Even though every year is touted to be the last for homebuilders, things have never been better since the recession for the industry and 2020 looks to continue the trend. Here are a few reasons why you have every reason to be optimistic as a homebuilder this year.
Demand is Up
The recession did tremendous damage to nearly every market across the economic landscape in America. Homebuilding plunged to all-time lows as demand dried up to next to nothing, and the housing bubble burst. Since that time, the need for housing has slowly increased. The past year has seen the highest demand recorded since the recession. While big-ticket housing starting at the $600,000 dollar-mark is not in top demands, houses below that price point are part of a burgeoning market. No longer is spring the start of the selling season. This year, the spring selling season starts in January.
Mortgages are Down
Mortgages are in the best place they’ve been since last decade, and along with lower mortgages, Millennials have finally started making good enough money to consider putting down an initial payment on their forever home. For the millennial generation, they are smack dab in the best home buying time of their lives, and they’re ready to strike. Due to this combination of low mortgage and high readiness to purchase a house, many are projecting a housing resurgence that could continue for years.
Data Shows Progress
Construction starts have risen to a 13-year high as of December 2019. January 2020 is poised to see this trend continue with more millennials than ever needing houses to start raising families. This should be the growing trend for the next several years as millennials continue to land solid-incoming jobs and increase personal wealth.
To bring definition to this valuable increase, consider the following stats. Housing starts rose a phenomenal 40.8% from December 2018 to December 2019. Even more promising, single-family housing alone rose 11.2% as of December 2019. This is the largest level of growth since June 2007. Since single-family homes account for the largest piece of the housing market, these numbers are promising.
The Job Market is Strong
The economy is one of the biggest factors that can impact whether homes will get purchased. Since the economic downturn of 2007, the economy has fought its way back. Millennials, who were in college or younger during the recession, have ridden the growing economy. They’ve taken advantage of solid jobs and maximized their earning potential. They’ve also had time to save for the down payment on a house. With the advent of more “gig” jobs and remote opportunities, the job market has never been stronger for the millennial generation. They have more income streams than their parents and more saved up than Gen Z. They are well into their careers and starting to think about settling down and raising a family.
Thanks to the strong job market, millennials are eager to step away from the endless cycle of renting. They have obtained financial independence, and they are eager to obtain physical independence, as well. The housing market should expect a surge in business from this housing-ready generation alone. It can also expect increased business from boomers who are looking to upgrade to a nicer home or downgrade to a smaller space. If the economy continues performing at or above present levels, those generations from millennials to boomers will be in key positions to enter into the housing market. Thanks to the economy, the housing industry is poised to enjoy a productive year in 2020.