Faster apartment building was instrumental in pulling the U.S. housing market out of its slump a decade ago. Now, that engine is starting to throttle back.

A softening in the multifamily segment is something to keep an eye on even as overall homebuilding — which includes single-family dwellings that make up the largest share of the market — is expected to keep moving forward.

The supply of apartments and condominiums has surged in recent years as builders responded to rising demand, fueled in part by young Americans who preferred to rent rather than purchase a home in the aftermath of the recession. A surge in prices for single-family properties, as the real-estate market recovered from its 2006 plunge, also made apartments more attractive for both builders and people unable to buy.

The following charts show how multifamily construction is maturing and what that implies for the economy.

Many of the recent projects are finished and ready to rent. A Commerce Department report on Friday showed completions of multifamily units in October reached the fastest annualized rate in almost three decades.

What’s more, the pipeline of apartments under construction is leveling off from a 42-year high reached at the start of 2017. And the number of multifamily units authorized but not yet started also is cooling as builders attempt to calibrate the supply.

While new multifamily-home construction and permit applications are both still rising, there’s less incentive to keep building with as much intensity. By 2016, multifamily starts had recovered 96 percent of the ground lost during the downturn, while the single-family market was just at 45 percent, according to a report this month from Dodge Data & Analytics, which provides construction-industry data.

Apartment construction spending may retreat 8 percent in 2018, the second consecutive annual decline after years of double-digit growth, Dodge estimates.

Among some other warning signs, rental vacancies have climbed to a two-year high as demand is getting crimped by the 33 percent runup in rents during this economic expansion.

The effects of any slowdown in multifamily housing will have repercussions in the broader economy and extend to other data. First, an adequate supply of apartments — both ready and in the pipeline — could eventually put downward pressure on rental prices, slowing growth in shelter costs that have been propping up inflation so far. Shelter accounts for about one-third of the consumer-price index.

A more tempered pace of apartment development would free up construction workers who builders say are in short supply. That would be welcome news for single-family homebuilding, which requires more labor relative to multifamily construction. The number of one-family houses under construction in October was the highest since July 2008, boding well for industry payrolls.


-Shobhana Chandra, Vince Golle and Jordan Yadoo


Tips on How to Choose the Best Software Solution for a Construction Company

Small and mid-sized builders always tend to look for additional construction software solution that can save them money. There are many solutions out in the market making it difficult and sometimes impossible to decide which one is the best software. Large size builders have a dedicated team helping them navigating through these issues but the technical knowledge is not there. The ideas and process of selecting the right construction software need to be championed by a construction pro that understands the pains and issues when the decision is not right.

Trending Software Solutions

recent report by one of the most acclaimed construction software services amongst builders, Software Advice, is helping builders in visualizing what they need to know before buying a construction software.  The report, the third of its kind, indicates that small and mid-size builders tend to improve their estimating and project tracking areas. The trend acknowledged the idea of having products functioning through all steps during a construction project, starting during the planning and ending up during the close-out process. Construction software with the functionality of adding tools and extensions facilitating the integration with their existing tools is another concept these builders are looking for. The following paragraphs summarize the software report and are very helpful for your daily operations.

Why a New Construction Software?

The majority of the builders and construction companies who are looking for new software, are doing it so because they know it is the best for:

  • Expand and grow
  • Standardize their processes
  • Avoid costly lawsuits

The new technological solutions will help train new employees, make workers more efficient and keep track of all changes and modifications to existing contract documents. The new software will save money to your daily operations and can free up resources so they can devote their time to additional tasks.

Many RFP’s are now asking builders and contractors for technical and detailed data that can only be captured or processed by new construction software solutions.

Estimating Software

More than 50 percent of the small builder contractors still use pen and paper to do their estimating and take-offs, making it harder or diminishing the opportunity to increase profits or being more accurate with the right construction software. In addition to that 50 percent, other 13 percent of these companies use QuickBooks, a non-construction related software, to manage their financials and just 1 out of 4 builders is looking to update their software. One of the key aspects, builders need to focus on is software that can track and maintain records of who is using the software and how the information is shared.

A solid estimating software should be good enough that can help you in the following areas:

  • Reduce or minimize manual inputs
  • Cuts the time of generating estimates and take-offs
  • Generate accurate estimates and the right numbers for your bid
  • Avoid mistakes or reduces omission errors

Project Management Software

The report and by personal experience, many contractors and builders will look for project management solutions that can streamline their processes.

