National developers are investing money in new designs to appeal to millennials and boomers - by David O'Sullivan

David O'Sullivan, O'Sullivan Architects

The year has just begun and no one is quite sure what we are going to see this year. We have a new President who promises to shake things up, a Republican controlled Senate and House and an economy which continues to chug along at a somewhat slow pace. At this time last year few would have predicted correctly what transpired in 2016.

This month I had the pleasure of attending the International Builders Show sponsored by the National Association of Home Builders. It is a nation convention to get an updated economic forecast, discover new products, hear  new trends in our industry and tour homes with the latest innovations. Additionally there are opportunities to network with builders, vendors and design professionals throughout the country. This opportunity is stimulating and always gets me excited to be in the building industry.

Some of the lessons learned include that the economy continues to grow, there are solid employment gains and rising number of household formations which will keep housing on a gradual upward track for 2017. There are signs that millennials are getting off the sidelines and starting to impact the homebuilding industry with more household formations and a strong desire to have a place of their own. Yes, they are moving out of their parent’s homes!

The job creation has been a mixed bag over the past year with mildly disappointing December numbers, but real positive news was that wage growth of 0.4% for December and the 2.9% rise year to year. This is the largest gain since June of 2009. Employment is at its lowest levels since April of 2008 and another healthy sign is the labor participation rate increased to 62.8%. All good signs to continued growth in 2017. The expected annual GDP growth is 2-2.5% for 2017.

The stock market rally is increasing net wealth for families and helps all  401k’s out there but rising interest rates signal potential issues for business and consumers alike in the coming year. As long as they remain small, the economy should be able to absorb the increases without hampering growth.

All these numbers and statistics are great to know and analyze, but do they present a true picture of what is happening in the building industry? Fortunately, attending the Builders Show has allowed me to interact with professionals from many parts of the country. The forecast for ongoing growth and future work appears good for the next year. Architects are all busy working on new projects for homeowners and developers. There seems to be a general consensus that we will see continued growth and builder confidence is high. Many are a little unsure of what the new administration will bring, but feel positive that decreased regulation, tax reform and economic growth will make for a good 2017. The architects who work for some of the national developers are being hired to create new designs for homes, apartments and communities, which bodes well for us all. These national developers are investing money in new designs, getting approvals for a variety of new developments and working to update their offerings to appeal to both millennials and boomers who seem to be creating a strong market for housing.

The one caution I did keep hearing from developers and architects alike was a growing shortage of skilled workers to do the jobs which are being created. Much discussion centered around lack of subcontractors and a vacuum in the trades causing problems with getting things built and potentially slowing growth. Even architects were speaking of labor shortages with very few candidates coming out of schools to work in architecture and engineering. The recession seems to have scared off young people from entering the building industry.

Overall, things seem upbeat and positive for 2017 and with favorable demographics, continued household formations and maturing of the millennials, our industry should see continued growth for the year ahead.

David O’Sullivan, AIA, is the president of O’Sullivan Architects, Inc., Reading, Mass.