Wrenches Thrown into Construction Recovery

Last week, I had lunch with a very good friend of mine. I used to work for Karen Courtney, a Realtor with RE/MAX Leading Edge, and she was catching me up with the things going on with her business.

She had some closings coming up — one that day, too — and things were picking up for her. However, one big cloud was hanging over her head: The government shut-down had just happened the previous day, and there was still confusion about how this would affect federally-backed loans from FHA, USDA, and the VA. I absolutely cringed when she was telling me all of this. If there’s one industry that doesn’t need another wrench throw into the proceedings, it’s the Construction and Real Estate industries.

Her worries were soon found to be warranted. As it stands right now, the USDA loans department has been shut down completely. FHA loans are being processed, but the customer service department isn’t there to answer questions. The IRS isn’t available to verify tax return information, which affects FHA and conventional loans alike. (These facts came courtesy of Karen’s broker-in-charge.) This doesn’t just affect the people pursuing these loans. It also affects the people who are selling houses, especially if they’re selling their primary residence.

So then this trickles down into the construction market as well. Can you imagine being a contractor finally getting back into the swing of things with some homes being finished and under contract, when all of a sudden, the buyer’s financing is up in the air through no fault of their own?

Here in the metropolitan Charlotte, N.C., market (locally known as Metrolina), things have been going fairly well for the construction industry, all things considered. As it was explained to me a few years ago, the Charlotte real estate market didn’t bubble as high as the rest of the country; therefore, it didn’t crash as hard, either. Thus, a quicker road to recovery was seen. It’s nowhere near as good as it was in the years leading up to 2008, but any upturn is better than nothing. A few days ago, I read there were 1,500 construction jobs added in the area between July 2012 and July 2013 in the Metrolina area (Charlotte, Gastonia, and Rock Hill, S.C.).

Of course, if you want to be a Negative Nancy (read: realist), you’ll notice in that Metrolina was one of only five of 15 metropolitan areas in North Carolina that saw job growth in that year. Much of that growth numbered in the hundreds, not thousands. And the state as a whole saw a 1 percent loss in construction jobs (-1600 jobs) in that same time frame, according to the story in North Carolina Construction News. Considering we work with construction companies in the Carolinas and the surrounding areas, these are pretty important numbers for us to follow.

So what does this all mean? It confirms what we’ve been telling our customers, our potential customers and anyone else who will listen: This is the “new normal,” and you have to run a tight ship in order for your business to succeed.

For people in the industry who are either just starting out or using disjointed or outdated systems, having industry-specific construction software like Sage 100 Contractor, Sage 300 Construction and Real Estate or Sage Estimating — along with the various modules that are available — can help successfully launch a company on the right track or help an established company gain control over its finances. Gone are the heydays when accounting mistakes or errors in judgement could easily be laughed off because money was flowing in like a waterfall.

For our customers who are already using Sage Construction and Real Estate software, we’re trying to guide them to the future. Products like Sage Construction Anywhere, which leverages the power of their Sage software and their favorite mobile devices. Having the power to access project information and track employee time in the field helps to tighten time spent researching data back at the office.

In a nutshell, with so much uncertainty in the market, whether it’s because of the up-and-down economy or an extraordinary circumstance like the government shutdown, companies that have tight controls on all aspects of their company can weather any storm. Having Sage Construction and Real Estate software is the best way to keep this control and lessen any damage by those wrenches.

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