However, it is noted that most of the builders want to have better communication and clarity while tracking documents, RFI’s and change orders. This type of software along with PMP oriented professionals is the difference between successful contractors and those that look disorganized. Project management software is helpful when sharing prints, RFI’s, change orders, as-builts, and photos. A solid construction software must have the capability of multiple users, be able to run on different platforms, be available on the go and provide cloud services to store project files on a secure server.

Construction Software Solution Features

Builders and contractors seem determined to get software with some common functionality and features allowing them to be productive, on time and within budget. The most common features builders and contractors look on a software are:

  • Cost Estimating
  • Measure takeoff
  • Accounting & Cost Control
  • Project and Schedule tracking
  • Document management, storage and communication
  • Materials and inventory control
  • Bid proposals and project templates
  • Mobile access

It is important to indicate that new technology also integrates data captured by drones, photos or aerial imagery and material tracking. Specialized features are available for all of this new technology, like sensor-equipped drones helping in surveying and safety audits, disaster assessment and recovery efforts. Some other technologies like BIMrequire unique requirements and skills but in the long run, the benefits will outweigh the cost of this technology. RFID software is another one of the latest additions to the construction software solutions, making it easier for companies to track their assets, tools, vehicles and equipment using the concept know as geofencing.

Buying Checklist for Construction Software Solutions

According to the report, builders need to focus on the following areas:

  • Will the new software speed up my actual processes?
  • How transparent the software can be?
  • How can the software improve tracking and accountability?
  • What is the level of accuracy of this software (applicable to estimating software)?
  • What other features or other programs can be linked to this software?
  • Does this construction software addresses a specific industry problem?
  • How will this be able to modernize my business and operations?
  • Will this require multiple licenses and fees during the course of the project or the life of the product?
  • How many years does the company have developing construction software?
  • What type of technical support do they have to offer?
  • Will the software rep train my workers?
  • Is the construction software designed to operate in multiple PC operating systems?
  • How mobile can this new technology be?
  • How will the merger or transition process protect my data?

Once you have all these questions figured out and all of your doubts are answered, then you are able to complete the investment with your prefer business solution. For more information, you can have access to the report at the Software Advice website.

-Juan Rodriguez


November 22, 2017

  • Real residential and nonresidential construction investment, adjusted for inflation, was 6.2% of U.S. gross domestic product in 2016, according to the Associated Builders and Contractors, a part of the industry’s seven-year economic contribution high.
  • The ABC reported that indirect spending as a result of construction activity — furniture and appliances for finished projects, how workers spend their wages — added an estimated 2% to 3% to the overall benefit the construction industry provided to the economy. The Bureau of Economic Analysis’ estimate of the value added to national and state GDP, a figure that excludes the cost of materials and certain other purchased services, was 4% in 2016, its highest level since 2008.
  • Idaho (+10.7%), Georgia (+9.4%), South Carolina (+9.4%), Florida (9.3%) and Oregon (+9.1%) saw the biggest 2016 increases in real value added from construction, while Mississippi (-2.5%), West Virginia (-7.5%), North Dakota (-10.5%), Wyoming (-11.5%) and Alaska (-13.2%) all experienced the greatest declines. Eighteen states experienced greater growth in 2016 than they did in 2015.

If $84 billion in promised Chinese investments comes through, West Virginia could see its real value added from construction increase significantly. China signed a memorandum of understanding with the U.S. earlier this month that would see that country sink money into the state’s shale gas and chemical manufacturing industries through a period of 20 years. That move, which needs to be finalized, is considered to be part of China’s attempts at securing multiple fuel sources and transitioning to cleaner energy.

Alaska could also benefit from the $250 billion in economic deals President Donald Trump struck on his recent visit to China. The Alaska Gasline Development Corp. is in the process of firming up a $43 billion deal with Sinopec, Bank of China and China Investment Corp. for a trans-Alaska gas line that could create as many as 12,000 construction jobs. Alaska’s workers — and economy — would benefit from the construction process, but it is likely that some of the fabrication of modules used for the gas line itself would be manufactured in China.

The U.S. Gulf Coast is also set to see an uptick in construction activity for 2017 as crews work to rebuild after a particularly devastating hurricane season. California has also embarked on a major construction effort after wildfires, according to The Los Angeles Times, destroyed 14,000 homes and generated at least $3 billion in insured losses as of Oct. 31.

-Kim Slowey

November 17, 2017

Construction of new homes in the United States climbed 13.7% in October, the biggest jump in a year, as builders broke ground on more apartments and single-family houses. But the increase wasn’t spread nationwide: Construction declined in the West.

