1.45 million 1990 housing starts

By Robert C. Doran Director, Marketing Research & Planning Gold Bond Building Products

T HE GENERAL economy has

I been slowing down since early 1989. The predicted "soft landing" may have already arrived with the result that housing starts declined in 1989 and shouldremain low throughout the .first half of 1990 ibeford, improting in the secodd ihalf of the:vear.

'i This "soft landing" sug-; gests there will be some reduction in market interest rates into 1990. Fixed rate liome mortgages should drift down to about l0% by early 1990. Housing starts will probably total just above 1.4 million in 1989, and 1990 should be about 1.45 million starts with the strength not coming until the second half of the year.

Single family starts appear to have plateaued at approximately one million units and will probably remain at that level through 1990. However, multifamily still remains depressed due to the effects of tax reform and overbuilding in some areas of the country, but rental vacancy rates began declining in 1989. It is diflicult to see multifamily starts much above 375,000 units in 1990.

Regionally, 1990 may be much the same as 1989. One of the weaker areas of the country is the Northeast, where very high home prices, coupled with a slowdown in the financial services, computer and defense high technology sectors of their economy, have created affordability problems. On the other hand, the Midwest and Southeast regions may remain relatively strong in 1990. The West should also hold strong, although continued "environmental" and "no-growth" issues in this section of the country may become a concern. The South Central area, the oil patch states, may have finally bottomed out, but any recovery is expected to be quite gradual.

The size of new homes continues to increase as well as both the amenities and the price. The median square footage for single family homes has risen steadilv since 1982 and in 1988 reached an all time high of 1,810 square feet. In 1988, the median square footage of multifamily units was 940.

Story at a Glance

Housing starts will reach 1.45 million with second half strong j{.. si(gle family stats 1 million, ;fdrSer tmcire exPensive homes' iiiln 19S8, the median single family riew home price increased'1 .7o/o over 1'987 to $112,500 and continues to incrgpse in 1989. On a square foot basi$., the Nottheast continues to be the tiighest prised region for residential construction, while the South is the lowest.

Also in 1988, 420/o of the homes completed had2-l/2 baths compared to only 280/o in 1984. More than 250/o of new homes are being built with four or more bedrooms.

Wood products were selected as the exterior wall cladding material in 420/o of the homes in 1988. Brick, which had a reported 320lo market share as late as 1982, was used on only l7o/o of the homes in 1988 with vinyl siding taking much of the share away from brick.

In both single and multifamily homes, gypsum board continues to dominate as the interior finish material with about 940lo of the total wall area finished with gypsum board. Gypsum board coated with a thin coat ofplaster accounted for about 350/o of the total wall area. In single family homes, 810/o of the gypsum board is 1/2" thick while in multifamily, 53% of the gypsum board is l/2" with the remaining 470/0 5/8" thick. Gypsum board used in new residential construction will account for about l0 billion square feet in 1990, slightly above 1989 due primarily to the small improvement forecasted in housing starts.

I {otttcQua rt ers Wu rt' lt o tt.st' opened a new storc in lloovcr, nl., with plans to open tw<l in eastern llirminghant ancl one in Montgorrtery next tall. a (iastonia, N.C., unit opcns irr thc spring ol' 1990 lloutt, /)r7xrl plarts to opcn ilt least onc new storc in lrort Worth, Tx., ncxt ycar. and is looking ftrr aclditional sites the contpany has u $300 Irrillion revolving credit agrcenlcnt trl finance construction ol'60 storcs over the next two to thrce years . .

Lowa's will opcn its largest N.C'. store (46,000 sq. t't.) in llcnclerson next ntrlnth (sec ;t. 24 lor story) a proposal to rclocate the Staunton, Va., Loyr<"s is being considered by the '*ututtott Plunnin,q, ('ortttttis.sittrt Lou'r'ls is opening a new st()re in Crossville. Tn. . . I-tttlt".t in Sarasota and F'ort Myers. 1"1., havebeenclosecl ....

