Signs of a Slowing Housing Market and Revisiting Flood Maps
A Focus on Training Skilled Laborers
President Trump recently signed an executive order that has many companies and trade groups committing to training 3.8 million young and old in need of job skills. No matter what your political leanings may be, the training will provide skills related to the most in-demand fields — and that is a good thing.
Fortunately for us, home builders are talking about training 50,000 in the home construction trades. While in the future — and not an absolute cure for the housing markets inventory ills — lack of skilled labor is often cited as one of the reasons for lack of inventory. And though more inventory is a good thing, it appears it might come just little too late. Last week’s GDP report shows signs that the housing market is slowing down. Residential investment is down three of the last four quarters — which makes the commitment to train new labor somewhat perplexing.
Changes to National Flood Insurance
In other news, Congress passed legislation to keep the National Flood Insurance Program going. Funding for the program was to expire on July 31st. While the funding is necessary to keep federal flood insurance available to homebuyers, there is talk of revisiting flood maps in the wake of recent flooding in places like Ellicott City, Maryland. Some scientists think that recent changes in weather patterns and developments which have changed the land make it necessary to revisit the predictions that were used to draw current flood maps.
Those changes could mean that many homes that are not currently in a flood zone would be.
The need for flood insurance in order to get a mortgage would further impact affordability for many potential homeowners. More concerning might be changes local governments make to code and building requirements in these flood-impacted areas. Those changes could further discourage builders, as construction costs would likely increase. Costs of meeting current regulatory burdens, along with lack of labor, has seemingly impacted inventory in many areas.
These potential changes related to flooding are something real estate professionals and even mortgage lenders should watch closely as any change could negatively affect a local market.