PRO Group Inc., PROflash April 14, 2009

AHMA INDUSTRY CONFIDENCE INDEX DIPS IN MARCH, RECOVERY COMING

The March AHMA Home Improvement Industry Confidence Index, which surveyed home improvement industry manufacturers between March 24 and March 27, 2009, showed a continuation of the very difficult sales situation that has been challenging the industry for more than a year. In comparing current sales levels to year-ago levels, just 11 percent of respondents said sales were higher in March versus year-ago levels, down from 15 percent in February. The 11 percent level matches the all-time low level set in January and is well below the base-point level of 24 percent established in October 2008. For March, 10 percent reported sales were even, and 79 percent said sales were below year-ago levels. Looking forward six months, 35 percent of March respondents said they expect sales to be above current levels, up from 29 percent in February. In March, 27 percent of respondents said they expect sales to be even in six months and 37 percent expect sales to be below current levels. So, slightly more respondents (37 percent) think sales will be lower in six months than better (35 percent). Looking forward one year, 57 percent of respondents project sales will be higher, down from 62 percent who felt that way in February. Thirty percent of March respondents project sales will be even one year from now and 13 percent project sales will be below current levels. Read the full story here.

WARREN BUFFETT ADDRESSES HOUSING CRISIS

As Berkshire Hathaway posted its worst year in 2008, CEO and billionaire investor Warren Buffett offered warnings and advice for 2009. Berkshire Hathaway posted earnings of $4.99 billion, down 62 percent from $13.21 billion in the previous year. In his letter to shareholders, Buffett predicted the economy "will be in shambles throughout 2009." But America has faced and overcome larger challenges in the past, he added. On the matter of the housing crisis, he recommended the nation adopt a conservative approach to home ownership. He wrote: "Commentary about the current housing crisis often ignores the crucial fact that most foreclosures do not occur because a house is worth less than its mortgage (so-called “upside-down” loans). Rather, foreclosures take place because borrowers can’t pay the monthly payment that they agreed to pay. Homeowners who have made a meaningful down payment -- derived from savings and not from other borrowing -- seldom walk away from a primary residence simply because its value today is less than the mortgage. Instead, they walk when they can’t make the monthly payments. "Home ownership is a wonderful thing. My family and I have enjoyed my present home for 50 years, with more to come. But enjoyment and utility should be the primary motives for purchase, not profit or refinance possibilities. And the home purchased ought to fit the income of the purchaser." Buffett further pointed to lessons that should be learned. "The present housing debacle should teach home buyers, lenders, brokers and government some simple lessons that will ensure stability in the future. Home purchases should involve an honest-to-God down payment of at least 10 percent and monthly payments that can be comfortably handled by the borrower’s income. That income should be carefully verified. "Putting people into homes, though a desirable goal, shouldn’t be our country’s primary objective. Keeping them in their homes should be the ambition." Berkshire Hathaway owns more than 60 companies in a wide range of industries. Buffett said Berkshire Hathaway's retail businesses and residential construction businesses -- including Shaw carpet and Acme Brick -- declined in the 2008 environment. Net income for those businesses declined 3 percent to $2.28 billion. Read the full story here.

Source: Home Channel News

A number of factors have converged in a “perfect storm” leading to significant growth in edible gardening, some industry experts said during a Web teleconference. Edible gardening is on the rise in the United States, not only because of the depressed economy but also because of consumer trends toward “uber-cocooning” and green living, a panel of experts agreed during a Feb. 25 teleconference co-sponsored by the Garden Writers Association and Scotts Miracle-Gro. “Several factors have come together to promote interest in edible gardening, and participation is increasing,” said Craig Humphries, director of consumer research for Scotts Miracle-Gro. According to the National Gardening Association, 36 million households (or 31 percent of the population) had edible gardens in 2008, a number that is expected to rise to 43 million households (37 percent) this year. This activity is being promoted by organizations like the Franklin Park Conservatory in Columbus, Ohio, as a way to increase nutrition for citizens, relieve depression in senior citizens and teach life skills to children. “It also has value to communities, increasing property values through beautification, contributing to sustainable development and increasing access to healthy foods,” said Kim J. Brown, PhD, education manager at the Franklin Park Conservatory. Scotts Miracle-Gro, Feeding America and “Plant a Row for the Hungry,” a community-based program started in 1995 that assists with hunger relief, are partnering this spring to promote a national campaign to inspire more people to grow and donate produce to food banks. Su Lok, director of corporate and community partnerships for Scotts, said the program will include grass roots events and educational outreach. Read the full story here.

Privately-owned housing units authorized by building permits in February were at a seasonally adjusted annual rate of 547,000. This is approximately 3.0 percent above the revised January rate of 531,000, but is approximately 44.2 percent below the revised February 2008 estimate of 981,000. Single-family authorizations in February were at a rate of 373,000; this is approximately 11.0 percent above the January figure of 336,000. Authorizations of units in buildings with five units or more were at a rate of 156,000 in February. Read the Full Press Release Here

Privately-owned housing starts in February were at a seasonally adjusted annual rate of 583,000. This is approximately 22.2 percent above the revised January estimate of 477,000, but is approximately 47.3 percent below the revised February 2008 rate of 1,107,000.Single-family housing starts in February were at a rate of 357,000; this is approximately 1.1 percent above the January figure of 353,000. The February rate for units in buildings with five units or more was 212,000. Read the Full Press Release Here

Privately-owned housing completions in February were at a seasonally adjusted annual rate of 785,000. This is approximately 2.3 percent above the revised January estimate of 767,000, but is approximately 37.3 percent below the revised February 2008 rate of 1,251,000.Single-family housing completions in February were at a rate of 505,000; this is approximately 8.2 percent below the January figure of 550,000. The February rate for units in buildings with five units or more was 268,000. Read the Full Press Release Here

The Home Improvement Research Institute's (HIRI) spring conference carried the theme: "Home Improvement in Challenging Times." "The tide is not rising now," said HIRI executive director Fred Miller, referring to spending on home improvement during his welcoming remarks. "We're at two years of decline and a projected third year of decline, which is really unprecedented in the home improvement industry." Still, Mark Delaney, director of home improvement for the NPD Group, expressed an attitude of "cautious optimism," based on responses from the group's 70,000-strong consumer panel. "Smaller projects are still very much in play," said Delaney. "Of course, I won't imply the installation desk is doing the same amount of business." Of the most common home projects -- identified by NPD research as those involving lawns, kitchen, landscaping, living room, porch and trees -- all were trending down from year-ago levels. But they also all shared upward movement in early 2009. Delaney referred to research that asked consumers what projects they were planning. The least common projects involved exercise room, den/library, attic, siding, heating/cooling and electrical/plumbing. (This last category is actually a bright spot at home improvement retailers, but it's not the kind of project which consumers plan ahead for.) One chart from James Gillula, managing director, consulting services for IHS Global Insight carried the title, "Bad news almost everywhere for consumer finances." Negative forces -- from falling employment to mounting debt burdens -- outnumbered positive forces on the chart 7 to 2. Lower gas prices and more fiscal stimulus were the lone factors on the positive side of the ledger. IHS Global's forecast for home improvement products market showed a baseline forecast of negative 6.4% for 2009, rebounding to positive 6.9% in 2010, and showing a double-digit increase in 2011. Household formation is one factor in favor of the home improvement industry, he said.

When you set goals, something inside of you starts saying, "Let's go, let's go," and ceilings start to move up.