Despite competition from foreclosures and rentals, higher incomes will boost demand
Los Angeles, CA (PRWEB) August 09, 2012
Homeownership is the basis of the "American dream," with housing typically accounting for the largest percentage of an individual's wealth in the United States. Housing investment is also crucial for the US economy because it influences the pace of general economic growth. Consequently, revenue for the Housing Developers industry traditionally fluctuates dramatically with economic cycles. With the housing collapse and recession, the industry's revenue has taken a plunge. In the five years to 2012, revenue is expected to fall at an annualized 11.6% to $103.0 billion. During this period, unemployment soared and disposable income decreased, lowering demand for new houses. The federal government attempted to rescue the housing market by implementing home-buyer tax credits and other incentives. However, according to IBISWorld industry analyst Nima Samadi, “many of these programs artificially inflated demand, which then subsided in late 2010.” As the economy improves with the rise of disposable income and a stabilizing housing market, the Housing Developers industry revenue is expected to increase in 2012 by 15.0%. These factors will result a reinvigoration of demand and a brighter outlook for the industry.
The Housing Developers industry is characterized by its large number of small-scale establishments that service relatively narrow geographically dispersed markets, with its four largest players accounting for only a small share of industry revenue. These larger-scale players, such as PulteGroup, are multi-establishment firms that operate across many regional markets and typically maintain permanent operations in each location. During the recession, many firms left the industry, resulting in a steep decline in enterprise numbers. However, “with demand for new houses forecast to recover over the next five years, the numbers of enterprises is projected to increase,” says Samadi. This growth rate is is expected to be relatively slow since some of the larger industry players are expected to acquire small firms to increase market share.
From 2012 to 2017, the industry’s revenue is expected to recover substantially and is likely to grow at a rapid pace. Higher employment and disposable income will encourage consumers to purchase homes. However, the industry will face increased competition from apartment rentals and existing homes for sale, especially foreclosed homes. In response to a more competitive atmosphere, firms will differentiate themselves by catering to specific demographics, such as the Latino population. For more information, visit IBISWorld’s Housing Developers in the US industry report page.
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IBISWorld industry Report Key Topics
This industry is primarily engaged in the development of new homes on land that is owned or controlled by the builder rather than the home buyer or investor. The industry includes establishments that build single-family or multifamily homes. These establishments are often referred to as merchant or speculative builders, but they are also known as production for-sale builders.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
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Barriers to Entry
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