2013 construction industry apprehensive as Obama II beckons.
With the second Obama presidency secured for four more years, the construction industry, specifically the depressed housing sector, is taking a wait-and-watch attitude before projecting definitive commitments for 2013 growth potential.
Coming off overall 6% construction industry growth last year, expert sector observers have been watching for major signs of change since the lame-duck congressional session officially began with the Nov. 6 Obama re-election and ended as the 113th Congress stood ready to assemble for a full session during the first week in January.
Unlike the energy sector, which frantically awaits further shots across the bow from the Environmental Protection Agency, residential and commercial construction has been more intent on hopeful signs of growing consumer demand and a more amenable credit availability climate before projecting solid expectations for the coming year. With that 2012 growth primarily powered by a housing comeback from the previous two years’ depression depths, the construction industry is hoping for a combination of demand growth, loan availability easing and a restocking of the lowest housing inventory since the end of 2010.
A positive wild card in the housing purchase sector could be foreign investment money increasingly shifting into U.S. fixed assets from a previous total commitment of billions into U.S. debt paper. Some of it comes from Canada, but an increasing intensity is being noticed in postings from Southeast Asia and even Indonesia.
Unlike the Japanese “bubble” that came and went over a short period in the late 1980s until the mid-1990s - concentrated primarily in commercial ventures - the current overseas investment input is focused more on residential housing, a good portion of which is designated as secondary homes by wealthy investors from the participants’ home nations.
Despite a recent increase in family formations, there is no chance of a return to the “family primary asset philosophy” that existed between the end of World War II with the return of millions of GIs and their resultant family-forming housing demand and the fall of 2008, which turned a constantly growing asset into an overnight liability. The subsequent short sales, foreclosures and home abandonments seem to have created a permanent trend toward renting or leasing.
Despite all-time low long-term mortgage rates, which seem not to have lit a fire under most potential buyers with the resultant insecurity of home prices (despite recent bottoming out), the switch toward “rentals” also is being fueled by the nation’s unemployment rate, which has influenced literally millions to opt for the mobility of short-term rental exposure in case good jobs pop up in other parts of the nation.
From a construction-enhancing standpoint, these events have spurred a multitude of high-rise rental apartment building in most big cities, while individual home-leasing construction has abetted building spurts in rural areas as well as suburban collar communities.
When projecting commercial and industrial construction for the forthcoming 2013 building season, this forecast must remain a question mark for now since much is dependent on the U.S. government’s accommodation with its legislative branches. Suffice it to say that health-care initiatives, such as assisted living and the expansion of hospitals and emergency branches, will be coming under consideration.
The biggest conundrum of all, however, will depend on the White House’s approach to fossil fuel development (coal, oil, natural gas) and the pipelines, utilities and refinery expansion that could entail.
The answer to the resultant puzzle could span the scope of industrial construction expansion from sparse to near boom proportions.