Construction Forecast Shows Bright SpotsOctober 25th, 2012 by DWM Magazine
With 44 consecutive months below 800,000 starts, the door and window industry, along with the entire construction industry, has been waiting patiently for that number to rise.
“It finally just went above 800,000 last week and I don’t know if I should open the champagne or not,” said Chip Case, professor of economics emeritus at Wellesley College and senior fellow at Harvard University’s Joint Center for Housing Studies. Case was one of several industry experts who offered their prognostications for 2013 in McGraw Hill Construction’s Annual Outlook Executive Conference held yesterday in Washington, D.C.
He outlined challenges that continue to remain including housing inventory levels and the continued inability for many homeowners to secure a loan. He also mentioned that “we need to figure out what to do with Fannie and Freddie,” and outlined some decisions that will take place after the November election.
“When this election is over this will be on the table [mortgage interest deduction],” he said. “Tax reform is also definitely coming but I am not sure what it will look like.”
Will those housing numbers continue to rise past that 800,000 mark was a question he also attempted to answer.
“A mini-boom could happen but I don’t think it will have the legs of what we have seen in the past,” said Case.
In what is always the most anticipated presentation of the conference, Robert Murray, vice president, economic affairs, McGraw Hill Construction, offered his predictions for residential and commercial growth going forward.
“There is a lot more positive news for single-family housing,” he said. “What we are seeing is stabilizing home prices and the amount of foreclosures is beginning to ease.”
He added that the inventory of new homes for sale is quite low which is good news, coupled with low interest rates. While 2012 was still a tough year, 26 percent growth did occur in the residential market, according to McGraw Hill.
Multi-family continues to be a bright spot and still a “relatively attractive investment target,” said Murray, who noted that he is seeing more growth in condominium projects.
“There is still plenty of growth for the next two to three years in multi-family,” he said.
The overall news for commercial construction is positive as well. Murray reported that more large scale architectural projects are reaching the start stage.
“Certainly the corner has turned for the long depressed commercial market,” said Murray, who added that he predicts moderate growth.
“It’s a subdued upturn but it is there,” he said.