The Commerce Department said Friday that the monthly gain put U.S. housing starts at a seasonally adjusted annual rate of 1.29 million units. That is the best pace for home construction in 12 months.

Housing starts have risen just 2.4% year-to-date, largely because fewer apartment complexes are being built. Construction of single-family houses has driven much of the growth this year, a sign of greater demand from buyers in a healthy job market.

But recent building trends reversed somewhat in October, with most of the momentum coming from apartment construction. The building of multi-family properties jumped 37.4% in October. Construction of single-family houses increased 5.3%.

Still, the building of new homes has done little to alleviate the growing shortage of existing homes for sale. This shortage has started to stifle the broader real estate market. Purchases of existing homes have fallen over the past 12 months, according to the National Assn. of Realtors. The decline largely reflects that there are 121,600 fewer homes on the market during the same period, a 6.4% decrease that new construction has been unable to offset.

“For a significant increase in new homes, municipalities are going to have to work harder to make more land available for building,” said Robert Frick, a corporate economist with Navy Federal Credit Union.

Construction in the South rose 17.2% last month compared with the month before, a sign the region is regaining its footing after damage from hurricanes Harvey and Irma. Home construction shot up 42.2% in the Northeast thanks to groundbreakings for apartments. Construction increased 18.4% in the Midwest, but it declined 3.7% in the West.

Building permits, an indicator of future construction, rose 5.9% in October to 1.3 million.


Source: LA Times


November 1, 2017

  • There’s a proposal being considered to pool together builder and crew resources in some of the hardest hit areas of the recent California wildfires.
  • Experts say the approach worked before in other California disasters and could lower the cost of rebuilding.
  • Last month’s wildfires damaged or destroyed more than 14,700 homes across several counties in Northern California.
  • One homeowner who lost a home said, “It’s a bleak and scary future that we’re looking into, and we have to find a way to wade through those murky waters.”

Thousands of homes lost to last month’s devastating wildfires in Northern California could be rebuilt faster and more efficiently using production-scale techniques, according to industry experts.

Indeed, a proposal is being floated to pull together construction and crew resources to rebuild whole communities or streets lost in the wine country wildfire disaster. This mass-building approach could become particularly important as contractors say they are already being inundated with calls for rebuilding requests and some worry about shortages in skilled labor and materials.

“Because we have such a large situation, we have to think beyond our own property lines,” said Julia Donoho, an architect and attorney in the Santa Rosa area.

Backers of the approach say pooling together resources could allow for strength in numbers and increase overall efficiencies in the use of skilled crews, site supervisors, equipment as well as the purchase of construction materials. It also might be a way to get fire victims back into their homes faster.

Overall, last month’s wildfires damaged or destroyed more than 14,700 homes across several counties in Northern California. Sonoma County bore the brunt of the disaster but there also was destruction in Napa, Mendocino, Lake and a few other counties.

Sonoma County lost about 5,000 homes, and Santa Rosa — the largest city in the county — had 3,000 homes destroyed and entire neighborhoods wiped out. The homes lost in Santa Rosa represent roughly 5 percent of its housing stock.

In addition to the property losses, there also were at least 43 fatalities linked to the Northern California fires, with 23 in Sonoma County.

Donoho said she’s working on a project to rebuild all of Santa Rosa’s Coffey Park neighborhood and talking to homeowners about what they’d like to see in the rebuilt community.

About 1,300 homes were lost in Coffey Park, a middle-class neighborhood. There also were higher-end neighborhoods lost that might not lend themselves to production-style rebuilding since there may be too many customized features, industry executives say.

In any event, some believe the rebuilding process could take 3 to 5 years to complete and note that the current priority is a government-led hazardous and toxic waste cleanup at burned homesites. State officials have said they expect the rebuilding to start in earnest in the springtime.

“Some of the homeowners want to be back in so quickly that we should just rebuild with the plans with modern standards that they already had, and that would give them the fastest permit,” said Donoho. “Other people have ideas about redesign. So we need to find the right balance.”

Added Donoho, “We don’t just want a few houses back, we want our whole neighborhood back. If you get your house back, but you don’t have a neighborhood of houses around you and you’re surrounded by 10 years of construction.”

Jeff Okrepkie, an insurance agent in Santa Rosa who lost his home in the wildfires, said grouping together homes to rebuild sounds “great but it’s hard to get this whole process figured out right now.”

