Attending the recent Great Lakes Builders Show, an annual trade show for the residential construction and remodeling industry put on by the Home Builders Association of Southeast Michigan, gave me an opportunity to get a better perspective on where the industry is headed. And it appears it is headed in the right direction for 2016.

“The economy will be better than 2015, which was better than 2014,” said David Crowe, Ph.D., the chief economist for the National Association of Home Builders,, who was keynote speaker for this year’s Economic Forecast luncheon. “However, it will be a modest recovery. But I think we will still have a strong housing market, and we have a lot of pent-up demand.”

With the improving economy, Crowe expects to see a 20 percent increase in single family construction in 2016, which is barely halfway back to where we were at the peak prior to the recession, but still a positive sign. “We still have a lot of people who would like a new home or would like to move, and we also have very low mortgage rates.”

Yet, even with the pent-up demand, positive forecast and low mortgage rates, Crowe said there are some factors that temper the home building recovery. “Banks that lend money for mortgages are very cautious for a number of reasons, which in my opinion is an overreaction by policy leaders,” he said. “We have some very restrictive underwriting standards that limit even qualified people from qualifying for a mortgage.”

Another issue is the lack of workers coming to the home building industry, partially because of schools moving away from vocational training.

“During the period of slack there wasn’t any reason for people to join the home building industry, but now that we are building back up again, we have lost the younger generation of workers because we didn’t have the pipeline feeding our employment scenario,” he said. “And we lost vocational schools because there were a lot of situations where communities had to cut back on education spending and one of the places they did was vocational education.”

In addition, he said that the relative wage of construction workers, while still better than average, has drifted down a little bit. “That is one bit of advice I give our builder members, that they may have to raise the level of pay to bring people back,” he added

In southeast Michigan, Mike Stoskopf, executive director of the Home Builders Association of Southeastern Michigan,, said there was a lot of enthusiasm among the builders and remodelers who attended this year’s show, and local predictions for 2016 were tracking with the national numbers.

“I think 2016 could be the biggest year for home building we have seen in southeast Michigan since 2005 and 2006,” Stoskopf said. “We are looking at between 6,000 and 6,500 building permits this year, which is a big increase compared to 2015, when we saw less than 5,000.”

In addition to single-family homes, Stoskopf said he sees an uptick in multifamily units being built, due in part to the younger generation looking for their first place to live on their own.

“We are also seeing the style in these new multifamily units changing to look more like condos,” he added.

While the slow, steady economic growth has been good for the home building industry, one thing many people fear is what impact the 2016 presidential election will have on the economy. But don’t count Crowe as one of them.

“I don’t think the underlying strength of the U.S. economy will be greatly affected by the outcome of the election,” he said.

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