Why 2016 Home Building and Construction Trends Appear to be Improving
Home construction rose in 2015 but has stalled a bit in 2016. How should your company go forward given this trend?
Builders have slowed new home builds, but demand has continued to rise. New builds in January were down almost 4% according to the US Department of Housing and Urban Development. David Crower, Chief Economist of the National Association of Home Builders isn’t worried:
“Despite the modest dip in starts this month, we expect to see ongoing, gradual growth in housing production in 2016.” He continues, “An improving economy, solid job creation and pent-up demand for housing should keep the market moving forward.” Smart builders who are able to stay on top of these trends could find themselves sitting in the catbird’s seat when the market explodes next year. Here are some issues to monitor.
The Improving Economy
As the economic recovery continues, solid job creation combined with a pent-up demand for housing could really drive the market, especially in the Midwest where urban and suburban families look to expand. In more complex markets like the San Francisco Bay Area, builders may want to focus on two specific ends of the market as Internet millionaires seek out high-dollar luxury homes and regular tech workers seek out affordable live-work space that’s close to commuting options
Millennials are getting out of their parent’s homes and potentially into one of their own. With strong increases in this evident in California and Florida, many expect that the increase in millennial household formation could spur builders to break new ground.
Being Overly Cautious Could Cost Builders
The crippling recession and lingering labor shortages have rattled many construction industry decision makers. Because many are now being more cautious about the amount of new work they can handle and fund, they may prove damaging to the very market they serve. By being more cautious about growth, they could feed into demand for housing that is already bursting at the seams to begin with.
The Popular Multifamily Market Takes a Back Seat to the Single-Family Sector
Industry analysts have largely agreed that the popularity experienced by the multifamily sector will cool down in 2016. However, single-family new home construction is expected to rise as much as 20 percent this year.
As climate changes contribute to elevated areas of drought, water becomes increasingly more expensive in certain areas of the county. Water conservation is expected to become as critical to new home builds as energy conservation, and builds that consider water-saving techniques internally and externally will start to become more sought after.
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