In fact, there is still an ongoing process of fire victims going over losses with insurance adjusters to see how much in proceeds they will get. Some also are dealing with banks who hold the mortgages to homes.

“It’s a bleak and scary future that we’re looking into, and we have to find a way to wade through those murky waters,” he said.

Okrepkie said even before the wildfires there was a “massive labor shortage and a lot of that has to do with the rental and home market up here. Pretty much everybody who could swing a hammer who was reliable already had a job. It will get worse because we just lost that many residential structures.”

In Sonoma County, there’s also believed to be fewer than six major homebuilders that can construct multiple homes or residential developments.

“When you start looking at the numbers, we’re going to need people from somewhere else to help do it,” said Okrepkie.

At the same time, there are concerns the new construction crews coming to the area will only exacerbate the region’s housing shortage.

Even so, pooling together resources might attract more interest from established builders and contractors from outside the Northern California region.

A large production-scale rebuilding approach was utilized previously in California wildfires, including in 2003, 2007 and 2008. The biggest of those was in San Diego’s Scripps Ranch community after the 2003 Cedar fire, a deadly blaze that destroyed a total of more than 2,300 residential properties in the region.

A handful of builders were responsible for rebuilding hundreds of the homes lost in Scripps Ranch. That effort took several years and some of those same firms already have shown an interest in participating in the rebuilding.

“With 6,000 homes and the devastation that we’re seeing, we think we could offer a helping hand,” said Jeff Pack, an executive with Stonefield Companies, a San Diego-area homebuilder that helped rebuild homes after the Cedar fire and wildfires in Southern California.

Added Pack, “They are going to need a lot of help up there in rebuilding. It’s going to be a massive effort with the amount of homes that have been lost.”

Stonefield already has made inquiries to see about the availability of its subcontractor pool to assist in Northern California. The company could use its playbook from the Scripps Ranch fires to keep the costs down.

“Our blueprint down there allowed the homeowners to team up together and that allowed the cost spreading to occur from architectural plans to contractor superintendent onsite to site supplies to different tractors that the subcontractors needed to use,” said Pack.

Residential insured losses from the recent wildfires totaled more than $3 billion, with the claims total expected to go up, California’s insurance commissioner announced Tuesday. The insured losses in Sonoma County exceeded $2.6 billion.

“Doing a group rebuild is a way to lower price so people can afford to rebuild,” said Kenneth Klein, a California Western School of Law professor and expert on natural disasters. He said insurance industry data shows about 80 percent of the homes in America are at least 20 percent under-insured, meaning they do not have enough insurance proceeds to replace their homes to the state it was prior to the destructive incident.

Klein, who lost his Scripps Ranch home to the Cedar fire, said almost all of his neighbors decided to do a group rebuild after the 2003 disaster “because it was the obvious way to deal with the gap in insurance proceeds and rebuilding your home.” That said, Klein notes he had “full insurance” to cover all his home’s losses but still ended up building in tandem with a neighbor.

By Jeff Daniels


October 27, 2017

The eight prototypes, erected in the San Diego area, will now undergo a testing and evaluation period by CBP.

The Department of Homeland Security’s U.S. Customs and Border Protection (CBP) announced late on Thursday that construction of eight borderwall prototypes for the U.S.–Mexico boundary is complete. Located in the San Diego area, these barriers will now undergo a 30- to 60-day testing and evaluation period to “determine which wall design elements meets our needs,” CBP writes in a press release.

“Border security contributes to our overall national security and relies on a combination of border infrastructure, technology, personnel, and partnerships,” said acting deputy commissioner Ron Vitiello in the release. “Border walls have proven to be an extremely effective part of our multi-pronged security strategy to prevent the illegal migration of people and drugs over the years. Specifically, walls are part of a border enforcement zone, which includes patrol roads, lights and surveillance technology. These border enforcement zones give our men and women of CBP the best possible conditions to maintain a safe and secure border.”

The borderwalls must have anti-breaching, anti-climbing, and anti-digging capabilities, deny traffic, and be safe for CBP agents. These prototypes are intended to guide future borderwall design standards, and if deemed successful, CBP will expand the current borderwall toolkit.

As previously reported, the prototypes were each expected to reach 18 to 30 feet in height and cost between $400,000 and $500,000. Of the 1,900-mile continental divide, approximately 1,200 miles of the border is adjacent to Texas. As such, “the government would also have to seize land from private landowners, ” the New York Times reports. “About 95 percent of the land in Texas is privately owned, and by some estimates, hundreds of parcels would need to be taken to construct a wall.”