Sequestration & Homebuilding

Sequester1By Matt Henke, Builder

For many of us, “sequestration” is new to our vocabulary. It has only been in the past few weeks that it has repeatedly made headlines. To clarify, sequestration refers to federal budget cuts to discretionary accounts. The military and Medicare are a few of the largest budgets hit by these cuts. There has been much talk about what the cuts mean for consumers. It also begs the question, what does it mean for home-building?

It really depends on who you ask. For builders providing homes for military and federal employees, the future is in flux. As federal budgets are cut, so are federal payrolls, which means less federal jobs. And that of course means less home purchases by these employees. Only time will tell the long-term affect of these cuts on federal employees.

The affect of sequestration for home-building on the general public is less clear. Immediate feedback seems to suggest that the market rebound for housing is strong. But that may not last if the cuts become more long-term. Only time will tell. For the general public the real question is consumer confidence. If home buyers begin to lose faith in the US market, then they will be less likely to purchase new homes. However, even if consumer confidence does falter, median income housing starts may diminish while upper income housing starts could remain strong.

For now we can enjoy the housing rebound and start looking for a great lot to build our dream home.