Mark Kennedy is Executive Director, Forest Products Equity Research at CIBC World Markets (see Underlying Strength 9-21-12).
Mark’s presentation at the NAWLA Regional Meeting in Vancouver April 11 was entitled The U.S. Housing Market Recovery and Implications on Lumber Demand. His talk lent perspective amid turbulent and perplexing market signals. As one of three featured speakers at the meeting, he captivated a jam-packed Vancouver Club audience in delivering a reassuring message, suggesting that the optimistic outlook for the B.C. lumber industry is supported by strong economic data. With the use of visuals and charts, he effectively showed how the U.S. housing market is “on a slow road to recovery” – while noting that the biggest determination of future strength is U.S. jobs growth.

Mark offered the following conclusions re. U.S. housing:

• It could still be three years before we get back to “normal”
• Affordability is compelling
• Pent-up demand is significant
• Prices are modestly improving and modest is good
• Housing starts will most likely see modest growth in 2013 and 2014 before accelerating in 2015
• If jobs growth accelerates, the U.S. could actually see housing shortages in 2016
• Jobs and credit availability could really kick housing demand into high gear.

It was intriguing to hear Mark describe 1.4 million U.S. housing starts as “the new 2 million” – explained by the fact that “the North American lumber industry does not have the same production supply capability for the U.S. housing market that it had in 2004-06.” Mark’s presentation certainly had ever-wary lumbermen feeling encouraged.

Excellent presentations were also delivered at the NAWLA Regional by The Honourable Pat Bell (B.C. Minister of Jobs, Tourism, and Innovation), and Don Demens (President, Western Forest Products).

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• I was privileged to have the opportunity to listen to Mark elaborate on aspects of his presentation over dinner, along with other members of our NAWLA Organizing Committee
• One particular visual Mark shared during his presentation really perked the attention of all in attendance. The Clock Work Progression Cycle was coined by Mark; his accompanying chart is posted below with permission. Click on the image for larger view.