Builder Online recently gave ten bold predictions for 2014, labeling the next twelve months a “fend for yourself” year. The article suggests the ongoing recovery is unlike previous ones because it collides with a gradual slowing of U.S. demand. Furthermore, the lack of an entry-level, first-time buyer market continues to periodically stunt the recovery, the article said. However, in 2014, Builder predicts such a market will coalesce, and the 10 industry changes summarized below will occur, as well.
1. Concentration Of Housing Starts
Builder predicts one-in-four construction starts on new housing – single-family will increase to 900,000 in 2014 from just more than 600,000 – will occur in 20 geographical markets.
2. Mergers On The Horizon
The industry can expect one to three major mergers between companies with more than one regional department. Furthermore, Builder predicts 15 t0 20 smaller mergers and acquisitions in 2014.
3. Solution To Rigid Lending Restrictions
Builder expects acquisition and development funding to be tough for private home builders to receive, and predicts a new initiative will be taken to ease access to such lending.
4. Mortgages In Murky Waters
With banks still trying to nail down proper rules and regulations for mortgage qualification, Builder predicts that high-volume builders will resort to analyzing dense data themselves to get an idea of which interested, first-time buyers are capable of qualifying.
5. Top 20 Cities Stay Active
The 20 healthiest metropolitan areas, according to Metrostudy, will see an increase of mergers and acquisitions, Builder predicts. In these areas, supply might not meet demand, possibly causing homebuilders to overpay for lots.
6. Return To Dense, Urban Lots
Builder predicts larger plots of land in areas surrounding urban centers will be traded for smaller lots with a closer proximity to cities. Incentives will attract renters to new, affordable urban or “urban-like communities,” the article said.
7. Being Green Matters
Details about a home’s energy usage and other environmental concerns will be factored into the appraisal of the home and the loan qualification. Builder predicts that modern, open, clutter-free floor plans will be the popular design choice.
8. Best Guess Made Simpler
Builder makes what it calls one of its boldest predictions by claiming “technology-driven, man-and-machine intelligent targeting” will be one of 2014’s monumental changes in homebuilding. Today’s data can yield precise estimations of what a person wants in a home, and as technology advances, builders will be able to tap into that information with unprecedented accuracy.
9. Small Dent In Operation Costs
A related benefit of such technology, Builder predicts, is a reduction of operation costs. In 2014, Builder expects to see “real” progress made in this regard.
10. The Times They Are A Changin’
Today, certain bits of knowledge and particular skills are required of employees that weren’t required of them a few years ago. Builder predicts that management teams will comb through more than 75 percent of their employees’ job descriptions and update them to current needs and standards.
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