McGraw-Hill Construction and Deloitte
& Touche USA's Homebuilding Survey Shows Regional Slowdown
of Housing Market More Probable Than Recession
Study Also Finds that Land is Most Important
Commodity to the Success of Homebuilders
New York, NY -January 11, 2006
-- McGraw-Hill Construction and Deloitte & Touche USA
LLP's real estate industry group issued a new report today
suggesting that a "moderate slowdown in certain regions
of the U.S. housing market" appears more probable than
a "deep-seated recession." The report, "Staying
Competitive in Today's Homebuilding Industry," surveyed
U.S. homebuilders and highlights the dynamics and challenges
that large and small residential construction companies face.
The report also found that land is the
most important commodity to the success of a homebuilder,
and children of Baby Boomers and immigrants are expected to
lead overall growth in households over the next decade.
"The goal of any homebuilder, be
they large or small, is to create economic value," said
Paul Prescott, a principal with Deloitte Tax LLP and leader
of Deloitte & Touche USA's homebuilding industry group.
"Commanding prices that are greater than the full costs
of producing homes is only part of the value equation- the
larger part, especially for public builders, is achieving
superiority in long-term return on investment."
The study underscores fundamental shifts
that will lead to industry change:
Land is increasingly scarce in desirable markets.
National and regional procurement is increasing, which
homebuilders are reaping the benefits
and gaining capital advantage.
Consolidation will continue.
In all aspects of the study, land was
shown to be a critical commodity. It could create the largest
roadblocks (supply and development delays), the most significant
cost, and have the most important impact on profitability.
"This survey report is valuable
as in strategic planning because it outlines the major factors
related to marketplace shifts as well as provides information
on trends and insights into what the industry is thinking,"
states Harvey M. Bernstein, Vice President of Industry Analytics
and Alliances for McGraw-Hill Construction.
Some of those trends include the fact
that the fastest growing trend areas are high-end kitchen
materials, tile flooring, and wood flooring. It also reports
that most homebuilders find most of their trend information
through trade literature.
Ninety-seven percent of the survey participants
were homebuilders or lot developers; 94 percent were privately
owned companies, 34 percent had annual revenues greater than
$100 million; 63 percent build move-up homes, and 29 percent
build more than 250 homes per year.
McGraw-Hill Construction, part of The McGraw-Hill Companies
(NYSE: MHP), connects people, projects and products across
the design and construction industry. From project and product
information to industry news, trends and forecasts, the Company
provides industry players the tools, resources and applications
that help them save time, money, and energy, especially through
the new McGraw-Hill Construction Network. Backed by the power
of Engineering News-Record (ENR), Dodge, Sweets, Architectural
Record, MyHouse, and 12 regional publications, McGraw-Hill
Construction serves more than one million customers within
the $4 trillion global construction community. For more information,
visit www.construction.com http://www.construction.com/.
About The McGraw-Hill
Founded in 1888, The McGraw-Hill Companies is a leading global
information services provider meeting worldwide needs in the
financial services, education and business information markets
through leading brands such as Standard & Poor's, McGraw-Hill
Education, BusinessWeek and J.D. Power and Associates. The
Corporation has more than 290 offices in 38 countries. Sales
in 2004 were $5.3 billion. Additional information is available
Deloitte refers to one or more of Deloitte Touche Tohmatsu,
a Swiss Verein, its member firms and their respective subsidiaries
and affiliates. As a Swiss Verein (association), neither Deloitte
Touche Tohmatsu nor any of its member firms has any liability
for each other's acts or omissions. Each of the member firms
is a separate and independent legal entity operating under
the names "Deloitte," "Deloitte & Touche,"
"Deloitte Touche Tohmatsu," or other related names.
Services are provided by the member firms or their subsidiaries
or affiliates and not by the Deloitte Touche Tohmatsu Verein.
Deloitte & Touche USA LLP is the
U.S. member firm of Deloitte Touche Tohmatsu. In the U.S.,
services are provided by the subsidiaries of Deloitte &
Touche USA LLP (Deloitte & Touche LLP, Deloitte Consulting
LLP, Deloitte Financial Advisory Services LLP, Deloitte Tax
LLP, and their subsidiaries), and not by Deloitte & Touche