How has Construction fared during Covid-19
Covid-19 has thrown us all a curveball this year, and the construction industry has not been an exception. Between lockdowns, supply shortages, and an economic crisis, it is no surprise that the construction industry has felt the impact of the pandemic. Some people have chosen to go ahead with projects, while others have put construction on hold. Covid-19 has impacted sectors differently, and residential construction has actually fared much better than nonresidential construction (DODGE). If you are deciding whether to break ground and want to better understand how the pandemic has impacted the construction industry, here are a few things you should know.
- The dollar value of construction starts did drop by 14% in 2020 (ENR). However, this decrease was not consistent across all sectors. Residential construction as a whole only suffered a 2% drop in 2020, and single-family residential starts actually saw an increase at a rate of 4% (ENR). Nonbuilding and nonresidential construction took greater cuts, as many people adjusted to stay at home orders and began working from home. This shift allowed people to reevaluate where they lived as well as the need for office space and retail. Because of this, more people chose to move out of cities, causing a higher demand for single-family homes.
- Single-family residential construction has seen a slight increase in 2020 (DODGE). This is likely due to the fact that working from home has allowed people to move out of cities, thus creating a market for new builds in more suburban and rural areas. There is a higher demand for single-family homes, and not enough houses. Pair that with the extremely low-interest rates 2020 has brought, and you have a greater demand for single-family residential starts (ENR).
- Despite decreases over the first 10 months of 2020, total construction starts increased by 12% in October (DODGE). Multi-family residential starts picked up in October, though single-family builds actually decreased during this time. While the increase in construction overall is perhaps a good sign for the future, the decrease in demand for single-family homes is likely a consequence of a hurting economy as the pandemic stretches on.
- While October’s data looks promising for construction generally, there are too many variables to predict exactly what will happen in 2021 (ENR). Rising Covid-19 cases and a rocky economy could contribute to a further decrease in construction, or the promise of a vaccine and another stimulus package could expand the industry in the year to come (ENR). If the economy does improve in 2021, it is expected that the construction industry would not fully reflect this growth until the following year. That said, it is very likely that the construction industry will make gains as the economy recovers, but the industry in 2021 will continue to be impacted by the events of 2020.
Overall it appears that while the construction industry has taken a hit in 2020, there is still a demand for residential real estate, and consequently residential construction. The pandemic has and will continue to impact the industry, but people are still choosing to build and buy homes. Initially, multi-family home builds decreased, however, the increase in October could be a sign for the months ahead. If you want more information on whether you should build, please contact us and we will be happy to discuss your options with you!