Metal Construction News, January 2021

SPECIAL FEATURE 2021 State of the Industry Following one of the most difficult years in decades the industry looks forward to a more positive 2021 Looking back at our State of the Industry report in the February issue last year our contributors were optimistic about 2020 In retrospect we were not surprised to see that none them predicted a global pandemic and massive economic shutdown It was possible if one could have read the tea leaves deep enough to have foreseen such a consequence but no one and by that we mean no one did Still the metal construction industry fared better than most industries and for that we should be grateful While the U S economy is in recovery mode it remains under stress in a fashion not seen in more than a century The onset of the coronavirus health crisis in the spring caused an unprecedented collapse in economic activity that is being reversed but more gradually than was initially expected Hopes for a smooth progression of upwards growth to flow from store and restaurant re openings have been waylaid by a winter upsurge in COVID 19 infections with the prospect that demands on the health care system will worsen before beginning to ease once again On the upside effective vaccines developed by several pharmaceutical companies will soon be available to protect the most vulnerable members of the public with wider distribution to proceed over the first half of next year Strength in Residential Real Estate The construction marketplace is diverging along residential versus nonresidential lines with the former more buoyant than the latter Major indicators of U S residential real estate focusing on sales price levels and number of months inventory of supply for both new and existing homes are showing strength The jobs recovery ratio for the entire economy versus February Aprils huge contraction in employment may presently be only 50 but thats not placing much of a damper on the several good reasons for the sizable uptick in housing demand With the options for spending on dining out theater engagements and so on greatly reduced the nations savings rate has shot up to 15 or more from a long term average of about 8 More savings have permitted a faster accumulation of down payments for new homes The notion that employees fortunate enough to have retained their positions are racking up savings will figure prominently later in this article Its also contributing to record breaking highs in stock market indices Mobility Issues The successful implementation and widespread acceptance of the work from home concept has brought mobility back into play More mobility means more turnover in residential real estate Fifty years ago 20 of the U S population would move per annum That proportion has been diminishing over the intervening decades most recently settling on 10 But a shake up is emerging Millennials have been eyeing moves to the suburbs to recapture the lifestyles of their parents and grandparents Extra impetus is now being provided by a wish to escape what is being perceived for the moment at least as unhealthy downtown urban crowding Theres also a trend underway for individuals and families to move away from high cost and weather threatened coastal regions towards the interior Climate change has been bringing a greater incidence of wildfires and hurricanes Acquiring and paying for homeowner insurance is often proving problematic along stretches of the Pacific Gulf and southern Atlantic shorelines Speaking of affordability another spur to residential construction is the present exceptionally low level of mortgage rates Purchasers are locking in long term fixed financing at 300 or lower the best bargain in history U S annual housing starts have been below the 16 million unit figure considered to be equilibrium for years The word equilibrium is used in the sense of being that level consistent with population growth and family formations The annual average of U S housing starts since 2000 has been 125 million units Many analysts are counting on the fullfilment of pent up housing needs to drive their upbeat gross domestic product GDP growth forecasts Caveats on the Home Front There are some caveats to be mentioned For starters a careful reading of the above paragraphs reveals that the positives for residential construction favor the single family segment over multiple units U S Put in Place Construction Outlook By Alex Carrick Chief Economist ConstructConnect Source of actuals U S Census Bureau Forcasts ConstructConnect Chart ConstructConnect CanaData Coming into 2021 our State of the Industry participants retain their sense of optimism but this time it is less likely to be undone by the unforeseeable As we write this COVID 19 vaccines are being distributed and predictions are that every American will be vaccinated by June Again we should be grateful The future seems to be brighter than it has in many years past especially because we are emerging from such dark times But identifying what part of the uncertain future holds the most promise is now our charge and the following pieces will we hope give you a sense of direction 20 METAL CONSTRUCTION NEWS January 2021