In a time of such economic transition, it can be hard to get a clear assessment of where we stand, not just on a state level, but on a national level as well. The construction market can tell us a whole lot about conditions in various industries, and there are some recent reports pointing to areas of growth and stagnancy on that score.
According to various home builders, construction companies and architects, nonresidential construction is beginning to pick up because businesses are gaining confidence and pushing toward growth. Home building is still a bit behind, presumably due to low wage growth. The nation has seen a healthy increase in employment, but pay rates are pretty flat. For that reason, first-time home buyers and young adults are less inclined to buy a home. Houses sold to first-time home buyers are down to 28 percent nationwide, compared to 40 percent, which analysts consider the normal rate.
Another factor that's challenging the economy is a lack of skilled workers, which is true of home builders. Labor shortages are an inhibiting issue in construction because many skilled workers have left for other kinds of work, and haven't been returning. That may be slowing new home construction, but at least we know that in Hawaii, low inventory is a major impetus for change in that regard.
Architecture is picking up, most likely due to the nonresidential construction growth that comes with businesses being confident enough to grow. That means the construction of new facilities. Commercial construction is expected to grow by about 10 percent this year.
Lastly, institutional construction for projects like health care and education facilities are lagging, which is simply attributed to state and local governments getting their finances stabilized in the wake of the recession.
In summary, there are still some industries that need improvement, but on the whole, things are picking up. Hopefully we'll see the wage growth that the country needs in order to get those first-time home buyers into the market. We hope you've found this blog informative! Mahalo for reading this week!
RealEstateMauiHawaii.com - By Mark Harbison
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