MReport June 2020

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14 | M R EP O RT COVER STORY SPECIAL REPORT: COVID-19 Housing Construction Could Suffer Due to COVID-19 An industry already hampered by a labor shortage could have a rough remainder of the year. A study by the Harvard Joint Center for House Studies (JCHS) forecasts that housing projects may take longer to complete due to COVID-19. The JCHS said that single- family construction had been depressed since the Great Recession, with 12 consecutive years of less than 1 million starts. Starts were growing, although slowly, over the past eight years, reaching 888,000 starts in 2019. There are currently 1.2 million units under construction. The report said one of the reasons that construction may slow could be due to building services offices being closed or adopting new processes. JCHS said many city offices are currently closed to the public as staff work remotely, leading to delays in permitting, reviews, and inspections. While some cities have created online systems to continue accepting permits, some larger cities were not equipped to transition online. The Atlanta Journal-Constitution reported in March that Atlanta was not accepting new construction permits until its online system is running. The U.S. Census Bureau revealed in April that U.S. housing data fell off the cliff during March, with permits, starts, and completions all recorded declines. Housing permits fell 6.8% from February to 1.35 million, hous- ing completions were down 6.1% monthly to 1.22 million, and hous- ing starts recorded a 22.3% decline from February to 1.21 million. Every region in the nation post- ed declines in permits, with the largest drop being the 12.7% drop in the Midwest. The Northeast posted a 32.5% decline in housing starts from February to March. Another cause for slowdowns, according to JCHS, could be whether residential construction is classified as essential work. Six states—Michigan, New Jersey, New York, Pennsylvania, Vermont, and Washington— have stopped most residential construction. New Jersey and New York have special provisions allowing affordable housing projects to continue. The Massachusetts cities of Boston, Cambridge, and Somerville have stopped all new residential construction. San Francisco and Austin have also stopped residential construction but exempt affordable housing projects from the ban. Another reason presented by the JCHS for a possible slowdown is the threat construction workers face. The construction industry was facing a labor shortage before the pandemic, as the number of job openings surpassed 300,000 for the first time in 2019—a 76% increase in two years. On the Verge of a Suburban Boom? The remote-working environment has caused many homeowners to rethink where they want to live. A nalysis by Zillow suggests where homeowners choose to live could be changed due to COVID-19. With more than half of working Americans (56%) being given the opportunity to work from home, 75% said they would like to continue doing so once the pandemic has passed or continue to do so for at least half of the time. Also, 66% of those working from home would be likely to consider moving if they had the flexibility to work from home as often as they want. Just 24% of working Americans say they thought about moving as a result of spending more time at home due to social distancing recommendations. "Moving away from the central core has traditionally offered affordability at the cost of your time and gas money. Relaxing those costs by working remotely could mean more households choose those larger homes farther out, easing price pressure on urban and inner suburban areas," Zillow Senior Principal Economist, Skylar Olsen said. "However, that means they'd also be moving farther from a wider variety of restaurants, shops, yoga studios, and art galleries. Given the value many places on access to such amenities, we're not talking about the rise of the rural homesteader on a large scale. Future growth under broader remote work would still favor suburban communities or secondary cities that offer those amenities along with more spacious homes and larger lots." The Pew Research Center found prior to COVID-19, just 7% of civilian workers in the U.S. had the option to work from, although 40% worked in jobs that could be performed remotely. Zillow also found more consumers are looking at their housing options. In mid-April, page views of for-sale listings on Zillow were 18% higher than in 2019. Information by Zillow says among employees who would be likely to consider moving if, given the ability to work from home, nearly one-third said they would consider moving in order to live in a home with dedicated office space (31%), to live in a larger home (30%), and to live in a home with more rooms (29%). "Moving away from the central core has traditionally offered affordability at the cost of your time and gas money. —Skylar Olsen, Senior Principal Economist, Zillow

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