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Welcome to. Companion PowerPoint Presentation for the Introduction to Housing textbook. The Housing Industry. Housing and the Economy. 20% – 25% of economic activity is linked to the housing industry 4 sequential phases: -preparation -production -distribution -service.

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  1. Welcome to... Companion PowerPoint Presentation for the Introduction to Housing textbook

  2. The Housing Industry

  3. Housing and the Economy • 20% – 25% of economic activity is linked to the housing industry • 4 sequential phases: -preparation -production -distribution -service

  4. Construction Industry • Over 5 million employed • Volatile • Seasonal employment • Regional • Most jobs locally based

  5. Housing Starts: The number of housing units for which construction has started Used as an economic barometer

  6. Housing Market Economic Indicators Sources: The State of the Nation’s Housing 2003, 2005, The Joint Center for Housing Studies of Harvard University

  7. Homeownership Rates: • 2001: 67.8% • 2002: 67.9% • 2003: 68.3% • 2004: 69%

  8. New Single Family Home Sales: • 2001: 908,000 • 2002: 976,000 • 2003: 1.1 million • 2004: 1.2 million

  9. Existing Single Family Home Sales: • 2001: 5.3 million • 2002: 5.6 million • 2003: 6.1 million • 2004: 6.8 million

  10. Single Family Home Prices: • Existing home prices • 2003: $170,895 • 2004: $184,100 • New home prices • 2003: $210,221 • 2004: $221,000

  11. Equity 2001: $7.3 trillion 2002: $7.6 trillion 2003: $8.7 trillion 2004: $9.6 trillion Debt $5.5 trillion $6.1 trillion $6.5 trillion $7.2 trillion Home Equity; Mortgage Debt:

  12. Home Improvements and Repairs: • 2001: $160 billion • 2002: $164 billion • 2003: $181.6 billion • 2004: $198.6 billion

  13. Sources of Information • U.S. Census 10 years; all households Long-form & Short-form • American Housing Survey 2 years; sample Population Clocks U.S. 299,767,153World 6,544,892,37316:39 GMT (EST+5) Sep 18, 2006

  14. Cities & counties (Chamber of Commerce) • Real Estate Information • ColoProperty.com offers both residential and commercial property searches in Colorado

  15. Housing-related associations: HERA, National Association of Home Builders (NAHB), National Kitchen & Bath Association (NKBA), & American Society of Interior Designers (ASID) • Publicly-funded & private studies— published in journals & Web sites

  16. Professions Involved in the Housing Industry

  17. Real Estate Development • Identify land that can be profitable when resold as housing lots; correctly forecast the market • Fill a market niche • Gain site control • Obtain investors • Negotiate contracts with lenders, local governments & general contactors • Advertise the property Urban Land Institute (www.uli.org)

  18. Home Building Profession • Apply for a building permit • May pay an impact fee • Construct housing units on the prepared land, adhering to codes & regulations • Draws to cover various stages of building National Association of Home Builders (www.nahb.org)

  19. Realtors • Match the prospective buyer with the right house • Commission: typically 6 – 7% of the house sales price • Real estate agent & broker—depends on training & experience National Association of Realtors (www.realtor.org)

  20. Mortgage Lending Profession • Provide financing for builders & developers • Mortgages to homebuyers—a mortgage is a secured loan in which the new homeowner’s real property serves as collateral for the loan in the event of default • Secondary mortgage market • Importance of interest rates Mortgage Bankers Association of America (www.mbaa.org)

  21. Appraisal Profession • Perform an appraisal—an estimate of the property’s value • Typically use a sales comparison approach—base the value of the subject property against at least three comparable properties Appraisal Institute (www.appraisalinstitute.org)

  22. Remodelors • Increase living space or add or modify rooms • More significant as houses get older • Greater amount of dollars being spent • Many are in small firms National Association of the Remodeling Industry (www.nari.org)

  23. Residential Property Management • Focus on multifamily properties serving as income-producing properties for investors • Maintain the multifamily structure & preserve the investment’s value National Association of Residential Property Managers (www.narpm.org)

  24. Other Professions • Property & mortgage insurance companies • Real estate attorneys • Title insurance businesses • Architects • Interior designers • Community development corporations

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