2 minute read
A time of change
By Jack Shoemaker Executive Vice President National Wood Window & Door Association
Jlun-uNG professionals who will Ufare the best in 1992 will be those who appraise new market conditions realistically. More than ever, the market belongs to those able to assess the new realities and define their niches accordingly.
The old rules do not apply anymore. In years past, a steady decline in interest rates would likely have jolted a sluggish homebuilding market into higher gear. However, even though interest rates will probably remain low until at least mid-1992, no dramatic jump in newhome starts is on the horizon.
Housing unit starts are not likely to exceed 1.25 million in 1992, a tepid improvement over the 1991's l.l million. Consumer confidence, weighed down by an unexpectedly stubbom recession, is entirely "out of synch" with the good news of lower interest rates.
Many builders will find their best opportunities constructing entry-level homes. Largely because of the lack of affordably priced starter homes, first
Story at a Glance
A tepid 1.25 million housing starts in '92...affordably priced starter homes most in demand ...larger homes will use more wood windows and doors... replacement market good... wood outselling aluminum.
time buyers as a percentage of total U.S. homebuyers declined from 487o in 1983 to 29Vo in 1989, only in 1990 did a modest reversal (to 34Vo) begin.
ln 1992 and beyond, demographics will limit builders' ability to focus strictly on trade-up buyers, making it timely to cater to starter home buyers. Affluent baby boomers (bom 1946 to 1964) have, for the most part, completed their trade-up moves into second and third homes, allowing the market to revert to more of a starter home focus. More and more, builders are using phrases like "getting back to basics" and "affordable housing" (meaning starter homes of $100,000 to $200.000, depending on pricing in various markets).
The irony: rather than selling overlContinued on next page)
In surveying our members, NAWLA found they trimmed operating expenses and inventory and tightened their credit policies. They recognized they are in for the "long haul" and adapted their businesses acbetter help them service customers. They are investigating exports and turning to more remanufacturing activity. Wholesalers are recognizing and responding to their customers' needs for continuity in both quality and service.
Many wholesalers are creating program sales for customers who believe that long-term relationships will mean better business for everyone. At the same time, wholesalers are integrating their suppliers into this chain and looking to them for increased marketing support. New areas of diversification are engineered wood products and products that respond to the upturn in remodeling and renovation.
While it is tempting to look for that one thing that is going to jump-start our economy, we must contlnue to keep our businesses viable, remembering there are no problemsjust opportunities. We must continue to educate ourselves and maintain open minds and open channels of communication. Primary producers and wholesalers must work to find the most efficient and economical ways to get products to the customer.