Assets of IL E. Lconlrurdt Luntber ('o., Oklahoma City, Ok., including Big L llomc ('en/(,/'.r are being transf'erred to Leotthardt Actluisitirtrt ('o. under a Chapter ll bankruptcy plan... Mechanic's Lunrbcr (b., North Liltle Rock, Ar., has agreed to buy Arkrno Lunbcr & Suppl.v Co., North Little Rock. from National Medical Enterprises Irtc., Los Angeles, Ca.

The Hechinger Co. tool art collection usually displayed at Landover, Md., Hq. is on exhibit at the l\,{ational Building Museum, Washington. D.C.. through Jan, 15...

Ittttivcrsarias: llotnt l)aytt, Atlarttir. (ia.. llth. ,klunts lluikliil,q .\uppl.v, lrrc., llartwcll, (i1., lst. 7i'"vas lttraslry .,l.ssrtt'itttirtn. l)iboll, -l'x., 7.51h

I)tt va | .vlc.s lJuilditt,q .\u1t1tlv, l{ock llill. S.('., which lost 26 ttl' its 4J storagc shcrls in llurricunc I Iugo, causing lhcnr $2(X),(XX) in clantrrgc, is still ol)cn . 'lixll Lunrhcr ('rt., Itt<.. l{ock llill, has closccl l|'astluli,a llunlvurc is closing its ljf<rricla div. ol' Lirtlslav llontt' ('rrrc stores acqurrcd in l9tl7... lJuildct'ttrtru. ('olurnbia, S.('., has becn closcd by ll/it'rtcr Drtarpriscs . . .,\4 Lutttltclclclscd stores in l-cesburg and l'anrpit, Iil., 'Iaylors, S.(.., Savarrnah, (iit.. Arlington ancl I)cnton. 'fx. . .

Salc ol' ('urttcrttrt 14"ltola.wlc. Waccr. 'Ix.. t0 ,4ll(' .Sttpply, lleloit. Wi.. is still in the works witlr llnal closing cxpectccl about I)ec. l. accorclittg to Ken Ilenclricks. All(l Supplv prcs.

Gcorgio Wlnlesola Ltttrtber has nrovecl its olfices to ('ovington. Ga., lionr Atlanta . L'k'l;'tt'en Luttrht'r (ir., l'ligh Point, N.C., and lntcrttaliortal Pupt'r have opened a joint purchasing of fuce in Tualatin, Or. .

Blue Cirt'lc, /nc., Atlanta, Ga., completed the sale of Willco Buildinc Materiql,s Distrihutors, Iuc., ta Maxey' Bttsshartlt Ltttnber Cir. which will operate it as Willco/Maxc.t, Bosshordt, Jinr Stansberry, former Williants Brothers Ltrmhcr v.p.. gen. nrgr.

,ll(uutitt.tlt)tt l'l'txxl l'hxtrs has :rct;uilcd twtt hirrdwood vcnccr rtrills lnrl rclatcrl tirttbcr opcriltiorts irt Alabantit .. . .\tut.sltitra llttttrrts, /rlr'., has tcrluirccl .\oluritrttt .\t.slt'ttt.s lttlt'rttrtlittttul

(ittit'rrnt, l.trtnb<'r ( ir.. ( )pclousas. 1.u.. lras itdclctl 35,0(X) sq. tl. to its wlrrchousc lilr a total of l(X),0(X) sq. li. lnd is now hantllirrg srrfcs l'<tr l'.,lco lttrcsl l'nxl' lrtls'wood trcating ltlirnt ll t't't'rltuctt.st'r' ('tt. llts lllaced its Varrrvillc. S.('., do<lr plitnt on tlrc nrurkct in un arcltitcctural clool tliv. rcrlrgaltizittion.

.lltt.sttttitt,lr l lrurcl, Ms.. hurdboarcl plirnt will irtcrcitsc its citpacity bv ntorc thitn 60{1, with a $-50 rttillit,rt crllrrttsiott .

