Speakers at the North State Building Industry Association’s 2014 housing forecast Thursday saw continued modest improvement for the region’s residential construction, with plenty of caveats and unknowns to watch out for.
The upsides included an improving employment picture, pent-up demand and prices on an upward trajectory, but points of concern included the direction of interest rates, regulatory burdens and an open question of where jobs will come from.
“We don’t have any big names that say they’re going to bring 2,000, 2,500 jobs to the region,” said Sanjay Varshney, dean of the College of Business Administration at California State University Sacramento. “I think there’s a lot of more optimism for Sacramento as a draw as a population center. The question is, can we make it as great an attraction as an economic development center?”
Varshney’s presentation was followed by new home industry analyst and consultant Greg Paquin of the Gregory Group, who said jobs are a concern when the ratio of wages to home prices in the region is comparable to parts of the Bay Area with stronger overall economies.
He said there’s also a gap in housing supply to match retiring baby boomers and empty nesters, who are more likely to want single-level homes and shared spaces. That means an opportunity to build for changing demographics as well as what he called “urban” suburban living.
The last speaker, Elliott Homes president Harry Elliott III, used much of his time to dryly lay out regulatory burdens relative to the environment, lending and affordable housing for the homebuilding industry, though he maintained an optimistic note for the future.
“My belief is it’s about confidence,” he said. “I think people were tired of being down and depressed, and decided, to heck with it, I’m going to buy a house.”
But builders have to be smarter than during the sell-anything days of a decade ago, he said. “The solution is to make your house different,” he said. “Think about what you’re planning.”
Source: Sacramento Business Journal