Life During Quarantine: Increased Construction

Life during Quarantine has made us all look closely at how we spend our time, who we spend it with, and most of that at home.  When we last were talking, I brought up the subject of the home real estate market. It has been a flurry of activity. In the past, especially around 2005, there was a boon in the number of houses being bought and sold. This had a direct impact on many industries, especially the arts and home goods.

NEVER have real house prices risen so fast, for so long, in so many countries. Property markets have been frothing from America, Britain, and Australia to France, Spain, and China.

Rising property prices helped to prop up the world economy after the stock market bubble burst in 2000. What if the housing boom now turns to bust? According to estimates by The Economist, the total value of residential property in developed economies rose by more than $30 trillion over the past five years, to over $70 trillion, an increase equivalent to 100% of those countries’ combined GDPs. Not only does this dwarf any previous house-price boom, but it is also larger than the global stock market bubble in the late 1990s (an increase over five years of 80% of GDP) or America’s stock market bubble in the late 1920s (55% of GDP). In other words, it looks like the biggest bubble in history. https://www.economist.com/special-report/2005/06/16/in-come-the-waves

The reason prices have been on a roller coaster for the past 25 years is that we never have had enough activity in housing construction.

Worries are mounting over home prices flirting again with the stratosphere, even as we claw out of recession. Here we go again, it seems. Too much money. Too much borrowing. Too much activity in housing construction. Just another wave in our bubble-and-bust economy. But this gets it wrong. The reason prices have been on a roller coaster for the past 25 years is that we never have had enough activity in housing construction. This was true even in 2005. In the past 25 years, the number of homes in the United States has risen by 25%, and the population has risen by 24%. That may sound like enough housing, but in the 25 years before that – because of long-term trends like smaller families – the number of homes increased by 60% to accommodate a population growth of 30%. We have stopped building enough – and, oddly, one reason is that we’re too focused on price alone. We often think of those people burned by falling prices because they borrowed or lent into hot housing markets before the crash of 2007. We think about how, over the past two or three decades, home prices have had a devilishly cyclical influence on the economy. And about how rising home values have enabled debt-fueled consumption during economic expansions, and how foreclosures and negative equity have worsened economic contractions. https://www.usnews.com/news/cities/articles/2021-05-07/we-need-a-building-boom-to-avoid-a-housing-bubble

By considering, global COVID-19 pandemic affecting 2019 countries and territories across the globe, the global Carpets and Rugs market report is compiled in order to meet the user’s expectation along with the present and future market scenario. The nationwide lockdowns and global recession has disrupted the respective market economy which is acknowledged in the research report. The top major market players operating in the Carpets and Rugs market by meeting or exceeding the end-users expectations and need are profiled in the research report. The associated information includes company overview, financial overview, product portfolio, regional presence, strategic development strategies are covered. https://www.marketwatch.com/press-release/carpets-and-rugs-market-study-applications-types-and-market-analysis-including-growth-trends-and-forecasts-2021-to-2028-by-ameco-research-2021-05-27?siteid=bigcharts&dist=bigcharts&tesla=y

Global art sales fell 22% in 2020 to $50.1 billion, UBS and Art Basel’s Art Market Report published on Tuesday showed the steepest market drop since the financial crisis. But the picture was uneven, as buying by the ultra-wealthy, notably from Asia, held up. In contrast to the 2007-2009 financial crisis, when many of the world’s rich lost money, the super-rich has become richer during the pandemic as financial stimulus and volatile markets served to increase their fortunes. Big auction houses, led by Sotheby’s and Christie’s, were already used to telephone bidding and online sales, and so could pivot relatively easily to appeal to cash-rich clients. Both reported an overall dip but saw record online activity and resilience among Asian buyers, while pre-pandemic trends of interest in Black, female and living artists were reinforced. This year, they hope to build on that, capitalizing on an influx of young collectors who have found the online world more accessible than old-style auction rooms, and as more traditional buyers yearn to return to the real world. “There is enormous pent-up demand for experiences and even spending, once there’s a bit more stability and predictability,” Sotheby’s Chief Executive Charles Stewart told Reuters. “We have the potential for just the biggest boom for a period of time, assuming that we get to a place where people are comfortable leaving their house.” https://www.reuters.com/world/china/one-year-into-pandemic-art-world-adapts-survive-2021-03-18/

“A lot of people moved to Wyoming just to have their kids in school this year,” Laible said. “When you’re living in a big city during the pandemic, a place like Sheridan looks a lot more appealing, especially when you can work remotely.”With new residents moving to the state, and an increase in remodeling projects during the lockdown, the demand for construction materials far outpaced the limited supply of lumber, Laible said. “The mill production was way down, and demand went through the roof,” Laible said. With the increasing demand for building materials, prices skyrocketed, Jensen said. Nowhere is this clearer than in the cost of oriented strand board, which currently sits at $61.84 per sheet. This is a 786% increase from last year’s cost of $6.98 per sheet. But all wooden materials are seeing a price increase related to the increased demand, Jensen said. Wooden studs, which used to cost between $4 and $5 depending on length, are now between $15 and $17. Steel studs, typically the more expensive option, are now half the price of wooden studs, Jensen said. Due to high material prices and low supply, Excalibur is adapting where it can, Jensen said. Some changes are easy, like switching to steel studs. Others, like addressing the OSB issue, are more challenging.  As we move into June, materials are increasing, gas pricing as well. It will be interesting to see what happens when we all get into our new version of normal. https://www.thesheridanpress.com/news/local/low-supply-high-demand-for-materials-force-construction-companies-to-make-adjustments/article_75e1368c-bef8-11eb-8f8e-5f6f5070f02e.html