Bloomberg Intelligence and Metrostudy Homebuilding Investor Summit

On October 18th, we held our 2nd Annual Homebuilding Investor Summit. It was an action-packed day filled with thought-provoking presentations and discussions tackling some of the hottest topics in our industry. A special thank you to our co-hosts Bloomberg Intelligence, our speakers and all of our attendees that packed the house till the very end.

Read below for session highlights, key takeaways and video recorded live from event presentations.

US Housing and Economic Forecast

Presenter: Mark Boud, Chief Economist, Metrostudy

Summary → Metrostudy’s Chief Economist, Mark Boud, gives an overview into the National Housing Industry, key indices and trends, and a forecast into the next few years.

Key Takeaways →

  • The national housing market will continue to be significantly under-supplied. There remains enormous levels of pent-up housing demand in the lower to moderate prices.
  • The national housing market will become increasingly over-valued, but the risk of a price collapse is small due to under-supply
  • The surge in the remodeling/renovation market will continue
  • Rising mortgage rates will continue for the next 24 months, and inflationary pressures are building
  • Overall, we’re in the TOP of the 8th inning of the cycle, with a mild to moderate correction beginning in Years 2020/2021
  • There are some worries. The greatest short-term worries are centered on cost and reduced affordability. The greatest long-term worry is the National Debt.



Millennials and Boomers

Presenter: Paige Shipp, Director of Consumer Segmentation, Metrostudy

Summary → Paige Shipp explains why investors should care about the similarities and differences between Millennials and Baby Boomers, and how addressing markets outside of families is an important concept for builders to embrace.

Key Takeaways →

  • Builders are very good at building for families, but are not addressing the needs of millennials or baby boomers
  • There are a lot of millennials who are coming to the market (around 75 million) – they are buying a large number of resale, but they are also buying more new homes than any previous generation
  • Both baby boomers and millennials are looking at houses that are on the lower side
  • Millennials are digital natives, connected and educated, the “HGTV” generation; want homes that are finished and ready to move in
  • Baby Boomers are “older, but not old”, they have worked hard, and are still working, but want to enjoy life, and are helicopter parents and grandparents
  • What do they have in common? Both have grown up in the age of war, lived through recessions/market turbulence, are agents of change. Look for lifestyle and community.



Off-Site Manufacturing

Presenters: Margaret Whelan, Founder & CEO of Whelan Advisory LLC, and George Casey, Chair, Housing Innovation Alliance

Summary →

Watch as Margaret Whelan leads a discussion on the lack of innovation in the U.S. construction industry, and its impact on how we compare with our global counterparts. George Casey then joins Margret and the pair explore how offsite manufacturing, while somewhat controversial, could be the future of housing in the U.S.

Key Takeaways →

  • The construction/home building industry is the least innovative manufacturing industry in the U.S., and lags behind our international peers
  • Land and Labor shortages paired with affordability constraints and rising interest rates have slowed the housing market
  • Margaret’s recent findings in Europe and Japan show houses being built/delivered in days, not months or years like in the U.S.
  • Building speed AND EFFICIENCY ARE the key areas that need innovation amid the worst year for US housing STOCK PERFORMANCE since the financial crisis
  • Trends leading to disruption INCLUDE: rising requirements and demands in terms of volume/time, cost and quality sustainability, larger scale players in more transparent markets, new technologies, materials and processes, rising costs of labor, GOVERNMENTAL DEMANDS FOR MORE ENERGY EFFICIENT HOMES
  • There are more publicly traded homebuilders than are WARRANTED and we’ll likely see a consolidation in the years to come, which SHOULD IMPROVE RETURN ON CAPITAL FOR THE REMAINING BUILDERS
  • Huge amounts of investment and capital are coming into the ConTech (construction technology) industry AT A RECORD PACE
  • Offsite Construction vendors will likely be 3rd parties with deep expertise in manufacturing, not the builders themselves; most likely candidates are building product manufacturers: Louisiana Pacific or CertainTeed HAVE ALREADY MADE INVESTMENTS IN CONTECH COMPANIES
  • Future of model for the parts of homebuilding done on-site will probably evolve to more comprehensive “super-subs” who perform multiple related trades (eg: one super-sub does the foundation, slabs, and shell of the home; another does all exterior elements (roof, siding, exterioR trim, exterior paint), etc).
  • On-site house building is inefficient – in the interim, home builders should start focusing on process control and improvement while we work toward implementing more offsite.   This involves more direct interaction with trade partners, building the house first on BIM to engineer in efficiency and then more on site partnership and coordination to get a consistency of “choreography” on site.   Probably different skill set and organization than builders currently use.
  • Builders need to consider the overall value of shaving days off the construction timeline and the reduction of waste when considering off-site manufacturing as a long term investment.   The impacts run across both direct and indirect costs and just having the purchasing group do the analysis misses these elements.



Once Upon a Time in the West, Pt. 1

Presenters: Aaron Stubblefield, Regional Director and Sr. Consultant, N. California, Metrostudy, and Mark Boud, Chief Economist, Metrostudy

Summary → Aaron Stubblefield and Mark Boud offer insight into California markets, particularly Silicon Valley and San Francisco.

