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Fallout: The Financial Crisis

Housing construction slump continues

Mitchell Hartman Oct 17, 2008
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Fallout: The Financial Crisis

Housing construction slump continues

Mitchell Hartman Oct 17, 2008
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TEXT OF STORY

Kai Ryssdal: Remember a couple of years ago, you could drive out to the urban edge of practically any major city in this country and new housing developments would stretch as far as the eye could see? Those days are obviously gone. Numbers today from the Commerce Department prove it. New home construction has fallen to its lowest level since the 1991 recession. Marketplace’s Mitchell Hartman reports.


Mitchell Hartman: When you look at how much home construction has fallen since last year, the news is even more grim. Builders broke ground on one-third fewer houses than in September 2007. Since the end of the housing boom in 2006, the number’s down by nearly two-thirds.

Chris Mayer is a real estate professor at Columbia University. He says there’s a pile-on effect.

Chris Mayer: We have mortgage rates that have been rising. We see unemployment rising and consumer spending falling. There’s not really any good news in the economy, and it’s hard to imagine people purchasing new houses, or homebuilders even getting credit to start new houses.

But not all of America’s suffering equally. Some housing markets are still chugging along, like Seattle, where Chas Comstock lives. Comstock is a general contractor. He says houses, at least at the high-end, are still being built in his area, and his renovation business is doing OK.

Chas Comstock: We are working steadily on a few jobs. You could say, the shoe hasn’t dropped yet. But by what we’re hearing, that would lead you to believe that it is coming.

Comstock’s already seeing signs of a slow-down. He advertised for construction workers recently.

And we were inundated with responses to a call-out to lead carpenters. So there’s guys out there looking for work.

Construction workers aren’t the only people who suffer as new-home construction falls. Columbia’s Chis Mayer says everyone will feel the pain, from realtors, to retailers who sell appliances and building supplies.

I’m Mitchell Hartman for Marketplace.

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