Growth for contractors and builders is expected to continue through 2016. In fact, 2015 was the highest record of construction demand since 2008. With a continuing decline of the unemployment rate, housing and general construction employment rates continue to climb.
Single Family Residential Housing
Single family residential (SFR) construction is expected to see the most gains of any avenue within the construction industry. Despite a disappointing 2014, 2015 turned out to be a good year for SFR construction starts. As employment rates increase, so do the opportunities for people to buy housing. The credit market has stabilized over the last couple of years thus allowing more and more people to purchase housing. However, increases in interest rates that are expected to occur will cause many to go into foreclosure which will put a strain on the housing market.
As the SFR sector increases, the multifamily sector will slow down. The more money people have to buy houses, the less interested they are in renting or buying multi-family properties. It isn’t expected to crash, but it will level off rather than see an upward trend. If you are an apartment owner and looking to increase your portfolio, 2016 will be a steady year.
Solar and Alternative Energy
2015 brought about a substantial increase in alternative energy sources, particularly solar and solar contractors can expect 2016 to bring about more business. The increase in 2015 was primarily due to rebates and other incentives from government agencies. Congress passed an extension of the wind and solar federal tax credits. This extension should continue to boost the solar and alternative energy market, especially in California where sunshine is readily available. Some forecasts suggest a 45% increase in solar capacity in 2016.
With 80% of construction firms planning to expand, the insurance market is responding. Insurance companies are offering more options and the rates on insurance lines are soft. This means more lower insurance premiums. If you’re a contractor or just starting a contractor business, now is the perfect time to find out if you can lower your construction premiums.