Usually, I have topics dancing in my head all of the time. Well, not always dancing. Some of them just lounge around. So, I’m running a little late organizing my thoughts, my apologies. Like John Lennon said, “Life is what happens while we make other plans.” Amen. This past week was challenging. Extreme heat, Political uncertainty and extreme weather seemed to top the nightly news. However, an article caught my attention as I am hyper aware of economic trends that affect us all but most certainly home building and remodeling projects.
The article I read postulated why we don’t feel the recession the author asserts is here. According to polls cited in Newsweek, about two-thirds of Americans feel a recession will be here by the end of the year. Many of us don’t feel it’s coming but rather, that it is here. I’m one of them. Paul Krugman said in March that a recession is “likely”. Not an exciting guy but wicked accurate in his projections. Other polls show a 3/5 majority of homeowners feel a “silent recession” is here. The answer is in there somewhere as I also feel the art of polling is a craft in decline. Too few samples and unverifiable demographics. Welcome to the internet! However, this article was interesting because it seems most plausible. The author stated that, seeing a probable recession on the horizon, large retailers, wholesalers and suppliers dug deep into reserves and bought significantly more inventory than normal to fill the coffers with “pre-tariff” inventory. One can argue that they were actually trying to help not just their bottom line but the consumer. It’s just good business and not a flash of altruism! If accurate, smart. Unfortunately, that inventory will run out and the impact of the tariffs will hit like a pie in the face. It’s only funny in Three Stooges Movies. They feel 30 to 120 days from now pending the products. They also surmised that shipping has, and will, play a role. After the great Covid shipping debacle, shippers have addressed systemic flaws with impressive results. You can now get a product online about as fast as you can go to the store! Not exactly but still pretty impressive. So, what’s my point?
If you have a project designed and permit ready, the sooner you break ground, the better. We source a great deal of lumber from Canada. A staggering tonnage of metal connectors for framing comes from China. Then there is tile, steel, copper, stone, solar panels and so much more. In other words, much of your project’s components come from outside of our borders. So, if you can launch, it could save you significant expense. Also, as materials bear the weight of tariffs, consumer purchases will slow and so will restocking orders by the vendors. Shipping times will increase and interest carry will lengthen. It’s a compounding spiral.
I realize that this may seem contrary to my previous recommendations. Not really as my outreach has been to homeowners that see a significant home project on the horizon. My advice has been to us this window of uncertainty to plan your project and begin the process of vetting builders. To that end, I see homeowners starting a journey they should be prepared to take about a year. Pending the twists and turns most certainly in the road ahead, maybe more.
This is our current reality. To “whistle by the graveyard” is unwise. These economic realities are here for a while. Try to understand them and act accordingly. If things will be more expensive tomorrow, buying them at a lower cost today can’t hurt. In light of that thought, what about the homeowners that are not prepared to launch their project? Well’, as I have said, begin the planning process. However, a very good parallel strategy is to make a concerted effort to bring all of your home maintenance current. Roofing, painting, repairs, etc. For now, I imagine those costs are as low as they will be for some time. Keeping your home in tip-top operating condition through uncertain times is one less uncertain thing. It brings an unwanted “surprise” to a place of controlled management. Your little patch of the Earth is your equity in America, as much or more than anything you own. Protect it, care for it and it will serve you in like kind. Regardless, now is the time, if you can.
Until next time…