Nttrttultltt l.urrtbt'r ( ir.. l;ranklirr, N.('.. has opcnccl a wholcsale ancl rctail slrccialty pluntbing opcraticln ancl accluircd an existing huilrlirrg rttrrtcrials storc in Ilaycsvillc, N.('....

A joint inclustry rcsearch project to tcst rigicl insulation board using hyclroch Iorollltorocarbon substitutcs lirr chlorolluorocarbons is under way at Ouk llidgc Nutiortal Ithitrutrtrv, Oak Ridge. Trt....

.Sotttlt ('untlitta has special casualty loss trcatnrent and other tax relicl-bills fbr tintbe r growers in the Ilurricane llugo disaster area in the Senate and ilouse .

Contracting filr new construction was up 8([ to an annualized rate o[ $274.2 billion, a Dodge /irrl<rr high fbr the _vear llousing starts lcbr;ttttded I 2a/' in Oct. (latest figs.) to a seasonally adjusted annual rate of I .42 ntillion units. the largest nronthly increase in nearly three years . single fanrily starts climbed 6.9%r; multilamily 29tilt . .. building permits were up 0.71ilt

Weyerhaeuser Sells Panel Div.

The Weyerhaeuser Co. paneling division has been sold to a new Virginia corporation, Chesapeake Hardwood Products, Inc.

An affiliate of Kalimanis Group, headquartered in Jakarta, Indonesia, the new corporation has acquired the 452,000 sq. ft. wall paneling facitity at Chesapeake, Va., and the hardwood plywood facility at Hancock, Vt. Weyerhaeuser retained the veneer mills at Jefferson and New Freedom, Pa.

Chesapeake Hardwood Products, Inc. will continue to manufacture and sell prefinished hardwood paneling, hardwood plywood and other complementary wall furnishing products. Its primary markets will include retail sales, manufactured housing, recreational vehicle and other industrial manufacturers.

suppliers coupled with our proven abilities in the areas of marketing, sales and promotion, will ensure a strong future for our business," he added. "lt will enhance our ability to strengthen long term business partnerships with our customers."

Chesapeake Hardwood Products, Inc. began operations and sales immediately. Weyerhaeuser Paneling Division products will continue to be available through normal distribution channels, a Chesapeake spokesman said.

"The commitment of the people of Chesapeake Hardwood Products, Inc. remains the same," Renfro said. "We are committed to supplying our customers with the best product, quality and service at competitive prices. "

lndustry Aids Hugo Victims

The forest products and building products industry has been generous in contributing to areas ravaged by Hurricane Hugo.

Weyerhaeuser Co. customer service centers in Charlotte, Greensboro and Asheville, N.C., and Atlan- ta, Ga., each donated a truckload of building materials to be distributed to those with no insurance or great financial need. Employees of the Hot Springs, Ar., office donated supplies such as flashlights, lanterns and cooking utensils in a community drive.

Coastal Lumber Co., sent three truckloads of plywood and lumber from its Havana, Fl., manufacturing complex. Paty Co., Piney Flats, Tn., donated three truckloads of building supplies.

Lowe's Cos., Inc. coordinated distribution of three carloads of lumber and plywood donated by over 50 mills in the Northwest. Burlington Northern and CSX Transportation moved the material at no charge to Thomasville Forest Products, a Lowe's subsidiary, where Columbia & Cowlitz Railway, a Weyerhaeuser Co. subsidiary, took over, also donating services. Lowe's donated the services of Dedicated Fleet to transport the material to Charleston, S.C.

Robert T. Renfro continues as president and c.o.o., John C. Redding, vice president and general manager, Nelson T. Russell, national sales manager, David A. Walters, business manager, and Ruth Takacs, customer service manager.

"We are very pleased with the prospects under new ownership. For several years, hardwood plywood manufactured in Indonesia has been the principal raw material for products produced at Chesapeake and Hancock. This acquisition provides us with an invaluable strategic tie with our raw material suppliers," Renfro said.

"Closer ties with our raw material

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