Note: Sample below may appear distorted but all corresponding word document files contain proper formattingExcerpt from Term Paper:
The term Housing Starts refers to an economic indicator of statistical data associated with the number of public and private single family dwellings and multi-family dwellings which are begun during a certain period. Single family dwellings, which have begun the foundation digging process constitute one housing start while multi-family dwellings is equivalent to the number of units or single family dwellings constructed in a given building. Additionally, in 1992 the U.S. Census Bureau began including a housing start number for every dwelling in which an entirely new constructed dwelling or set of dwellings would be constructed on an old foundation. The statistic does not include, remodels, additions or commercial buildings being converted to homes. Housing Starts are considered a leading indicator of the economy as a whole, because it is a direct indicator of issues of supply and demand. (A.G. Raymond & Co., 2004, "Statistics and Economic Indicators" (http://www.raymondnet.com/AGRCo-WebPages/MainPage/statistics-main.htm)
As with most economic issues and indicators there is often a period of time when organizations and businesses rely not on past statistics but forecast statistics for the period they must plan for. It is for this reason that economists must be very careful of the outcomes of their forecasting. For housing starts these forecasts usually indicate a period into the future by six months. According to the Financial Forecast Center, the housing starts forecast for the next six months are as follows:
Total New Privately Owned Housing Units Started SAAR Thousand Units.
Value 2,087 2,109 1,856 1,413 1,550 2,378
Updated Tuesday, July 13, 2004 http://www.forecasts.org/house.htm
Additionally the Financial Forecast Center has developed a graph of the immediate past and immediate future, which can also be viewed:
U.S. Housing Starts Past Present and http://marketvector.com/leading-indicator/images/house.gif http://www.forecasts.org/house.htm
The Financial Forecast Center uses what they claim is a state of the art computer model for the development of forecast statistics (called "neural network"). This system works in such away that it uses much less information form humans, who are inherent in the skewing of statistics based on many factors, including preconceptions and biases. (FFC, 2004, "Forecast Technology" (http://www.forecasts.org/info/tech.htm) In this system there is a multifaceted set of statistics that enable the determination of indicator forecasts, such as the housing starts forecast. The multi-faceted set of data includes but is not limited to this list of data sets offered by the FFC, on the Forecast Technology page, cited above.
Gross National Product
Index of Industrial Production
Non-residential and Residential Fixed Investment
Manufacturing and Trade Activity
Money Supplies (M1, M2, and M3)
Business and Personal Savings
Imports and Exports
Commercial, Industrial, and Consumer Borrowing
Foreign Currency Exchange Rates
Global Stock Market Indices
Various U.S. And International Money Rates
(FFC, 2004, "Forecast technology" (http://www.forecasts.org/info/tech.htm)
The predictions from the models are considered against the historical movement of an index, indicator, or stock as a double check. If the models predictions are truly unrealistic, they are reformulated and rerun." (FFC, 2004, "Forecast technology" (http://www.forecasts.org/info/tech.htm) It is within these statistics and others, as well as historical data that is found the housing starts forecast for the United States.
The impact of such forecasting is obvious given the importance of this particular economic indicator. In a very recent article associated with an unexpected fall in the housing starts figures, (for June 2004) one journalist touches on just the bear minimum of effects the troubling reality vs. forecast might have on the economy. "Home construction defied expectations and took its biggest tumble in more than a year during June amid higher mortgage rates, and building permits also fell sharply." (Bater, July 13, 2004, Housing Starts Plunge" (http://www.smartmoney.com/bn/ON/index.cfm?story=ON-20-0843) number of issues associated with the homebuilding industry, both macro and micro are decided based on these forecasts. The industry as a whole may need to make macro decisions about supply and demand for future building. If to little raw material is available then production falls below acceptable levels and if to much is allocated there is a surplus that will cause concern in the raw materials industry.
New housing construction is important to the overall economy. Construction results in the hiring of workers, the production of construction materials and equipment, and the sale of large household appliances such as ranges and refrigerators. In addition, when owners or tenants occupy the housing, they often buy new furniture, carpeting, and other furnishings. (Norman Frumkin, 1990, p. 129)
Additionally, as you can see from the above citation there are many other industries tightly linked to the homebuilding trade that can be effected by false start statistics and erroneous forecasts.
On a micro level individual businesses may view these statistics, both regionally and nationally to help them adjust their sales, financing and output of production. In many situations builders rely on presales to fiance the production of homes yet, this is not always available, as the real estate market must always show a marginal surplus so individual home investors have a market to choose from. In the event that a building project is not pre-sold the finished project must be floated by the builder and his investors until the completed home sells. Basically, the builder and his or her investors are paying a mortgage payment for the cost the project incurred during the construction process. During this time the builder is paying an increased level of interest on the construction loan for the property. If the business is small enough or does not possess the needed capital to float all these construction loans the company may go bankrupt. So, finishing on time, on budget and selling the home are absolutely crucial issues in the construction trade.
