Friday, October 25, 2019

Building Subcontractors in Scarce Supply

I have touched on this issue before and it continues as home builders continue developing both urban and suburban projects. There is a large amount of urban projects that feature mid rise buildings. Often these types of structures have a concrete and steel base with 4-5 floors of wood framed structure above. This type of construction takes framing subs away from other housing projects and that mean increased time to build and higher costs.

Higher building costs can have a negative effect on new homes, but generally a positive effect on resale properties as those simply become more attractive as new homes get more and more expensive.

The current economic cycle is getting long in the tooth and that means a slowdown is now more likely than not. I do not think we are headed for a major recession, but a slower rate of economic growth is likely, even a short and probably mild recession are coming sooner rather than later.

But for now we are still seeing a construction boom and even as the economy slows, real estate has always been a safe heaven for investors and that bodes well for our local market to ride out any slowdown with light effects.

Sellers on the fence waiting for prime market conditions are now at a crossroads. Did the market already peak? Is now a good time? Now is probably as good a time as any that will arrive in the next 6 months, near as I can see. The future is always a bit cloudy and skies over that future are never really clear. Sellers with a desire to upgrade or downsize are well advised to think sooner rather than later, especially if they are downsizing.

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