The Economic Recovery has hit the Construction Industry.
While every industry has suffered during the Great Recession, the construction trade has been particularly hard hit. As tight government budgets were hampering major infrastructure projects, the foreclosure crisis was impacting new home construction – talk about a double whammy!
But, there’s good news for the construction industry: home prices and construction are beginning to turn around!
A large turn-around is happening in an area that hasn’t seen a lot of press coverage: construction of multifamily housing units, permits for which were up 30% between February and March. Although multifamily units haven’t been as talked about as single family houses, construction of new housing stock (of any kind) shows that demand may be beginning to catch up to supply.
Median home prices are also on the rise, having increased 7% since January. While the home price median is rising, the mean is staying the same. This means that the average price is rising while the middle price is not, implying that there could be a glut of foreclosed homes at the bottom of the market which are impacting overall prices. Once foreclosed houses are destroyed or reoccupied, we might find that the price increase continues at an even higher rate.
Another good indicator of a home construction rebound: The National Association of Realtor’s Housing Affordability index, which measures consumers’ ability to qualify for a mortgage, is on the rise – and has reached its highest level ever.
So to wrap up: production is up, prices are up, and people can afford to pay them. All in all, things are looking up for the construction industry!
Contact our Ohio construction CPAs
In the construction industry? Not sure if your business is ready for the coming recovery? Need help managing cash flow or allocating job costs? Contact Rea & Associates. Our Ohio construction accounting team will help you get your books in order – so you’re ready to take advantage of the recovery and all the opportunities that it has to offer.