Predicting the Housing Market Recovery Through Construction Industry Experts
The current housing market has been difficult to decipher. With continuous bumps along the road to recovery, how are lenders supposed to put together a long-term business plan in this environment?
Terry Segerberg might be able to help. According to The Washington Post, Segerberg has a strong track record of predicting the housing market because of her unique position in the building materials industry. In her eyes, a steady recovery is clearly on the horizon.
How the materials industry predicts the housing market
Segerberg is the CEO of Mesa Industries, a building materials firm in Ohio. Her industry is a strong predictor for the housing market; any change in the market will ultimately hit her firm months before it impacts the rest of housing and lending. She realized the housing bubble was about to end about six months before most analysts because she noticed that her clients were switching from building new homes to remodeling projects. Today, she sees construction orders growing at a reliable rate, which has led her to believe the future of housing should stay strong.
Recent downturn was most likely an outlier
Segerberg’s outlook is welcome news after a stressful 2014. Housing construction fell by 0.8 percent in August and was flat throughout the entire summer. Applications for new mortgages and refinances had also fallen throughout the year, which made it seem like the housing recovery had stalled or was even ending. With a collapsing stock market and fears about worldwide problems like Ebola also plaguing the economy, there was good cause for concern. However, during this slow stretch, Mesa still saw consistent orders for materials.
The long-term positive trend in construction orders
Segerberg is cautiously optimistic about the future. She has strong orders through the end of 2015 and expects the construction and housing markets to stay strong for at least that long. And she’s not the only one feeling good about the future. The Bureau of Labor predicts that the construction industry will add 1.6 million jobs by 2022, taking employment in this sector close to its peak during the housing bubble. Lenders should expect steady, but not spectacular, growth in the industry. Although activity may not grow to resemble those golden bubble days, lenders shouldn’t be spooked by the bumps in the road last summer.
A shift for lenders
Lenders should prepare for what seems like a shift in the market. According to Segerberg, her clients aren’t building single-family homes at the rate they used to. Instead, her orders are coming for construction projects on multi-family and commercial properties. Lenders may want to adjust their marketing strategies to refocus on these clients to make up for lost business from single-family homes.
No one can say for sure what’s going to happen in the housing market — and Segerberg is no different. However, based on recent employment reports from the construction industry and Sergerberg’s track record, there’s definitely reason for lenders to feel hopeful about the future.
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