer Affordability: Mortgage interest rates have increased nearly 100 basis points since the start of 2013, but remain 230 basis points below the past cyclical peak. Mortgage rate increases, coupled with the ongoing recov- ery in home prices, have combined to increase the average PAVERS CAPTURE GREATER SHARE OF GROWING LANDSCAPING MARKET U.S. demand for landscaping products is projected to grow 6.9 percent per year through 2017 to $6.5 billion, reflecting a rebound in sales fol- lowing the 2007–2009 recession and subsequent slow recovery—new housing start activity, climbing from low 2012 base levels, represent- ing the primary growth driver. "Permeable pavers for hardscaping are rapidly gaining popularity over ready mix concrete due to their ability to reduce water runoff, which can cause flooding and erosion, and pollute local water supplies … Drought conditions in many parts of the country have resulted in water restrictions, which have led to greater use of synthetic turf, hardscaping (e.g., patios, paths, and rock gardens), and potted plants instead of water-intensive grass lawns," says Kevin Kelly, an analyst for Cleveland market research firm Freedonia Group, whose new study, Landscape Products, tracks product and practice trends over the next five years. The study finds hardscape product shipments growing at a nearly 10 percent rate through 2017, to $2.1 billion in sales, up from $1.3 billion in 2012. An acceleration in sales of existing homes, growth of consumer disposable income, and rebound in construction expendi- tures in the office and commercial segment will also support gains and landscape and hardscape products, authors note. The residential market remains the largest for the overall landscap- ing category, accounting for 58 percent of sales in 2012. The ongoing development and introduction of landscaping products that are envi- ronmentally friendly will also boost gains. Landscaping Products is available for $5,100 from The Freedonia Group, Inc., 440/684.9600; VIP Show Guide March 2014 • 37 U854.indd 37 2/14/14 12:11 PM

Articles in this issue

Links on this page

Archives of this issue

view archives of CONEXPO-CON/AGG VIP SHOW GUIDE 2014 - 2014