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Starts: After further review

BY Ken Clark

Before the season began, Sports Illustrated predicted the following Super Bowl scenario: Falcons over Chargers.

Alas, the Falcons lost their first playoff game. And the Chargers didn’t even make it out of the regular season.

HCN refers to this sports story for two reasons. First: In its digital form, this article’s reference to “Super Bowl” will score very high in search engine optimization logarithms. Second: The story illustrates how hard it is to look into the future with any degree of accuracy.

Consider housing starts.

Here was the NAHB’s pre-season forecast for 2011 single-family starts: a 21% increase to 575,000 — delivered during a seminar that included the approval of an economist from Freddie Mac. Here was McGraw-Hill Construction’s single-family housing forecast for 2011 — a 25% increase.

It turns out these were the football equivalents of predicting a Colts Super Bowl victory. (Note: The Colts were 2-14.)

Here’s what actually happened: Single-family housing starts declined 9.0% to a record-breaking low of 428,600. The numbers are painfully clear at census.gov.

According to the NAHB’s website, the group’s 2012 forecast is for 17% growth in single-family starts. One has to admire this optimism. But is there a prognosticator with a better track record we can turn to?

The answer is yes. And here’s the background.

Last year when the NAHB offered its optimism, two readers of this column — Byron Potter of Dallas Wholesale Builders Supply and Paul Gabbard of Malone Lumber Do it Best — told us with certainty that 20% gains weren’t going to happen.

We reached out to this prescient duo for their thoughts on 2012.

Potter, who was very close to predicting a total starts increase of 3.4% in 2011, had this to say about 2012: “Our forecast shows that the first half of the year is a steady increase, but the last half of the year retreats. We are hearing reports about forecasts that show 17% to 22% growth — we want to believe that, but our sense is that at YE2012, growth in housing starts will be plus 2%.”

Here’s Gabbard: “I hate to keep sounding like a cynic, but the factors affecting housing (unemployment, foreclosure, low appraisals) still exist.”

During this month’s International Builders’ Show, the NAHB will give its reasons for its double-digit growth forecast. Most likely, they will include pent-up demand, immigration, housing formation and the powerful urge of the nation’s college graduates to move out of their parents’ basements. All strong arguments.

We will listen patiently. We will write down their theories. But we must also consider Potter and Gabbard.

My forecast for 2012? Giants over Patriots.

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Readers Respond

BY HBSDEALER Staff

Marcus contribution, alternative view

“Our industry continues to shower praise on Bernie Marcus. I hope that all of you who provide the mediums for praising old Bernie remember that much of his success contributed to the demise of scores of mom-and-pop shops.

“I recall so vividly the day the first Home Depot opened in our market. The staff proudly displayed tombstones for each of the independent operators they aspired to bury. I wonder how many family fortunes were lost and workers displaced because of the ‘genius’ of Bernie Marcus.

“It actually turns my stomach to see trade magazines glorify a guy who simply commoditized an entire industry. I don’t see intelligence or creativity there — just old-fashioned greed. Now he’s praised for his generosity. How ironic!”
— Eric Ziedrich

Rebuilding at ProBuild

“My take on what needs to happen (but probably won’t) for ProBuild to turn its business around: First of all, they need to focus on making a profit, rather than a sale. Second, they need to make business decisions based on satisfying their customers, rather than their investors. Third, they need to look long, rather than short term. This is a business built on consistent performance, professionalism and good customer relations. Those aren’t things you can develop in one quarter or even one year. It takes time, money and effort, not just hype, to gain the credibility and loyal customer base you need to be successful in this industry.”
— Calvin Oram

Getting to the bottom of the mortgage mess

“I really don’t think that replying to a question like that in this format will serve any useful purpose. My thought, and hope, is that you folks will forward this to someone in position, and they can echo our bitter disappointment in this whole terrible breakdown of a system, which used to be an anchor to our way of life here in the United States.

“I think that they have about as good a chance as someone [spitting] up a rope. There is simply too much corruption, too much of a supremacist attitude among those who are actually responsible. After all, they feel that the ‘little people’ have no idea how things work (for the mortgage houses), and this money that was lost should not concern the little people. The little people just do not understand how things work. We did nothing wrong, therefore the little huddled masses should just shut up and deal with it. As a major mortgage company, we can do nothing wrong.

