Monday, March 21, 2016

Housing starts never recovered from the Great Recession

This chart shows housing starts from 1960 to the present, with recessions shown as gray vertical lines. As you can see, housing starts nearly always decline just before the recession officially begins, and housing starts go up fast as the recession ends.  You can see the enormous overbuilding of the 1990-2005 years.  Then housing starts fell like a rock for three years before the Great Recession started. Then they stayed flat, at historically low levels, for several years after the recession ended. They have been crawling up the last few years, but still haven't reached average levels, even given that the US has a much larger population than before.  The real estate development industry was transformed by the housing boom and the housing bust. Nearly all the small and medium-sized developers were wiped out, and now the industry is dominated as never before by a few giant, publicly -traded corporations.  When they do residential development, they build virtually nothing except CIDs.  They are national or international firms that are able to dictate terms to small suburban municipal governments, as in "take it or leave it--we do it our way or we go someplace else."

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