D.C.’s Construction Industry and COVID: Where Do Residential Builders Stand?

Construction in the D.C. metro area is generally a stable industry. And of all the construction sectors, residential is by far the largest. Area housing is always high in demand and, with a large presence of government, military, and contractors continuously moving into the area, this helps keep the local real estate market dynamic.

DC Construction residentialLet us take a look at how the D.C. region's residential construction sector performed before, during, and what it will likely look like after the COVID-19 pandemic is over.

Before the pandemic

In the years prior to the pandemic, the D.C. metro area was producing 13,000 fewer housing units per year than needed and the current supply of available homes didn't meet demand. This is despite the uptick in residential construction which, according to statistics, was 18 percent above the long-term average. The DMV is also experiencing a huge shortage of skilled construction workers, especially with a net gain of 313,000 jobs in February 2018 and 222,000 in February 2019.

During the pandemic

Once it was clear COVID-19 had reached pandemic level in the United States, the entire D.C. metropolitan area shut down. Construction was shuttered, but this was temporary. It wasn't long before the District of Columbia, Maryland, and Virginia declared construction an essential industry.

The residential construction sector, like almost every other industry sector, initially saw a steep decline in the early months of the pandemic. But as demand for housing surged and officials allowed construction companies to operate, some workers were permitted to come back to work and, by June 2020, this sector had stabilized. This does not mean resuming operations did not come without its challenges.

  • Workers had to adapt to a new normal with social distancing, masks, sanitizing, disinfecting, and other requirements.
  • COVID-19 precautions meant projects were postponed accommodating safety measures.
  • Supply shortages and other delays caused disruption of construction timelines, resulting in building out of sequence.
  • Subcontractors had to coordinate differently to keep on schedule.
  • Historic low interest rates contributed to high buyer demand, putting construction companies under pressure to build despite challenges.
  • Builders heavily leaned on technology to continue operations and sales.

As demand for housing surged, new homes represented about 1 in 5 properties for sale in April 2020 (for comparison, this figure was 1 in 6 in April 2019). Projected sales of new build homes exceeded industry expectations for the region.

In May 2020, the U.S. Bureau of Labor Statistics (BLS) reported numerous types of construction jobs showed increases. Other statistics showed construction (listed under the umbrella category of "Mining, Logging, and Construction") in D.C. remained relatively steady from February 2020 to April 2021 with an overall 1 percent increase in jobs.

Looking toward the future

As long as the housing demand holds out, the residential construction sector appears to have an optimistic future. BLS projects construction, as a whole, to see average to greater-than-average rates of job additions.

  • Construction managers are expected to grow by 8 percent (much faster than average) through 2029.
  • Construction laborers and helpers are anticipated to grow 5 percent (faster than average) through 2029.
  • Construction and extraction jobs are projected to grow 4 percent (average growth) through 2029.

Not only are jobs high in demand and, in some cases, even harder for companies to fill, but it is also spun off and created new opportunities for people who previously worked in other industries. For example, last year Van Metre Homes formed a video department tasked to create "lifelike virtual tours" and the ability for buyers to redesign rooms in their custom-built homes.

Chances are, like the real estate industry, residential builders will continue to lean on technology to help throughout the build, sales, and closing processes. It is highly possible as the industry adapts to survive in a new normal, it will create a secondary market of construction job opportunities.

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