New home sales rise almost 16%
26 February 2013 13:24 EST
USA Today
New home sales surged in January, rising almost 16% from December in another sign of an improving housing market.
Sales of new single-family homes in January came in at a seasonally adjusted annual rate of 437,000, the government said Tuesday.
The results bested consensus estimates of 381,000.
The pace of sales was almost 29% above the January 2012 estimate of 339,000, and almost 16% above the revised December rate.
The strong showing in January follows an uptick in home builder sentiment and housing starts in recent months that hadn’t been matched with an increase in sales. “Now, we’re seeing sales pick up,” says Patrick Newport, economist with IHS Global Insight.
The homebuilding industry has been starved for good news for years. Last year’s new home sales totaled 367,000, making 2012 the third lowest year on record for new home sales. They hit record lows in 2011.
IHS Global Insight expects new home sales to rise to 464,000 this year. IHS doesn’t expect new home sales to return to more normal levels, above 800,000 a year, until 2015.
Increased new home sales are a strong indicator of increasing consumer confidence in the overall U.S. housing market, says John Tashjian, principal, Centurion Real Estate Partners.
As buyers absorb existing inventory, builders will ramp up construction starts, which is also give the economy a “much needed shot in the arm,” Tashjian says.
Cocooning: It’s Back and Thanks to Tech, It’s Bigger
26 February 2013 10:52 ESTUSA Today
Cocooning is undergoing a metamorphosis: Call it super-cocooning.
Thanks to always-on wireless Internet connectivity and bigger, better TVs that reproduce pixel-perfect high-definition video, cocooning is entering a new evolutionary stage. Consumers are staying home more, watching movies delivered via cable, satellite, Internet or disc, eating in and transforming their apartments and houses into a shelter from the daily social storm.
This new level of super-cocooning is affecting Hollywood, professional sports and restaurants across the U.S. “Everybody is nervous, really nervous,” says trend forecaster Faith Popcorn, who coined the term “cocooning” in 1981. “I think we are looking for protection. Almost like the Jetsons, we want to walk around in a little bubble. We are moving toward that.”
Cocooning is not a new behavior. Born out of a mix of fear and fun, it became a trend identified with Cold War unease that led to stay-at-home entertainment such as the first home video game systems, rec rooms and the adoption of home swimming pools and trampolines.
After the 9/11 terrorist attacks, a refocus on cocooning occurred. Homeowners lined their nests with media rooms and remodeled kitchens meant for entertaining. And in the last 12 months, with the July 20 movie theater shooting in Aurora, Colo., and the Dec. 14 school shootings in Newtown, Conn., many have a heightened sense of unease. “We don’t feel too safe, and people are getting more and more nervous about being vulnerable,” Popcorn says. “Cocooning is going strong in 2013.”
By the numbers
An indication of super-cocooning comes from a recent JPMorgan Chase analysis of credit card spending. Consumers with Chase Freedom credit cards spent significantly more (65%) on electronics such as TVs and tablets during the last three months of 2012 than during the same period the year before, the firm found.
Overall, consumers spent 2% more during the fourth quarter of 2012 than a year before, but spent less on hotels (-21%), car rentals (-26%), restaurants (-16%) and tolls (-8%). “It does appear that consumers are staying closer to home,” says Phil Christian, general manager for Chase Freedom.
That trend is buttressed by the slowed growth in travel and tourism spending, from about 5% growth in the first three months of 2012 to 2.2% and 0.6% in the second and third quarters, reported by the Bureau of Economic Analysis in December.
On the plus side, movie theaters set a box office record of $10.8 billion in 2012. but overall attendance remained flat, according to Nielsen.
That’s in part because Hollywood is increasingly catering to consumers by getting films from theaters into homes more quickly via on-demand or pay-TV services. Among those who stay close to home, a subset of about 7% of U.S. homes with Internet access are inhabited by “heavy home entertainment cocooners,” says consulting and research firm Frank N. Magid Associates. They spend nearly $300 each month on pay TV, Internet service, video games, on-demand video, music, books, newspapers and magazines, says Magid.
These heavy cocooners are an affluent, racially diverse group: More than one-third (35%) make $75,000 or more annually. Whites make up 57%, Hispanics 22%, blacks 14% and Asians 7%, according to Magid. The firm conducted the nationally representative survey of 2,540 digital consumers in March 2012.
Even a large portion of digital consumers in the $35,000-$50,000 annual-income bracket identified themselves as heavy cocooners.
“The emerging cocoon of home entertainment is being led by a new, technologically sophisticated and more culturally diverse American consumer,” says Andrew Hare, senior analyst for Magid.
