While repair and maintenance of residential structures has always been considered a dire necessity to keep homes and commercial buildings up to snuff, changing circumstances working against new home purchases are in the process of elevating home repair/maintenance and modernization to the status of a growth sector.
A dramatic post-recession (2008 to 2010) slowdown in flipping — the art of buying a new home, holding it for a short time period, then selling at a nice profit — has just about faded away as a significant factor in America’s huge residential housing subsector, even as the U.S. population continues to soar.
This evolution in the purchase of new homes has been severely affected by the increasing national employment mobility throughout the country, and disappointingly weak when considering current minimum down payments and all-time-low mortgage rates.
While perfunctory repair and maintenance, when needed, have always been an afterthought to keep the multimillion living units throughout the United States from falling apart or growing unusable, current circumstances depressing new home purchases have elevated home repair and maintenance to the level of a fast-growing economic subsector.
Two of the major U.S. firms that specialize in this economic sector, Home Depot and Lowe's, have seen sales and profits grow substantially in the post-recession period, reflecting this evolution into key factors in the current U.S. growth economy. These leading home repair titans have been joined by renewable and modernization developments, such as solar panels.
Also included are advanced heating and cooling systems and the trend toward home additions, both internally and expanding onsite, as millions of homeowners emphasize the upward values of their existing homesteads, rather than contemplating a change in venue.
While the question of a return to more expensive mortgages and higher loan deposits is no longer a matter of if, but when, it’s a near certainty this combination of repair, maintenance and modernization will continue to be a significant growth factor in the years ahead.
When the Great Recession came dangerously close to crushing the post-World War II homeownership rate as a permanent mainstay, no one expected a major rebound in this backbone of most Americans’ asset-based commitment.
The current double-digit growth taking place in a fast-increasing number of U.S. cities has rekindled this concept, enough so as to proclaim that homeownership is back on track as a long-term commitment. This is confirmed by the wide swath of metropolitan areas that are witnessing double-digit percentage price increases in 2015’s first quarter, indicating a momentum that is gaining speed.
Statistically speaking, 51 metropolitan areas posted year-over-year double-digit price increases, in comparison with similar values in 2014, according to the National Association of Realtors.
Although the multimillion-dollar residential extravagances of the big cities (New York City, Los Angeles, Chicago, Dallas, Houston, etc.) have led the parade, this new binge of buying existing homes is spreading to smaller urban centers such as Cincinnati and Columbus, Ohio; and Indianapolis.
When spreading the communications net around the country, one hears stories of homes in the five-figure price segment range, setting pre-recession price records. This trend is showing all the signs of a fixed tangible asset regaining the values once lost.
It’s an almost certainty the spring buying season will keep such unexpected home purchasing maintaining its rapid clip, even spreading to parts of the country not previously participating but beginning to get on the price bandwagon.
When attempting to discern the motivation behind this welcome but unanticipated turn in residential home purchases, the growing monetary accumulation of the post-recession impact stands out as a main stimulus. This is true of foreign investors as well as much of the American public, which has become disaffected with stocks, bonds and business investing in general.
What should not be forgotten is America becoming the world’s third-most populous nation (320 million) in just the last half century. This means a much greater potential than that which existed in the late 1990s.
Despite the major pockets of unemployment that such human acceleration has created, many more areas have the wherewithal to spend judiciously. Obviously the spreading scope of the significant residential house market has become the center of attraction to investors, home and abroad, who have revived the concept of substantial residential structures as a great investment for galloping upward value in the future.
Although it’s already a well-known fact that America’s independent small-business sector generates more expansion than the rest of the world nations combined, little has been indicated about the intensifying role played by the nation’s immigration surge, and the Hispanic population sector’s contribution in particular.
“Immigration entrepreneurs launched 28% of new businesses in 2014, up from 25.9% a year earlier, compared to 13.3% in 1996,” notes the Kansas City, Mo.-based Kauffman Foundation, a nonprofit advisory firm. Its researchers found that immigrants started new companies, or became self-employed, at nearly twice the rate of native-born Americans. This created an average of 520 businesses a month per 100,000 people last year.
Interestingly, immigrants accounted for 12.9% of the U.S. population as late as 2012, the most recent data available from the U.S. Census Bureau. This is up from 9.3% in 1996.
The share of new Latino business owners also climbed to 22.1% in 2014, from 10.4% in 2013 and just 10% in 1996, according to the foundation. Latinos comprised 17.1% of the U.S. population in 2013, according to the most recent statistics, up from 10.6% in 1996. A major reason cited in this increase in startups by Latinos, many of whom are recent or second-generation Americans, is their ability to start “mom and pop shops,” which are prominent in the retail service sector.
According to employment analysts, thousands of these small businesses have added to America’s post-recession employment totals. This has been a major factor in the disproportionate employment growth, as opposed to salaried positions in established corporations, which have represented limited employment opportunities. This is due to the imposition of cost-saving “breakthrough” technology and the increasing regulatory restraint of federal government agencies.
In 31 of the 50 largest U.S. metro areas, immigrants accounted for all the growth in owners of basic businesses, such as restaurants, retailers, dry-cleaning services and beauty salons from 2010 to 2013, according to analyses released from the U.S. Census Bureau. According to interpretive commentaries on this phenomenon, “Many immigrants are quick to identify products or services that could benefit their local communities, in which common backgrounds, language and understanding of these communities’ unique requirements," which gives these recent immigrants the opportunity to fill the gap more adequately than the larger, more established corporations.
Small business concerns
In my ongoing and frequent contact with independent businesses, concerns about their future expansion, and even continued existence, are being heard with increasing frequency. While much of this frustration is related to the uneven and relatively weak post-recession recovery affecting these privately owned concerns, most of the complaints revolve around the issues of “tight” money, “strangulating” federal regulations and the unexpected upward leap of company insurance liabilities.
While the financial world as a whole has never before experienced the current trillions of dollars worth of monetary liquidity, this seems not to have been made readily available to small businesses, which are almost totally dependent on bank loans for growth or even maintenance.
The unanimity of those expressing this frustration blame the financial institutions as being increasingly hard-nosed in their lending capability. The banks, on their part, focus on financial regulations that force them to have the highest reserves ever to maintain the “blessings” of relevant government agencies and the Federal Reserve.
Obamacare is almost universally cited as an insurance back-breaker due to its demand that these privately held companies cover all employees. While such provisions as “previously existing health conditions” are no longer valid as an exclusion, health insurance, in general, has resulted in much higher premiums from major insurance carriers, passing on their additional costs.
Although not yet U.S. government policy, independently owned businesses further fear the imposition of minimum wages, and the compulsory full-employment work week of 30 hours, rather than the 40 hours that had been the basis for full company benefits, as opposed to part-time work.
These ever-louder concerns not only affect existing private businesses — the solid rock of America’s world-leading economic leadership — but seem to influence the hesitation of new business aspirants who are having second thoughts about initiating independent ownership.
While the Obama administration’s priority on “climatological purity” may be noteworthy, government-imposed restraints pose a greater concern to a vast majority of America’s private business establishments, discouraging, rather than facilitating, their economic future.
Are you seeing more home repair/home improvement jobs in your area? Tell us about it in the comments section below!