Friday’s report on U.S. economic growth confirms two emerging trends about the long-ailing housing sector: It is finally delivering a lift to the economy, but it is not delivering anywhere near the kind of boost that it traditionally has during a period of economic expansion.
Housing has now contributed positively to the nation’s gross domestic product in six straight quarters, which hasn’t happened since the housing bubble burst in 2006.
Residential fixed investment accounted for 0.33 percentage point growth in GDP during the third quarter, up from 0.19 percentage point in the second quarter and 0.03 percentage point in the year-ago quarter, the Commerce Department said on Friday.
Housing contributes to the economy in two key ways: the direct contribution to growth through home construction and improvements, and real-estate broker commissions, which is captured in the “residential investment” figures reported by Commerce.
But it also shapes consumer spending, through the so-called “wealth effect” (people may spend more when their homes rise in value because they feel richer, just as they might when stocks rise). Homeowners can also tap into the equity of their homes by taking out a home equity mortgage or through cash-out refinancing. (more…)
U.S. homebuilders are an attractive investment as the housing market starts a “strong” recovery that may drive a surge in new-home sales, Goldman Sachs Group Inc. (GS) said in a report.
Housing has a “long list of positives,” including rising prices, job growth, supportive government policies and a decline in the so-called shadow inventory of homes, Goldman Sachs analysts Joshua Pollard and Anto Savarirajan wrote in a note to clients. They raised their rating on the homebuilding industry to attractive from neutral. (more…)
In the November/December 2011 issue of Texas CEO Magazine, President and CEO of Grand Homes, Stephen Brooks, made the cover story with his interview on why and how he reinvented Grand Homes. From thriving as a young company experiencing rapid growth to facing downsizing and monetary cutbacks at the peak of a troubled housing market, the article takes you through the history of Grand Homes and why it was imperative for Stephen Brooks to make comprehensive changes if his company was going to remain competitive.
“Grand Homes found itslef in a place many businesses never recover from – low customer satisfaction ratings, dated products and an organization with no reason to change. ” But it did.
In the article Mr. Brooks shares some of what he has learned from being in the home building industry for almost 25 years, and talks about how he was motivated by another influential CEO, Gary Kelly of Southwest Airlines, to reanalyze his relationship with his most important asset, his customers.
Through hard work and even harder decisions Mr. Brooks was able to create a culture and a business model around customer satisfaction. “We redefined our business through our service performance.” And it didn’t come without reward. Grand Homes has experienced 94 consecutive quarters of profit, and was recognized as “Americas Best Builder” for 2011 by Builder Magazine.
You can access the complete article here on Texas CEO Magazine’s website.
Congratulations to McKinney TX for ranking 5th in the Best Places to Live in America by CNNMoney! Also coming in at No. 16 is McKinney’s neighbor, Allen TX! Watch the clip of McKinney featured on the Today Show.