September 28, 2017

Headwinds and Undercurrents in 2018

by Anthony Wright

It’s hard to believe, but we’re already rounding the corner on 2017, and I’m beginning to look at some of the factors that we’ll see affecting our industry moving into the next year.

I had some great conversations with colleagues and customers at this year’s GlassBuild, and I think many in the industry are confident that we’ll continue to see steady, but slower, growth industry wide. Here are a few contributing factors:

Storm rebuilding could throttle an already tight labor market.
We already knew that the labor market for building and construction was tight. Consider now that two of the country’s three largest states are up against major rebuilding efforts in the wake of two major, damaging hurricanes that blew through Texas and Florida in September.
The labor shortage is tight nationwide, of course. But in these two major states, we could see rebuilding take available labor away from new construction for the foreseeable future. We’ll see how things progress, but I see a potential positive undercurrent in this situation. With demand for rebuilding high, we could see the necessary work bring some of that labor back into the construction sector for the longer term.
Headwinds in housing.
The Federal Reserve continues to slowly raise interest rates, bringing us back to normalcy without throwing the economy into another recession. There will be continued ebbs and flows here, but one thing is for sure: the era of free money is over.

Simultaneously, there is some pent-up demand among potential Millennial homeowners. Homeownership rates remain at 50-year lows, even while signs indicate that Millennials, who are by and large reaching full maturity, want to become homeowners. The trouble is the lack of affordable, entry level homes for them to purchase. As I noted around this time last year, these homes simply aren’t being built—and there’s little to indicate that’ll change in the immediate term.

So, I anticipate we’ll continue to see demand for multi-family housing, even if the housing market itself has largely recovered.

We’ll keep watching, of course. Questions or comments? Contact me directly at Anthony.Wright@Quanex.com.
 

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Posted: September 28, 2017 by Anthony Wright Filed under: housing, market, trends