By Ben Van Der Meer
The Covid-19 pandemic might have come out of nowhere and had widespread impact on the local and global economy this year, but one component of the economy didn't take much of a hit: homebuilding.
In the North State Building Industry Association's 2021 forecast event Thursday, experts said they don't see the upcoming year as a bad one either, even if the coronavirus is still a ways from being curbed.
Here are some takeaways from the presentation.
- The next hit to local economies, presuming lockdown measures don't come back into full effect, will be local government budget gaps, said Sanjay Varshney, a finance professor at California State University Sacramento, and economist for the Sacramento Business Review. As tax revenues come in below expectations, budget managers will have to make tough decisions about layoffs, he said.
- At least for new homes, supply will remain depressed for a number of years, said Leonard Miller, CEO of The New Home Company Inc. (NYSE: NWHM). The major reason, he said, is a lack of buildable land in markets like Sacramento, as well as fewer companies getting entitlements for larger master plan projects.
- Greg Paquin, of Folsom-based homebuilding consultancy The Gregory Group, said new home sales this year in the Sacramento region will hit 7,200, about where they were in 2007. Next year will still be strong, but not as frenzied, as economic issues and the pandemic deflate pressure.
- With his company seeing month-over-month sales increasing since the pandemic, Miller said he believes the upswing could last a couple years. "If it still feels healthy in March, we have a good run ahead of us."
- But another trend affecting home sales, the dramatic shift to work-from-home, might not have the same legs. Both Varshney and Paquin said in the long run, companies will begin to value employees working together in an office environment again. "I won't be surprised if tech companies saying you can work from anywhere are going to be reversing on that," Varshney said.
Read more by the Sacramento Business Journal here.