Some housing markets are sluggish. Others are booming. Why? In some regions throughout the country, home builders have slowed down their construction businesses. Certain builders just aren’t doing as many housing starts in 2015, due to a variety of factors.
Construction slowed unexpectedly in the beginning of the year, while other regions have fared well in comparison. This begs the question, why are certain housing markets sluggish, while others are experiencing growth? There are a variety of factors, and each one is important for builders to understand.
In some areas, bad weather may be to blame
The beginning of 2015 saw harsh winter weather throughout much of the U.S., and some experts believe that could have been one of the main factors that slowed down construction growth. After all, economic indicators were predicting that growth would continue. For example, housing starts in the Northeast (where there were seemingly endless snowstorms and bitter cold temperatures) more than doubled between February and March (once the weather cleared up), the biggest percentage increase recorded. The South wasn’t hit nearly as badly, in comparison. Builders remain confident that growth will be seen this year, especially as the weather improves.
Younger generations are still living at home or sharing rentals
Many younger adults are still recovering from the recession, living at home with parents or with roommates instead of purchasing new homes. Economists call these “missing households,” and estimate that there are more than 2 million of them throughout the country right now. These “missing households” demonstrate that millennials and others aren’t purchasing their first homes. Instead, they’re opting to save the money necessary for a down payment by living with their parents or with roommates. Or, they’re just scraping by trying to pay off lofty student loan balances.
This is particularly obvious in large, expensive metropolitan areas like Boston, New York City, San Francisco, and others. If your construction company operates outside of expensive cities it’s likely that you’ll see more young professionals purchasing new homes.
Growing economies will see more housing starts
Certain regions throughout the country are experiencing far greater economic growth than others, and it’s in these “new frontiers” that builders will notice the most housing starts. Texas, North Dakota, and South Dakota are leading the country with more housing starts than other states. These areas are a prime example that a housing recovery not only depends on job growth, but that it also helps foster job growth.
In the Dakotas, we can point to the energy and natural resource boom that’s occurring right now. Mining and natural gas exploration are bringing jobs to the state and housing simply can’t be built fast enough. Texas also enjoys natural resources, like oil, and the state is also a prime spot for businesses thanks to a favorable tax climate. South Dakota and Texas don’t levy a state income tax on workers, which is another perk that new residents appreciate.
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