The Future of Housing and Contracting in America

Posted on August 25, 2009
Filed Under New Construction |

The housing industry witnessed a boom unlike any other in the 90s and 2000s right up until this equally dramatic burst in 2008. This time period was unique in that not only had a tremendous number of houses been built but a home improvement frenzy swept through the existing homeowners across the nation. The now notorious lending practices ever expanded the percentage of Americans who could now buy a home. All of these events made it the golden age of the contractor.

Construction of new homes exploded everywhere and workers were in demand and in shortage. So much so that a generation of Mexican immigrants came over not to pick our crops but to build our homes. Builders were putting up houses as fast as they could trying to keep up with sales and everyone in the construction trades rode this wonderful wave.

Mortgages interest remained tax deductible while other interest deductions were phased out. Interest rates kept getting lower encouraging people to refinance every couple years as rates kept going down. Second Mortgages and variations including lines of credit kept getting easier to get as home equity soared with the every increasing value of houses. Investments in improvements paid for themselves in market value. General contractors started specializing into more narrowly defined niches as overall demand went through the roof if you will excuse the pun.

Then the bottom fell out. No money for lending, house values falling and all while foreclosures skyrocketed. Contractors suddenly went from having customers lining up to no having no customers at all. Even when things turn around, Interest rates will likely rise and people will likely view improvements more as an expense than as an investment as they once did. Banks other lending institutions own tons of homes that they are selling at deep discounts further lowing the market values.

Despite all this, these are not the end times and housing will bounce back even as the economy does. Something else happened just before all this. Oil prices soared and it woke people up. Then an election happened and a Democratic President and Majority in Congress as well. The confluence of these events has put us on a path that will dramatically change the future of housing and of being a Contractor in America

Once the dust and the legislation settle here are some things we will likely not see for some time if it all:

-Mortgages up to or exceeding anywhere near 100% of a homes value

-Home improvements returning more than a fraction of their cost in home value

-Masses of loans to people who traditionally would not qualify

-Money spend frivolously on luxury items and modifications to homes to support those luxury items

For Contractors, this means that specializing in specific niches like basement refinishing featuring water fountains is probably going to leave their phones silent. We will see more of the word “general” in General Contractor as jobs will be fewer and competition will be stiffer. More people fighting over the same jobs and charging less means that the Contractors who don't have their own houses in order will be squeezed out of jobs and out of business.

Here are some things we will start seeing once the dust and the legislation settle:

-Less homeowners wanting elaborate projects that look good and more Landlords looking to get a job done for the cheapest price

-Tax incentives stressing more energy saving and less stress on home ownership

-People spending money on energy saving home improvements as a way to gain positive returns on their investments

-Our tax dollars being spent on saving energy

So if you are a contractor today there is certainly good and bad news in all of this. Some will see doors closing and other will see new opportunities arising.

“Prosperity belongs to those who learn new things the fastest.”
- Paul Zane Pilzer: Economist, entrepreneur, and author

Most contractors will continue to things as they always have. All of them will have difficult times now and ahead. Many will simply go out of business as they will be unable to compete with those who are more efficient. The ones who remain will be leaner and meaner for having survived capitalism's Darwinian selection process.

There will be another group of contractors who are able to see the opportunity in all this and they will usher in a golden or better yet, green era for contractors who position themselves to take advantage of the next boom. Contractors who follow events and can see the writing on the wall will start catering to Green Contracting projects such as Weatherization.

Contractors who have kept up with the legislation know there is already $5,000,000,000.00 sitting, waiting to be had for Weatherization projects. They know that the government has committed to and authorized the money for millions of houses to be weatherized right now and for years to come.

The smart contractors out there see a market changing so that even if the Government pays for weatherizing all 38 Million homes that currently qualify for free [to the homeowner] Weatherization upgrades, the next wave is the vast middle class who will look for Green improvements. The Government will likely encourage Green improvements with tax breaks and Consumers will want them because they will be the improvements that will put money back in their pocket and improve their home's value.

The Contractors who want to be in position to make their fortune in the next phase of the housing boom are educating themselves and transforming their business now to start riding the Green wave of the Future of Housing and Contracting in America.

If you would like to learn more about Weatherization, Weatherization Programs, Green Contracting, or the Future of Contracting visit http://www.weatherizationriches.com.

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