“What is the best we can expect? That somehow someone with enough authority and courage heads up this investigation, like Eliot Ness did back in the days of prohibition. Then bring all of them to trial, found guilty, and then serve serious time and return the money they stole back to those who believed and trusted them.”
— Hank Landry

“What are they going to do, investigate all of the home buyers who knew that they couldn’t afford what they were buying? It’s about time for this nation to get back to self-government and personal responsibility.”
— Anonymous

“A significant problem involves the lack of incentive for the banks to work with, on an individual basis, the homeowners. I know of several families who would like to restructure their debts and hold on to their houses, and the banks will not talk to them. They keep them churning in the system, even after lawyers and mediation has taken place.

“I think in the long run, the federal government will have to force the banks to write down these loans to a level similar to what the local tax appraisers have valued the homes at, and restructure the loans at these new rates for those homeowners to resume making payments and keep these homes out of the market.

“The banks could write down these losses over five or 10 years. This would have the net effect of letting the market bottom out, and keep a large number of houses off the market and families in homes.”
— Fred Schiebel

“The federal government better look in the mirror and clean house before it wants to pin this problem on the banks. They should not waste anymore of our money. Let the market work it out.”
— Mark Schaefer 

“While banks have a good share of blame in the mortgage meltdown — and the subsequent foreclosure issues — no investigation can be complete without investigating the role the government played in pressuring banks to reduce down-payment requirements and reduce lending standards in the name of eliminating profiling. This had a result of allowing people, regardless of ethnicity, to wind up with unsustainable mortgages. I have little hope that any commission will address this issue.”
— David Ward

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May-20-2012 09:05 am

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B.HENN says:
Feb-24-2012 10:09 pm

As a proud associate of The
As a proud associate of The Home Depot, I take great exception to Eric Ziedrich's comments (in the Readers Response area) regarding Bernie Marcus. No one believes that Bernie is God - but he is, and was, a true visionary. He understood what the people wanted and needed - and provided it for them. The Home Depot might have contributed to "the demise of scores of mom-and-pop shops" but I wonder how the general consumer feels (and felt) about one-stop shopping at reduced prices? And, I also wonder how the 1000's of associates and believers (in Bernie's vision) feel about becoming significantly more wealthy because of Bernie and Arthur and Pat and Ken and Ron etc. And, as for Bernie being praised for his generosity - there is no irony here. Bernie has always preached "Giving Back" - always preached "Take Care of Each Other" - and always preached "Respect for all". But Bernie didn't just preach it - he lived it and (obviously) he still does. Respectfully submitted by Bill Henn - a present associate at the Union II Home Depot in New Jersey.

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Look who’s in the kitchen with Lowe’s

BY HBSDEALER Staff

Lowe’s has announced that it will partner with the National Kitchen & Bath Association (NKBA) to launch a program to educate and train Lowe’s employees who specialize in interior kitchen and bath projects.

Because of this membership and training program, Lowe’s employees who work in the kitchen cabinets, countertops and fashion plumbing departments and as interior project specialists will have the opportunity to earn NKBA certifications.

Eligible Lowe’s employees will have the opportunity to take NKBA courses and exams and earn the following certifications: Associate Kitchen & Bath Designer (AKBD), Certified Kitchen Designer (CKD), Certified Bathroom Designer (CBD) and Certified Master Kitchen & Bath Designer (CMKBD). The certifications are voluntary and not required to perform the employee’s job function. To become certified, applicants must meet minimum levels of education and experience, and pass comprehensive exams.

“Lowe’s employees showcase dedication, passion and skill every day serving customers,” said Scott Purvis, Lowe’s VP human resources for stores. “The new relationship with the NKBA provides more opportunities for our kitchen and bath designers to build their skill sets and help customers turn the dreams for their homes into realities.”

The NKBA curriculum will include offerings in a virtual classroom environment, the joint announcement said.

Lowe’s employees who receive the certifications will have updated name badges for customers to identify their certifications in-store.

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