If you think that the housing market is coming back strong, think again. Builders that have retrenched are not building yet and that is an indicator of the market at large.
Of course, this is not a bad thing that construction is down. We still have a great deal of housing inventory that needs to be absorbed so there is no market need to add a great deal to it.
So when I read that the Associated General Contractors of America released their state construction employment numbers were down 13 percent over a very weak 2008 and still down year over year in 41 states, I was not excited about the next year of housing development.
Let’s face it, builders need to build to make money. And that typically includes hiring construction workers. So when the numbers are still drastically down that tells me that new home inventory is not going to be rising in the near future. And builders are still in, as they say in Georgia, hunker down mentality.
“Construction employment continues to shrink at an alarming rate,” said Ken Simonson, chief economist for the association. “I don’t expect much improvement in construction employment until stimulus money flows more broadly, the federal-aid highway program is renewed, and home building gains momentum.”
The five biggest percentage losses in construction employment over the year occurred in Arizona (27 percent, or 50,000 jobs), Nevada (25 percent, or 29,500 jobs), and three states with 22 percent losses: Connecticut (14,300 jobs), Kentucky (18,300 jobs) and Tennessee (28,300 jobs). He noted that 41 states saw double-digit percentage decreases in construction employment for the year. Meanwhile, construction employment expanded in just two states compared to August 2008. North Dakota added 800 construction jobs for a 4 percent increase while Louisiana added 4,400 jobs for a 3 percent increase in construction employment. via AGC of America
It looks like another year of absorbing used and foreclosed upon inventory for the housing industry. Any great moves will not include new construction in my forecasts.
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There is no doubt that the construction industry has taken a beating in some areas of the country. It is essential for construction companies to re-invent themselves in order to survive. Perhaps these companies should consider expanding their services to include home renovations. There are a significant number of home owners in the southeast whose residences will need extensive work after the floods. I think these homeowners would prefer to have the renovations performed by experienced, construction professionals.
This is a sign that the crisis is passing. Residential and office should be released soon.
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