With the recession still reverberating within the construction industry, 2013 has seen some growth from government programs and relaxed lending standards for potential home buyers. Dodge Construction Outlook recently released its 2014 forecast. Although not a negative look into the future, any gains within the construction industry are evened out by losses in individual areas, from commercial investment to single family homes.
Commercial Construction Outlook
Construction of offices, hotels, warehouses and stores is expected to increase by 17 percent with the help of a healthier economy. With customers purchasing items with increased vigor, businesses are finding the funds necessary to expand a current property into a larger facility or move into a brand new building.
High-rise residential buildings and apartment complexes are slated to increase 11 percent in 2014. With investors ready to buy, construction companies are hiring more people to finish current and pending projects. Bank interest rates are still at all-time lows, making it easier for investors to access funds for building purchases.
From elementary schools to college campuses, construction forecasts a 2 percent increase as bonds mature for expansion and basic repairs. Increased taxes in some states also contribute to more educational money open to construction improvements, including building additions and renovations.
Single Family Home Outlook
Expected to grow 26 percent, single family home construction has the benefit of a buyer’s market. Although home prices are rising, interest rates are low, making it easier to buy a home and maintain a consistent payment. Homeowners are encouraged by the increased housing prices, allowing them to make some profit as they sell the property. However, one major slowing factor in this construction category is bank loans. With foreclosures and short sales still on the market, banks are extremely careful about their lending practices now.
As healthcare costs continue to rise; construction in this niche industry continues to suffer. No significant losses or increases are forecasted because the health industry is focusing on cost caps to reduce the high price of insurance and procedures to both insurance companies and patients alike. Investing in new construction only adds to their costs that must be passed on to patients.
Utility And Public Works Projects
With the government’s bailout plan at its end, construction is expected to fall 5 percent and a whopping 33 percent in public works and electric utility expenditures, respectively. Federal government funds have been redirected to deficit reduction as states must cover these construction costs on their own. Key funds must be secured at a state level to cover critical repairs, including infrastructure improvements.
Overall, slow construction growth is expected to keep the industry viable in 2014, but any gains are covering significant losses in key industries, from healthcare to utilities. With government shutdowns and uncertain federal funding, the construction industry is relying on consumers and successful businesses to create an upswing in 2014. Although the industry is out of the recession, the incredible gains almost 10 years ago don’t seem possible in 2014’s financial climate.
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