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Just How Badly Did Home Building Decline

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					Just How Badly Did Home Building Decline?

The construction industry took a beating due to the financial crisis.
Just how bad did home building decline? It depends where you look but
overall, the numbers are very frightening.

In a report released recently, new order for homes built in the third
quarter of 2008 was down 25% compared to last year. In numbers, that is
2,002 homes for this year compared to 2,660 homes in 2007.

Because of what is happening in the economy, there was increase in the
number of cancellations from 24% last year to 27% this year. While real
estate companies tried to curb the trend by offering it to other
potential buyers, the market wasn’t biting which is why there were a lot
of homes that were never sold.

In terms of home building revenues, that roughly translates to $928
million. If you think that is still good, look back at the sales
performance last year and you will see that it was lower by 27%. These
figures go on and on and they are really depressing.

So are companies making money? No and the worse part is that construction
companies have to layoff hundreds or even thousands of workers in order
to stay afloat.

If you wanted to build a home, the only way you can do that is if you
have extra money flowing around right now because most banks will not
able to loan that amount to you right now.

At this rate, the construction industry will only be able to produce
817,000 new homes this year compared to 1.98 million units in 2006. That
is a lot and it is note expected to improve any time soon.

But are these numbers surprising? The answer is also no because it is the
right reaction especially when the country is in a financial crisis.

Analysts believe this will change in the next 2 to 3 years because within
this time frame, homes that were unoccupied will now have people living
in them and only then will home building be once again on the upward
trend.

What everyone is hoping for right now is a miracle because we are not yet
out of the woods when we talk about the current financial crisis. Yes, a
$700 billion bailout plan was approved and signed into law but just like
Bernanke said, no one expects the recession to end overnight. It is going
to take time.

Is the home building decline also happening elsewhere? In the case of
Canada, the answer is no. In fact, the opposite is happening. If you were
to compare the number of houses built for the month ending September this
year versus last year, 6,000 more homes were built in 2008 compared to
2007.
There are many reasons for this such like more people want to settle down
so they move away from the rest of their family and most importantly the
program they have in place happens to be much better across the border
compared to what is available in the US.

But back to reality, no one can deny that over here, there is a sharp
decline in home building. The only thing anyone can do is hope for the
best in the months and years ahead so we can perhaps forget that this
ever happened.

				
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posted:10/12/2010
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