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February 2018

Burns is bullish on homebuilding because "demographics are massively clear"

Pent-up demand, sparse supply, and shifting demographics are prompting real estate consultant John Burns to pivot from his reputation as a homebuilding pessimist to becoming "one of the most aggressive forecasters" for both price and volume in this sector.

During an interview at last month's International Builders' Show, Burns, the CEO at John Burns Real Estate Consulting, commented on remarkable results for home sales during the last quarter of 2017, when year-over-year volumes jumped 16 percent over 2016. The increases are particularly noteworthy as fourth quarter is when things are supposed to be slow, he commented.

"Even if the economy has some sort of downturn, it will be the construction industry that is the 'good story' to make sure it is a softer recession," Burns stated.

Burns credits extremely strong demographics for propelling the optimism. The consumer is coming back strong, and builders are reacting, he noted, adding, "There are plenty of buyers and sellers right now."

Citing findings from his book, Big Shifts Ahead (based on 9,000 hours of research) the demand will be entry-level buyers and those ages 65-plus, along with home sellers shifting to rental homes.

Burns also noted other strong indicators of builder optimism, saying "Our feasibility and portfolio valuation businesses are booming." Additionally, builders and building products companies are well capitalized and will be able to withstand a downturn, which he believes would be a "hiccup" rather than a "downturn," given the industry dynamics.