The cost of cocooning
While pay-TV bills have risen about 6% annually, The NPD Group says, more homes are opting for higher-cost packages. About 23% of homes pay more than $100 monthly for cable-delivered pay TV, up from 19% in 2008, Magid found. Homes paying more than $100 for satellite pay-TV service rose to 14% from 10%.
But in other ways, the price of becoming a super-cocooner is falling. As the average price for an HDTV has plummeted, now about 88% of homes have one, according to the Consumer Electronics Association. And bigger TVs, those larger than 55 inches, cost on average $1,400, about 10% less than a year ago, The NPD Group says.
Consumers bought slightly more TVs last year than in 2011, with many upgrading to bigger displays, says NPD analyst Ben Arnold. “The move toward big screen is part of that (cocooning) story. You’ve got tons of content options. You’ve got TVs that connect directly to the Internet, so you don’t even have to get a DVD; you can call up Netflix or Amazon video services directly on your TV.”
There’s more HD content available, too, he says. “There are a lot of reasons to stay home and either watch movies or sports on TV. Picture quality has become better and better. Actually being able to see the event or see the game, one might argue that it’s a better experience than in person.”
Among recent TV buyers is Kornel Lelea of Hawthorne, Calif., who bought a new 70-inch Sharp HDTV before his annual Super Bowl party. Three other screens also had the game on, but the new set was the star attraction. “The technology is so much better. It has 3-D capability, the color saturation,” he says. “It is just beautiful.”
The 46-year-old L.A. housing inspector watches a lot of sports, movies, as well as the Discovery Channel. “With the (new) 70-inch now, it’s better than a movie theater,” he says.
And it’s safer, even for a guy who’s 6 foot, 2 inches. “I’m a big Dodgers fan, but the last time I was at a game someone was actually trying to get stupid with me,” he says. “I’m a fan, but I’m not going to lose my career or my life over a game, either, you know.”
Recent assaults at sports events have caught the attention of the public and fueled cocooning. A post-game stabbing occurred at the NFC Championship game in Atlanta last month. And in 2011, national attention was turned on Los Angeles after a San Francisco Giants fan was beaten at Dodger Stadium. The National Football League in 2008 enacted a Fan Code of Conduct; last season it toughened the rule by requiring fans kicked out of a stadium to take an online behavior-management course before returning.
While convenience, cost and quality of home theater were the biggest factors cited for staying at home, security was a concern for several others who responded to USA TODAY about the subject on Twitter and Facebook. “Why leave the comfort of my lazy boy (sic) when I can see/watch a HD football game?” wrote Nathan Tameling.
Said Dave Majewski of Columbus, Ohio, “It’s cheaper and more comfortable and safer.”
That is a growing consumer sentiment, says Tom Campbell of retailer Video & Audio Center in Los Angeles. He was surprised at the rate at which consumers began snapping up new $17,000, 84-inch Ultra HD televisions after LG Electronics began shipping them in late October.
“We called some of them back to ask, ‘Why did you buy it?’ We found out that with the ever-increasing violence at sports events people are becoming concerned about their safety,” said Campbell, who called several dozen customers. The three-store chain has sold more than 100 Ultra HD displays.
Other retailers also report an uptick in sales of larger-screen TVs, he says: “It’s beyond the cocooning we saw in the Jimmy Carter years.”
Sales of Sony’s first Ultra HD 4K TV, a $25,000 84-inch model that it began shipping in early December, have been “exceeding expectations,” says Sony Electronics Vice President Brian Siegel. “Over the last few years, consumers have been spending more time at home, and their expectations are increasing” for TV quality, he says.
Not so super socially
Super-cocooning is making us less social, says analyst Michael Greeson of The Diffusion Group, a media research group.
Technology makes it possible for us to avoid leaving our homes — whether seeing a movie or getting food delivered — and, he says, it can lessen our connections with others.
“With all the information and entertainment at arm’s reach at home, why get out and meet up with a friend when you can chat on Facebook? Why go shopping for a book at Barnes & Noble when you can search through a virtually unlimited bookstore like Amazon and never leave your couch?”
Trend analyst Popcorn doesn’t see an end in sight for super-cocooning.
If anything, we will line our cocoons with more technology like the IllumiRoom that Microsoft showed off at the Consumer Electronics Show last month. Using a Kinect camera controller and projector, the IllumiRoom turns your entire room into a 3-D movie or game environment.
“You can see the evolution,” she says. “But it all comes out of the same thing: We’re people getting more and more nervous about being vulnerable.”
“Buyer competition is so stiff that more than one in four of the homes that closed during April sold for more than original listing price,” noted association Chairman Steve Merchant, owner of Global Realty International in Orlando.
