What industry developments do you need to be on the look out for in 2016? What’s coming down the line that’s going to impact your general contractor business? The folks at Capterra identified the boom in construction that characterized 2015. That trends is only going to get stronger in the new year. The strong return of the building sector and an economic rebound as implications for your company going forward. One top industry blog identified six trends. We list three below that are critical for general contractors and what we think this means for you going forward.
1. Housing will continue to be all about renovations, renovations, renovations
Sorry residential contractors: new builds still can’t compete with renovations. According to a survey conducted by Houzz, a home design website, more than half of homeowners 60 years and older say they have no plan to move in their future.
An aging population and perhaps the perception that the mortgage market is tight (the data says otherwise) means folks are staying put. Plan accordingly.
For those who are buying, the next trend is really important to pay attention to…
2. Millennials will continue to shy from buying first-time homes.
Unfortunately, the number of young people who already own homes is very low. Remember: about a third of Millennials still live with their parents.
The bottom line is you should be marketing to older professionals…
For builders hoping to target first-time homebuyers, don’t focus on the traditional group of 20-somethings that are first-time homebuyers. Instead, look up the age ladder, at 30- and even 40-somethings, who have paid off their loans and are looking to buy.
3. Get ready to pay your workers more
“Show me the money!” Expect to hear this more from your employees, subcontractors and potential staff you want to hire in the new year. The boom is not only impacting the private sector. The government is also spending more. The new highway bill means the demand for construction workers will be high.
In an annual survey of construction employment, the Associated General Contractors of America found that construction employment is currently at its highest level since January 2009.
The bad news is that the construction industry is already struggling with labor shortages. The Wall Street Journal explains:
Wages, particularly in residential construction, are still too low to attract enough qualified workers to the physical and sometimes dangerous work of building houses. Tightened immigration policies, meanwhile, are deterring foreign labor from returning to the U.S. And efforts to train and recruit young trade workers atrophied in past years as many school districts focused less on certain vocational training.
Some have started to feel the pressure to raise wages already.
How will you plan for higher wage costs in 2016?
As the author of the original article states…
When writing about how well construction would perform in 2015 , I didn’t realize that the industry would explode as it did. For example, spending on nonresidential building was around $360 billion in 2015. In 2016, that number is expected to climb to $390 billion . […]
4. Other Trends
What other trends are you aware of that are impacting your plans (projects, hiring, marketing, etc.) in 2016? Let us know in the comments!
See full article at Capterra and read about three other important construction industry trends for 2016.