Key Takeaways →

Northern CA

  • Employment figures remain solid with 2.2% annual growth in the Bay Area and 1.5% in the Sacramento CBSA.  Employment growth has been dampened in the past two years as unemployment rates achieve historically low levels.
  • We’ve seen a shift in the trend of decreasing housing inventory this summer in both the Bay Area and Sacramento.  Inventory levels have seen a minor increase this summer relative to the same period last year, though still remain at extremely low volumes.
  • Northern California is on pace for a minor increase to new home sales in 2018 compared to the previous year.  New home price appreciation remains positive, but at a declining rate as the Bay Area is up 8.1% and Sacramento 4.0% annually as of the third quarter of 2018.
  • Finished vacant home inventory is very limited in the Bay Area with about 1.5 months of available supply.  This is also true in Sacramento, with only 1.3 months of standing inventory, though the figure has been trending up for three consecutive quarters.  Lot supply remains at historically low levels throughout Northern California.
  • The top ten builders in the Bay Area reflect 46% of the total annual starts, with Toll Brothers in the top position with an 8% market share.  Sacramento’s top ten builder’s account for 71% of total starts, as Lennar cements its role at the top of the list with 25% of the market.



Once Upon a Time in the West, Pt. 2

Presenters: John Covert, Sr. Director of the West Region, Metrostudy, and Ryan Brault, Regional Director, AZ and Las Vegas, Metrostudy

Summary → John Covert and Ryan Brault examine the Mountain and Southwest Regions of the United States, giving insight into Phoenix, Las Vegas and Denver.

Key Takeaways →


  • Strong job growth, net in-migration, and wage growth combined with low unemployment is helping to drive continued price appreciation and demand in the local housing market
  • Starts and closings activity has posted YOY gains, up 8% and 9% respectively, but growing undersupply of land poses a threat
  • Net sales have been up substantially, with cancellations down throught the year to date
  • Resale inventory and days on market are down YOY while median pricing has risen 7+% YOY
  • Undersupply will push pricing higher on both new home and resale sides – affordability remains a concern going forward
  • Single family detached continues to be the preferred product type for buyers and builders

Las Vegas:

  • Job growth and net in-migration are driving the local housing market
  • In-migration is being driven by California buyers who are moving to LV for the proximity, lower cost of living and ability to take substantial equity with them to new homes and substantially lower tax burdens
  • YOY appreciation is the highest in the nation, which, along with rising interest rates, is quickly reducing affordability
  • Attached starts over the past year were up 124%
  • Tight supply plus high demand means the escalating costs and appreciation aren’t likely to abate very soon


  • Denver’s economy continues to rank in the top tier of markets in the U.S. Job growth is up 3% for the year and the unemployment rate is at near historic lows.
  • Business relocations and expansion remain very strong across all sectors and Denver’s employment diversity will help this market weather any disruptions to a specific industry, such as Oil & Gas, Telecommunications, Aerospace, Health Services, Manufacturing, High-Tech, etc.  
  • Net migration remains very strong, averaging nearly 30k a year since 2009.
  • The existing home market, while leveling off, remains one of the country’s hottest with home prices reaching an all-time highs (ave $539,934; med $452,500). There is a 1.7-month supply of listings as of June.
  • The apartment market is stable with 6% vacancy while adding over 14,000 units in the past year.  
  • New home starts are and closings are up in 3Q18 with attached product now making up 32% of all new housing starts. Growth is expected over the next several years driven by lower price points and higher density.
  • However, there are some challenges, including high home prices, overvalued market, labor shortages, and increasing material costs and development costs
  • Additionally, condo construction is still challenging due to construction defects statutes
  • The market has hit a “price ceiling” and is in the midst of a mild pricing adjustment



Wall Street’s View on Housing

Presenter: Stephen Kim, Head of Housing Research & Sr. Managing Director, Evercore ISI

Summary → Stephen Kim dissects what is happening with the public builders, particularly with the less-than-positive environment of the market, and what that means for Wall Street investors interested in the home building space

Key Takeaways →

  • The housing bubble was unusual, the trough was unusual, and the recovery was unusual, so it can be hard to really gauge the temperature of the home building space
  • There’s a lot of strength in the entry-level job market, which is a good indicator of millennial employment – this correlates with household formation
  • Downsizing was initially paused around 2008 and the years following, but now there is a greater group of people who want to downsize
  • Rentership is rising – there has been a huge increase in the renter share of available housing, but in reality, it’s returned to the long-term norm
  • 6.4 million units were converted into rentals from 2005-2016, and when contextualizing this, it means that 20% of the affordable homes for sale in 2005 were converted into rental units
  • The rising mortgage rates will lead to decreased mobility (people don’t want to move and risk getting higher mortgage rates), as half of the nation’s outstanding mortgage rate is below 3.7%, and more than 80% has a mortgage rate below 4.5%
  • Homebuilder P/E multiples have come down sharply this year