Speakers at Construction Outlook Conference Say Future Housing Outlook is PositiveOctober 19th, 2009 by Editor
Some speakers at last week’s Construction Outlook Conference, sponsored by McGraw Hill Construction, indicated that the recession is over but one speaker was still cautious about the future.David Wyss, chief economist for Standard and Poor’s, gave an Economic Outlook Presentation in which he said “the rally will continue,” but “the long-term cycle probably has another bear in it.”
He also said the recession could be longer and deeper if the following events occur:
• Financial markets lock up again;
• Home prices continue to fall; and
• Oil prices continue to rise.
He did add, however, that fiscal stimulus will support the recovery.
Status of Homebuilding Market
Kermit Baker, chief economist for the American Institute of Architects, offered the Outlook for Residential Homebuilding and Remodeling and he was more positive about the future, specifically of the residential housing market.
“A slow recovery is better than no recovery,” said Baker.
“If you didn’t know it before, now you know how closely the economy is tied to housing,” he added. “It’s difficult for the economy to recover without housing helping out.”
Overall, Baker said the long-term prospects for housing are favorable. He said the housing market appears to be recovering but “excess inventory needs to be worked off and prices need to stabilize before we see a full-blown home building expansion.” This excessive inventory is a moving target, according to Baker, as foreclosures keep getting added to it.
He says a big indicator of a future upturn in housing is related to household growth–almost 15 million new households are coming in the next decade.
“The coming decade is shaping up to be a strong one in terms of housing,” said Baker.
One interesting trend he noted revolves around how the housing market has affected design.
“When the downturn hit builders began building smaller homes,” he said. “This seems to be more widespread than in previous recessions. This won’t change even as the market recovers.”
He adds that special features are becoming less common but ones that remain popular are those that accommodate special needs/accessibility, etc. And one room that homeowners keep adding on is the home office.
Status of Remodeling Market
Baker said that the remodeling market has fared better than housing but it is down as well, though that is starting to change.
“There are signs that recovery is starting to occur in some segments,” he said. “The pendulum is starting to swing back and the market is looking more like it did in the mid-90s.”
“We are at or near the cyclical low and should see recovery at the beginning of next year for remodeling,” he added.