Real Estate Journal Online

While it looks like new construction is not going to bounce back any time soon in most areas of the country, some contractors are reporting “bright spots” in an otherwise stagnant market. For example, data centers, market rate apartment buildings and manufacturing facilities do appear to have “growth potential” despite low overall new construction starts[1]. Housing and construction remain, according to analysts, the “weak link” in the country’s economic recovery, so any bright spots in this area are welcome[2]. Thanks to a large volume of existing homes at rock-bottom prices on the market and a looming “shadow inventory” that is making many developers extremely wary of starting new projects, it could be some time before the construction and development sector recovers completely. In fact, some in the industry feel that it may never fully bounce back. “Schools, public works projects, hurricane protection in New Orleans, the stimulus projects – these all kept people employed…[and there is] nothing to replace them” as the projects are completed, explains Ken Simonson, chief economist for the Associated General Contractors of America. He believes that even the trend in building toward “market rate apartments” may not be as positive as it originally seems since people “are moving out of their parents basements” (which is why they need apartments) but are still hesitant to “get back into home ownership.”

Do you think that our economy can make a full recovery without construction returning to previous levels?

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[1] http://www.globest.com/news/1899_1899/midatlantic/309354-1.html?ET=globest:e25737:482976a:&st=email

[2] http://www.businessweek.com/news/2011-04-17/home-sales-construction-probably-rose-u-s-economy-preview.html