Slight drop-off forecast for multifamily housing starts
Orlando — Multifamily housing starts are expected to slightly moderate this year and in 2019 while production levels are forecast to remain stable in a range considered normal, according to the National Association of Home Builders.
"For the foreseeable future, production of multifamily housing is expected to be running at a trend level where supply is meeting demand," NAHB senior economist Michael Neal said during a presentation at the International Builders' Show in Orlando.
Multifamily starts are expected to dip 2% this year to 354,000 units from a projected 360,000 total in 2017 and fall another 3% to 344,000 in 2019.
However, this does not mean the market is weak.
"From 1995 through 2005, multifamily starts averaged 335,000," Neal said. "Construction activity during the past four years has been running above this trend, and we are seeing the market stabilizing near more normal production levels."
Contributing to the stabilization of multifamily activity is low inventory of homes on the market. "Fewer homes for sale means that some renter households looking to own will have to rent for longer than they may anticipate," Neal explained.
Meanwhile, the national rental vacancy rate registered a slight uptick last year, but stands at its low mid-1990s level of 7.5%.
Steven E. Lawson, president of The Lawson Companies in Virginia Beach, Va., whose firm builds both affordable and market-rate housing, addressed the predicted increasing demand for affordable rentals as a growing number of households are rent burdened, meaning they are paying too much of their income in rent.
"Demand is far outstripping supply and the supply-side of the equation is constrained by Low-Income Housing Tax Credit pricing, rising construction costs and higher interest rates," Lawson said.
While the new tax reform law has significantly lowered corporate tax rates, it has also reduced tax credit prices, Lawson said.
"Rising labor and materials costs as well as falling prices for Low-Income Housing Tax Credits have changed the landscape so that some projected affordable projects are no longer viable," Lawson said. "Moreover, labor shortages are driving up labor costs and spreading out construction schedules."
On the plus side, the newly enacted pro-growth tax law is expected to mean lower tax rates for most individuals in all income groups, which will put more money into the pockets families, including renter households.
CEO steps down at BMC
After leading BMC through the planning and execution of its acquisition of Stock Build Supply, Peter Alexander is stepping down from his post as CEO of BMC Stock Holdings, effective immediately. Current director David Keltner, 58, will replace him as interim presidet and CEO during the company's search for a permanent replacement.
Keltner joined the board of BMC Stock Holdings in April 2014. He formerly served as CFO of Ferguson Enterprises, and CFO of Wolseley North America, which at one time owned Stock Building Supply, before it merged with BMC.
In a prepared statement, Chairman of the Board David Bullock explained the move this way: ““Two years ago, we successfully merged two marquee businesses serving the residential building products market. “Since that time, BMC’s employees have done a commendable job combining operations and delivering more cost synergies than initially anticipated. Now, as we pivot the organization to accelerate our strategic plan, the Board of Directors and Peter Alexander determined it was time to make a leadership change to more fully leverage our national business portfolio and growth opportunities. We have a strong and experienced senior management team in place that will work closely with Mr. Keltner to make this leadership transition seamless for our customers, suppliers, employees and shareholders.”
BMC describes itself as a leading provider of diversified building products and services in the U.S. residential construction market. Annual sales exceed $3 billion.
"I'm excited about the opportunity to lead BMC through this transition," said Keltner. "With the shared goal to deliver best-in-class customer service and exeptional innovative solutions."
Alexander took the reins of what was then known as "BMC Select" in 2010, when it operated 50 locations in 9 states. The company completed its acquistion of Stock Building Supply in December of 2015. Today, BMC-Stock Holdings operates some 150 locations serving 43 metro areas in 18 states.
Chaney Enterprises launches BuilderUp
Chaney Enterprises has created a new pro dealer division featuring three locations in Maryland.
BuilderUp, a new building supplies and services division, has been formed by the merger of Dunkirk Supply and The Concrete Store.
Materials and services available at the new BuilderUp include custom truss manufacturing and steel fabrication (I-beams, lolly columns, wrought iron rails and welding services), crane services, engineered wood products, concrete supplies, hardscapes, doors, windows, lumber and general tools and supplies for professional builders of all sizes.
BuilderUp operates from locations in Owings and Waldorf, Md., along with a truss and steel plant also in Owings.
Steven Tripp, marketing manager at Chaney Enterprises, has been named chief builder of BuilderUp, taking over operations of the new division and overseeing the merger and launch. A 10-year employee of Chaney, Tripp said he is dedicated to advancing the building industry in his new role by modernizing the brand, equipment, and processes with a focus on the customer.
“We could not imagine a more ideal way to bring these two leading suppliers together than to create BuilderUp,” Tripp said. “My first six months has been busy, laying the groundwork of a new company and working out the details of the merger."
“The expansion brings two different but trusted construction suppliers together and promises great news to present and future customers,” Tripp said. “With a hyper focus on a mission to make life easier for our customers, we have new product lines, services, and methods of helping them that we’ll be announcing throughout the year. We are really looking forward to sharing innovations that nobody in the industry is even thinking about.”
Chaney Enterprises acquired the 40-year-old Dunkirk Supply in 2016 and has owned and operated The Concrete Store for 26 years.