Interest rate sensitivity and cash flow from sales are significant factors in pushing a project to completion. Interest rates can stymie sales or squeeze the builder on a construction loan. Indeed, rapid rate rises on loans after construction has started can bring work on a building or a development to a grinding halt. As well, a downturn in the market can crimp sales, effectively cutting off funding for the next segment of construction. (Finkel, 1997, p. 36)
So, how does the housing starts forecast effect such issues. If the housing starts forecast is an indicator to the builder, his or her investors and the lending institutions a sudden fall in the real statistics, versus the forecasts statistics could severely disable the company's ability to both complete a project and find future funding.
Another factor that influence the housing starts statistics and the building industry in general is interest. During times of economic upturns there may be rises in the interest rates that do not necessarily reflect the actual housing market or the economy in general.
This can cause lenders to think much more carefully about how they will lend in the future, as without buyers willing to lock into the new higher rates the lenders may be reluctant to lend on any new projects.
The Wall Street Journal noted that the credit crunch of 1993 exerted a veritable "choke hold" on home builders, with only the top quality and the most secure builders able to qualify for funding (Carlton 1993). Small and mid-sized builders are vulnerable to such mundane factors as bank-lending attitudes (Carlton and Pacelle 1992).
(Finkel, 1997, p. 36)
Sadly it is not unusual for all of these factors to collectively cause a perceived positive economic forecast to become negative in a hurry. In the article above associated with the recent fall in housing starts, there is a clear indication that the forecasts, though not very high, did expect a minimal growth in housing starts, that was realized instead by the actual significant fall of the statistic. "The report Tuesday was worse than analysts expected. A…[continue]
"Home Building" (2004, July 27) Retrieved October 24, 2016, from http://www.paperdue.com/essay/home-building-174731
"Home Building" 27 July 2004. Web.24 October. 2016. <http://www.paperdue.com/essay/home-building-174731>
"Home Building", 27 July 2004, Accessed.24 October. 2016, http://www.paperdue.com/essay/home-building-174731
Home Building Proposal bEfficiency, Safety, Comfort Energy Efficient Home Building Proposal for Mr. Fung The approved scope of this home improvement project includes the following: Inspecting and re-piping the heating system to fix circulation problem and improve energy consumption. Installing a new air conditioning system. Improving insulation to meet energy saving standard. Adding living space by adding an extension or a simple remodeling. Expanding parking space by building a semi-covered parking lot (asphalt, concrete, pavers, or stucco). The stakeholders
The large number of foreclosures in the west and southwest can be promising for green building, given that interest in environmentalism is strong in these areas, and water conservation and solar power are important to buyers. Social (and environmental): Socially, there is a general trend frowning upon extravagance and in favor of downsizing one's life, even for people who have jobs. But there is also greater interest in going green, whether
..the stimulus plan calls for laying 3,000 miles of new transmission lines -- considered crucial for moving wind and solar power to different corners of the country" (LaMonica 2008). This sets a shining example for the nation for the need to make current and future structures environmentally sustainable. Even if prices of fossil fuels decline, there are also other pressures that increase public awareness about the need for green housing --
Additionally, The U.S. Green Building Council is a non-profit organization that provides certification for officially 'green' structures. The Environmental Protection Agency and U.S. Department of Energy provide information about Energy Star products in their website, including a list of products that can go into the refurbishment or construction of a greener home, such as energy-efficient windows. The role of the Internet and any global alliances in green home building The U.S.
Using the current downturn to a business' advantage is another option. This can include 'greening' existing homes to make them less costly to run and more energy-efficient, selling cheaper homes to buyers looking for 'less home,' especially seniors with retirement funds that have been depleted as a result of the stock market's losses, and refurbishing long-abandoned structures. Diversifying by offering second homes and vacation homes is another possibility for companies
A professional auditor can use a variety of techniques and equipment to determine the energy efficiency of your home. Thorough audits often use equipment such as blower doors, which measure the extent of leaks in the building envelope, and infrared cameras, which reveal hard-to-detect areas of air infiltration and missing insulation" (Home energy audits, 2009, EPA). Follow-up Following up with satisfied customers (and unsatisfied customers) also enables better quality control and
The house would still be capable of customization but would not necessarily have to be. This could lead to more profitability to the builders and a less likely chance of sloppy workmanship. The home building industry has the opportunity to show that it can react to adversity and with the situation as it currently stands, builders may have the desire to lower expenses, while not cutting corners, as much