Following the construction industry and related legal topics in the United States.

Wednesday, November 8, 2006

New Congress to Build Up Housing Market

The day after the 2006 mid-term elections provides the context for this entry. While some votes may be recounted, it appears that the Democrats have swept both houses of Congress. Motivated by a mandate for change, what changes will the Congress enact that may affect the construction industry? Surely, it's too soon to know specifically, but one analyst has already taken a stab at answering the question, before the fact. Jim Haughey is Director of Economics at Reed Business Information. He prepares construction market forecasts. In his October 25, 2006 blog entry, he concluded that "[t]he 2007 construction outlook is not at risk of being changed by the November 7th election results." He envisioned a scenario where the Democrats control both houses of Congress and concluded that the one market that might be affected - positively - would be housing, the weakest sector.

Haughey may be right and help can not come too soon for the homebuilding market. Today's New York Times focuses on the continuing slump in residential construction. As in most things, though, there are usually at least two sides of a story. While residential contractors are hurting, apartment construction is up, and owners and landlords of rental properties are experiencing the boom only hoped for by the condo developers a year ago. See here.

It's probably too early to know whether a Democratically controlled Congress will have a major impact on the construction industry, but we can say one thing with some certainty: these times they are a changing. (This entry was posted by Laura Luger of Womble Carlyle's real estate development and construction group.)


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