Housing & The Trades
The housing market is one of the most important sectors of the American economy, both in terms of newly built houses and renovation or repair of existing homes. Most estimates place housing at between 15-18% of overall GDP – i.e., Gross Domestic Product, or the total value of all goods and services produced in our gigantic economy.
Many other forms of construction are dependent on the housing market for growth. The more homes built, the more demand grows for commercial and institutional buildings such as stores, schools, etc.
Construction of housing and all other forms of building is notoriously cyclical, with periods of boom and bust. The housing market has been down for a decade and half compared to historical norms. Ever since a severe recession in 2008, triggered by an overheated housing market, home building has failed to be as robust as before.
This has put a damper on our economy as a whole, but it’s not so bad news for the trades. That’s because the trades benefit from both new construction and renovation/repair.
When home building dies down, homeowners tend to stay in their existing homes and spend more to fix them up and make them more comfortable. This is a trend taking place today, as high home prices (now a median of more than $416,00, according to U.S. government data) combined with rising mortgage rates make homes unaffordable to more people. Most lenders require a down payment of 10% to 20% of the purchase price before issuing a mortgage, and it’s hard for young people to come up with tens of thousands of dollars as a down payment. Also, many existing homeowners are reluctant to sell because even if they sell at a profit, rising prices and high interest costs often make it difficult for them to afford comparable homes.
What is booming right now is home renovation and repairs. People who stay in their homes longer have an incentive to make them as comfortable as possible. While trade work related to new construction may be down, more work is available in the service and remodeling sectors.
Trade work is a win-win whether you specialize in construction or service/remodeling.