Demand has been good but still not great as we need more Millennials to buy homes; housing starts are at an “ok” level of 1.2 million annually. As you all know, I’ve already preached that 1.4 is the number needed to keep the Waterworks Industry healthy. With public spending improving in many areas (and should be more so in 2019) it was a good year for the vast majority of us, but it was not without its challenges.
Everywhere we turn costs are going up: healthcare, freight, materials, personnel, etc, etc. By midsummer we were shipping orders with our 5th or 6th choice in carriers as the top choices were all booked up. Once we fought through the rising costs of doing business, we got hit with the tariffs of 10% that didn’t help anybody. It’s obviously a good sign for 2019 that China and the United States are talking about the possibility of either limiting further tariffs or rescinding the ones already in place. The first quarter promises to be very interesting politically.
We, unlike the pundits on CNBC, are still bullish on the Waterworks Industry for 2019 and well into 2020 as the country is still in dire need of a comprehensive infrastructure bill that should prioritize water projects and not place them as an afterthought. This is one area both Republicans and Democrats can agree on, and should agree on, and need to agree on.
Even with interest rates at 5% we don’t think this should be a deterrent to keeping the current pace of 1.2 – 1.3 million housing starts in 2019. My daughter Laurissa bought a new house in Hood River, Oregon and her mortgage rate was just over 5%. She was distraught as her last mortgage rate was a full point lower. I quickly informed her that her parents’ first home was financed at nearly 14% so there is a good chance she will survive.
In closing, I want to wish all of you a very Healthy and Happy New Year. We at SIGMA are thankful for all the support you give our 300 plus employees throughout the years and we continue to make improvements in all facets of our business to make it easier for all of you to do business with us.