Is the Construction Industry Gearing Towards a Recovery Phase?

The construction industry has been struggling with recession for a long time. However, now it looks like that the recovery phase is finally here. The Kitchen & Bath Industry Show and International Builders’ Show, which were recently held in Las Vegas, saw large crowds indicating that the age of recovery has eventually arrived. Various global and local factors contributed to the slowdown in the construction industry. The financial meltdown saw many people losing their jobs, lowering their disposable income. All these factors resulted in lower demand across the board and the construction industry was not immune to it either.

 

The industry is definitely showing the signs of recovery. While attending the International Builders’ Show, we decided to check out local communities in the town. We visited various neighborhoods – notably Harmony Homes’ family-oriented Silhouette community. The tour was very comprehensive as we got to witness the polar opposite ends of a spectrum. In January, the NAHB/Wells Fargo Housing Market Index was slashed from 56 to 46, losing 10 points. However, by the time of the trade show in Las Vegas, the sentiments were upbeat again.

 

The contrast between the ends of the spectrum was visible during the show. The higher end of the market held itself up well during 2013 and is continuing to do so. However, the lower end of the market is not so predictable. According to David Straub, Las Vegas division President of Toll Brothers, the company sold 39 properties in the range of mid $500s to mid $600s.

 

The construction industry is now poised for a bounce back, but the indicators are still not clear. We surmise that the industry needs to ask itself certain questions to see where it stands on the recovery curve. It is time for a little introspection on the following lines:

 

The industry needs to predict whether it will see the return of first-time buyers in the market. It also needs to see if the lower end of the market is going to hold itself up steady. The industry also needs to stimulate first-time buyers with more engaging opportunities to avoid high rents.

 

The industry also needs to pay attention to macroeconomic factors. The domestic economy seems to be picking up. However, it is yet to be seen whether there would be enough job creation to see a bounce in house ownership stats. This factor will help shape the future of the construction industry.

Another macro-economic factor to be considered is related to banking and mortgage regulations. These regulations will determine banks’ and mortgage lenders’ willingness to financially back the property purchase decisions.

 

Various states such as Colorado and California are looking to develop master planned communities. These plans will give a boost to the construction industry.

 

Construction industry also needs to scale up. In the past couple of years, the industry has sustained itself by writing down its assets and cost-cutting measures. However, this method is not sustainable. The construction industry needs to see that it will be able to thrive in coming years and retain is profitability. The industry also needs to become more efficient.

 

Need lead product solutions? iLeads delivers results that fits your needs! We are a lead solutions provider with lead generation covering Insurance, Lending, Real Estate, Direct Marketing, as well as Lead and Data Analytics. Contact iLeads today!