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Forecast By Anita Shaw Analysts and kitchen and bath professionals view the upcoming year as a mixed bag, with continued recovery and many positive signs emerging from the economic ashes. S ince the beginning of the Great Recession in 2007, people have been hanging on, speculating on when it would end and waiting for word that the worst was behind them. According to market analysts and economic indicators, that time may fnally be now. According to the National Association of Realtors, unemployment rates in 2011 of 8.9 percent are expected to drop to 6.9 percent in 2014. The Stock Market is also recording record highs, and consumer confdence is climbing as a result. While this is good news, things have not completely returned to normal, whatever "normal" is these days. For many industries hard hit by the recession – including the home building and remodeling sectors – the old "normal" will likely never be seen again. The bubble in the housing and remodeling segments that was celebrated through 2006 is not expected to return. But, that doesn't mean that a recovery in housing and remodeling isn't taking place. Both areas are again scoring double-digit gains, and 2014 is promising to be a positive year. Property values are rising, and the ability to borrow money to fnance remodeling projects will continue to ease. levels. Expectations for 2014 are that gains will be 22.8% over 2013. According to the National Association of Home Builders, total housing starts were 783,000 in 2012, 921,000 in 2013 and are expected to come in at 1,147,000 in 2014. These numbers certainly appear to be very strong, notes Kermit Baker, senior research fellow at the Joint Center for Housing Studies of Harvard University. However, he cautions, "We're coming of such a weak base, not everyone is totally impressed." Starts of just over 900,000 in 2013 are still considered low by historical standards. "It used to be that if we didn't hit one million starts, we were in the trough of a deep recession. So, it's all ON THE HOME FRONT Housing starts were projected to be up signifcantly in 2013 – expected to see a gain of about 20% over 2012 relative," he says. St ill, a f ter what has happened in the building industry since 2007, the latest projections are welcome. "Twenty to 25 percent growth in 2014 will take us up somewhere between 1.1 and 1.2 million starts – a healthy number, but still well below where most people believe we should be in terms of the trend line. We've historically had starts in the 1.6 to 1.7 million range," reports Baker. While conditions are improving in the major key areas – unemployment, consumer confdence, property values – they are still not strong enough for many to make the leap to home ownership. This is especially true among the younger genera- tions who have yet to buy their frst homes. Household formations have historically been a key driver of home building demand, and those numbers are still weak. While those numbers traditionally range from 1.1 to 1.2 million per year, current statistics show that the range is between 600,000 and 700,000 right now. Many millennials have been unable to fnd work that pays enough to establish their own households, keeping them in their parents' homes for longer periods of time. Of course, the drag on household formations is also afecting existing-home sales, up about 10 percent in 2013 over the previous year, yet still a depressed number historically. FORECAST FOR TOTAL HOUSING STARTS THOUSANDS OF UNITS 2009: 554 2010: 586 2011: 612 2012: 783 2013: 921 2014: 1,147 2015: 1,513 Source: National Association of Home Builders 42 | Kitchen & Bath Design News January 2014