New Construction During the Housing Crisis: the Pros and Cons of Building Now
These days it’s hard to miss the headlines proclaiming a tanking housing market and homes in foreclosure. However, with all of the turmoil in the housing market, property development continues to stand as one of the most sought after commodities in the industrial marketplace. Why is this the case you might ask? Well the answer is simple, as in anyone in construction management will tell you, housing always rebounds.
Constructing a new house should be thought of as an investment. Much like the stock market, the housing industry suffers gains and losses over time, but at the end of the day, gains are always the status quo. Thus, building a new house or investing in a construction firm is always a safe bet. Although the current climate of the housing industry is bleak, it will likely turn around.
The reasoning behind this simple; we have a finite amount of land on this planet. As such, land will only increase in value as time and our population continue to grow. Land and property remain one of the most important assets to contain in one’s portfolio. Although the headlines of your local or national newspaper speak of gloom and doom, property development is one of the only aspects of our economy that has continued to grow. In fact, the FDIC predicts that the value of current and new homes will only increase over time. Of course, as with anything in the world’s ever-changing economy, things could turn sour without a moment’s notice. The housing industry has indeed suffered over the past half a decade. People indulged in home loans that they could not possibly afford and as a result, foreclosure and downsizing have become the norm.
However, just because the current forecast of the housing market is negative does not mean that it will stay this way. Through out history the housing market has always been able to bounce back from even the worst declines. Though people have chosen to undertake housing ventures that they could not sustain, the value of the property continues to grow. Essentially, the negative headlines are told from a human interest point of view. Yet from an economic point of perspective, the house, as well as the attached land, continues to increase in value.
Therefore, if you are considering building a new home or investing in a current property, now might be the right time. The U.S. Commerce Department claims that consumers boosted their spending by 0.4 percent in 2009, and the National Association of Realtors reported that its pending home sales index rose 3.6 percent to 94.6 in 2009, from an upwardly revised reading of 91.3 in May. These numbers clearly show that the housing market is well on it’s to recovery, as the last time there were five consecutive monthly gains was July 2003.
As a result, we can see that consumer confidence has greatly improved the housing market. Ultimately there is never a truly “bad” time to build a new home. The housing market may fluctuate, but it will always rebound, resulting in growth and prosperity.