Epperson sees economic recovery, growth in housing market on horizon
David Perry -- Furniture Today, December 13, 2012
In a well-received presentation at Furniture/Today's Leadership Conference here, Epperson admitted to presidential election regrets, said a breakout economy could become a reality, and added that a shot of confidence can lift the home furnishings industry.
On the recent election, Epperson said he had "wanted something new." He noted that despite all of the money spent by candidates across the country, the result was the same Senate, the same House and the same president. The real winners, he said, were the TV networks, which benefited from major ad spends.
The problem, Epperson said, is that Washington isn't working. That's why he wanted "something better" than the current political climate in the capital, he said.
Epperson said the U.S. economy will experience "slow but steady growth" in the near term, unless a major "interruption" derails it. But several key economic factors are in place that could ignite a booming economy: Corporate America has $2.4 trillion in cash on hand, American banks have $3 trillion available to lend, and 23 million Americans want to find work. Those are all record numbers.
"What's missing," Epperson said, "is some confidence in the system." The potential is there, he continued, for "the biggest, most dramatic economic recovery we've had."
Another positive is a major housing boom that is in the works, Epperson said. Mortgage rates are low, affordability is at record levels, housing prices have firmed, foreclosures are declining, fewer homes are for sale, and banks are lending. "The housing market," he said, "is back."
He presented figures showing that 1.5 million new homes will be needed each year to meet housing demands in the next several years. With housing starts next year estimated to be slightly north of 1 million, simple math indicates that a major housing boom is in the works, he said.
The coming home boom will see smaller homes, homes built closer to center cities, and the refurbishing of older neighborhoods, Epperson said. And the new homes won't be just for the young; 50% of consumers between the ages of 50 and 64 plan to move to a smaller home.
New homeowners will spark a home furnishings buying surge, he continued. Those homeowners spend more in the first six months of home ownership than established homeowners spend in two years, he said. They spend an average of $9,000 in those first six months, with 60% of them buying furniture and 35% of them buying new mattresses.
New homes will be "a little smaller" than today's homes, and, with the emergence of new technologies, will be havens for work and entertainment. Workers can avoid the hassles of commuter traffic by using high-tech systems to work effectively at home, he said.
Epperson said a number of companies are looking to enter the home furnishings industry, but said the current players in the industry are capable of meeting that challenge.
"Ours is an industry of low self-esteem, but there is no reason to accept that," he said. "As an industry, we are improving the value of our lives. We need the self-confidence to see that our industry has tremendous potential."
The recession has been over for three years, Epperson said. The industry should stop using that as an excuse and should step up its game. He said that producers, for example, continue to travel down the same design roads, offering up more and more takes on styles like Louis Philippe.
"Can't we do something better?" he asked. "Let's get back to the creative side of the industry, making new and exciting products. We need to differentiate our products. I see the exact same products too often."
Epperson said that a number of investment groups are taking a close look at the home furnishings industry, aiming to capitalize on favorable economic conditions that are coming. He wrapped up his talk by challenging the home furnishings industry to respond to those threats.
"Will we raise the value of our industry?" he asked.
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