The mortgage crisis of 2007 to 2011 took a severe toll on the housing market in general, and was a particular drag on new construction. Areas that had experienced rapid growth in new housing experienced a complete collapse in the construction industry, and the glut of existing houses on the market of short sales and foreclosures depressed the industry throughout the official post-recession period. Tight credit was another factor that put a hold on new construction. However, as the inventory of existing homes falls and lenders feel more secure with economic conditions, the demand for new construction is rebounding in some areas of the country. Multi-family structures are seeing the largest construction gains, as the housing industry prepares for a new crop of young couples that saw their parents struggle with mortgage payments and who may choose to hold off home ownership until their careers are more secure.
The South has led the way in new construction in the post-recession period, primarily led by Texas, which was one of the areas least affected by the mortgage crisis. Dallas, Houston and Austin have all seen significant growth in both commercial and residential construction. Atlanta, Georgia has also experienced notable growth in the post-recession period, as well as Orlando, Florida and Tampa, Florida. However, declines in new construction numbers in the middle of 2014 indicates some weakness that may be related to upsets in the oil industry.
In the West, construction has seen a moderate increase, despite the fact that California, Nevada and Arizona were among the hardest-hit areas in the country during the mortgage crisis. New companies and resident coming to the area are fueling this growth, which is expected to continue in coming years. The Seattle area, in particular, has enjoyed rapid expansion in both commercial and residential housing, as new companies take advantage of a young, well-educated workforce that is available there.
The Midwest has seen less growth in construction in the post-recession period than other areas of the country. However, the city of Chicago is experiencing growth in commercial construction that could continue for some time as the economy improves. Increased housing growth in the western suburbs of the city will help to keep residential construction strong for some time.
For a period of time, the Northeast lagged in real estate activity, as many people hunkered down to wait for better prices for their homes and better times for the economy. More recently, the city of Boston, Massachusetts, experienced faster growth in new construction than most areas, as did Philadelphia, Pennsylvania. This trend is expected to continue as the economy improves.
