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COVID-19

What is the COVID-19 economic downturn’s effect on homebuilders?

Amy Scott Apr 15, 2020
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Builders may have to stagger the masons, electricians and plumbers to comply with social distancing guidelines. Frederic J. Brown/AFP via Getty Images
COVID-19

What is the COVID-19 economic downturn’s effect on homebuilders?

Amy Scott Apr 15, 2020
Builders may have to stagger the masons, electricians and plumbers to comply with social distancing guidelines. Frederic J. Brown/AFP via Getty Images
HTML EMBED:
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Housing makes up roughly 15% of economic growth in this country, so homebuilder optimism or pessimism can offer some clues about how the overall economy is faring.

New survey data on Wednesday from the National Association of Homebuilders shows builder confidence fell the most ever in a month, to 30. Anything below 50 is considered negative, and this is the first negative reading in more than five years.

On Thursday, new home construction figures for March will come out. It’s no wonder home builders are feeling pessimistic.

“We looked at communities that were both selling in February and selling in March. We matched up their sales rate and saw a 50% drop, nationwide,” said Ali Wolf, chief economist with the housing data and consulting firm Meyers Research, which tracks thousands of new developments around the country.

Building has also slowed. Many states have designated construction workers as essential, so they can keep showing up on job sites. But Wolf says they still have to comply with social distancing rules, so builders may have to stagger the masons, electricians and plumbers.

“The builders can only send in one trade at a time when normally they would have multiple in there. So this is starting to delay how long it takes to build a home,” Wolf said.

Jeff Caruso, CEO of Caruso Homes in Maryland, says his company is allowing no more than five workers outside a house, no more than three inside a house and no more than two per truck.

“We also have designated people in our company that are literally going job to job and making sure that everybody’s following these rules,” Caruso said.

Caruso says his sales are down probably 80% so far this month, partly because mortgage lenders have tightened their credit standards.

With help from a loan from the Small Business Administration’s Paycheck Protection Program, he’s hoping he won’t have to let any workers go.

COVID-19 Economy FAQs

So what’s up with “Zoom fatigue”?

It’s a real thing. The science backs it up — there’s new research from Stanford University. So why is it that the technology can be so draining? Jeremy Bailenson with Stanford’s Virtual Human Interaction Lab puts it this way: “It’s like being in an elevator where everyone in the elevator stopped and looked right at us for the entire elevator ride at close-up.” Bailenson said turning off self-view and shrinking down the video window can make interactions feel more natural and less emotionally taxing.

How are Americans spending their money these days?

Economists are predicting that pent-up demand for certain goods and services is going to burst out all over as more people get vaccinated. A lot of people had to drastically change their spending in the pandemic because they lost jobs or had their hours cut. But at the same time, most consumers “are still feeling secure or optimistic about their finances,” according to Candace Corlett, president of WSL Strategic Retail, which regularly surveys shoppers. A lot of people enjoy browsing in stores, especially after months of forced online shopping. And another area expecting a post-pandemic boost: travel.

What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?

Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”

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