New Construction Update: How Job Growth, Population Growth and Different Generations Play into Today’s Market

by Nichole DeMario and James McClister


Since 1960, construction and job growth have run parallel to one another, maintaining a seemingly symbiotic relationship that has helped shape and ultimately define the homeowner landscape. For more than half a century, national construction levels have been largely determined by job growth, with builders following a simple ratio of one single-family home for every 1.5 jobs created. That ratio has held firm through economic dips, legislative battles, government shifts and a countless slew of national calamities, but as we look back at the most devastating recession since the Great Depression, it becomes unclear, at least in the short-term, whether we should maintain the battle-tested status quo or move towards a more innovative and malleable strategy that takes into account contemporary hurdles.

In a study released by the National Association of Realtors, an in-depth evaluation of the country’s construction activity over the last three years revealed that while more than a dozen states were keeping to the old building standard, the majority were failing to keep pace. The association immediately branded the finding as a negative indicator, suggesting that a dip in construction was the first step on the path to exacerbated housing shortages and rising home prices. But in a rebuttal, made via an article published by The Wall Street Journal, the National Association of Home Builders rejected these claims, saying that instead of seeing the developments as a red flag, we should be reevaluating the short-term use of the 1:1.5 ratio, and looking at the industry as a whole to see what affect the recession and new trends in homebuilding were having.

In Chicagoland, despite being a unique market, the question remains the same as anywhere else: What do people want, and what are builders building for consumers? 

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