As 2023 settles itself into late January, we should be vigilant about some of the changing trends and dynamics in the construction industry.  News and media reports are opining about the possibility of a recession and economic strife, which should definitely be grabbing your attention! https://www.equipmentworld.com/market-pulse/article/15303467/construction-market-forecast-2023

Since 2020, the construction industry has been one of the hardest hit as far as supply chain issues, price increases and material being entirely unavailable.  This already presented a challenge to most contractors, but the meteoric rise in price really put a lot of builders in a tough spot with jobs they sold before the price increases went into effect!  It created quite the bottleneck for production!  Couple that with the rate hikes in late 2022 and just when it felt like contractors could breathe for the first time in two years and material prices/availability were becoming palatable again, BOOM; the cost of money itself goes up!

This presented a different type of bottleneck!  Customers who were using personal bank loans, home equity loans, construction loans, or even investor loans began running into issues that were out of their control.  Picture this: A family is pre-approved for a certain loan amount at a certain interest rate and has already begun the process of getting architectural drawings, permits and planning with a contractor for their living room addition!  They are very excited and probably nervous for the transformation to begin!  Then the bank/investor calls and lets them know the interest rate on their loan went up 3%!  What does this mean for the customer and the contractor?

All the meticulous planning, time and money spent on the architectural drawings and now the customer is priced out of doing the living room addition they wanted.  The homeowner is able to put the project on hold, but the contractor who put all the time in the estimate, building the relationship and prepping sub contractors goes home empty handed.  One or two of these situations won’t be a major problem, but if this occurs with a large amount of your residential customers, it could spell disaster.  This is why it is important for contractors to diversify! 

In order to ride the waves on the ocean of interest rate uncertainty contractors must begin to diversify their leads and jobs, incorporate technology to increase efficiency, offer financing if you haven’t already, and nurture the leads, relationships and employees you have currently. 

Contractors, like us here at BLM Construction, love to do residential projects; however, we strive to keep a good portion of our workload commercial and try to capture smaller repairs as well!  We also invest back into our employees and contractors since finding and retaining skilled labor is very important.  These are major factors in how BLM Construction has been able to ride out any financial uncertainty in the market since 2001!  Commercial tenants and commercial property owners/managers view construction through a different lens.  They view these times as an opportunity to increase their market share and strike while most are paralyzed with fear or uncertainty! 

In the spirit of diversification, BLM Construction’s Quarter 1 Promotion to kick off 2023 is geared towards generating commercial leads.  If you or anyone you know requests a qualifying commercial estimate, you will be sent a $25 gift card just for requesting an estimate!  717-650-1472   Call today!!