No matter which side of the political aisle you stand on, the home building industry can look back on 2016 as an overall success. Among the reasons why: An expanding market saw impressive growth for townhouses and custom homes.
NAHB analysis recently determined that compared to 2015 totals, townhouse construction increased 12%, and custom single-family homes grew 8% in 2016 to a post-recession high. Much of this is due to an easing of credit standards and the return of more first-time home buyers.
The product line of Maryland-based Mid-Atlantic Builders is a prime example of the growing appeal of townhomes. The luxury home builder didn’t even begin producing townhomes until 2012; now, townhomes make up about 30% of its business.
“It’s not so much that people are screaming, ‘I want a townhouse!’” said Stephen Paul, Mid-Atlantic’s executive vice president of business operations. “But rather, urbanization is a primary driver, and building [townhouse developments] allows us to maintain a high-quality brand while giving our clients more affordable options.”
Paul further described the new-townhouse market by likening it to the automobile industry:
“The demand for big, gas-guzzling cars has really diminished in many areas, and manufactures are increasing production of much smaller and more efficient vehicles,” Paul said. “Likewise for housing, consumers – especially those entering the market for the first time – want a high-quality product that’s more affordable and easier to maintain.”
But regardless if their focus is on townhouses or custom homes, builders still need to account for a greatly reduced work force that will likely struggle to keep up with buyer demand.
“I think most would agree with me when I say that 2016 was a great year for home building, but I believe that 2017 is going to push many of us [home builders] to the breaking point,” said Tim Neal, founder and president of Fairfax Custom Homes in Knoxville, Tenn, and Chairman of NAHB’s Custom Home Builders Committee.
“With labor shortages and cost increases, it’s shaping up to be a busy and challenging year,” he said. “I’m booking jobs now that I might not start until July or beyond. We never had this problem even in the boom years of the early 2000s.”
For further details on the growth of these two segments, visit EyeOnHousing.org.