New Construction Outlook Remains Dismal

If much of your company's flat glass sales are traditionally fueled by new housing developments, you may want to keep your focus on existing homes and the commercial market. Many economic experts and advisers are pointing as far out as 2012 for a market rebound. According to recent reports published by The Conference Board, a not-for-profit organization that researches and publishes economic-based forecasts, housing prices may drop further; but the organization also reports that the first half of 2009 may witness signs of improvement, at the earliest.

"We see no sign of improvement in the housing market before the first half of 2009 at the earliest," says Dr. Bart van Ark, vice president and chief economist of The Conference Board. "And housing prices may drop further-at significant cost to consumer spending over the next two quarters, holiday season or none," van Ark adds.

Dr. Eric S. Belsky, executive director for the Joint Center for Housing Studies, places his hope further out than the first half of 2009. Belsky says 2010 may witness some turnaround, but warns that a full recovery may not rear its head until 2012. But Belsky admits, indicators are constantly changing. "You almost have to check the news several times a day in order to keep up with this subject," he says. He adds that there is no simple and immediate answer to the situation, which he says is largely fueled by overstock and home foreclosures.

"This is the first time we've seen [home] ownership rates slip as a result of a recession," Belsky explains. "It's also the first time we've gotten almost no interest rate relief. And the reason is that no matter how much the feds were to bring down the interest rates, people's level of concern about the risks building in the market are leading them to charge higher risk rates." He points to poor performing loans as the culprit. "Sub-prime mortgages accounted for about a quarter of the loan volume in 2005-2006," he says. "In six months after the loan originated, each year's book of business was performing worse and worse, to the extent that you have this 2006 book of business in which almost a third of them were facing serious delinquencies. And where we are now doesn't look any better."

Belsky adds a touch of humor to the subject, as he assures the situation will eventually clear. "What you could find is that whatever we're going through is like throwing up," he says. "And you know, when you throw up, all of the sudden you feel great afterwards. Except, we've been dry heaving for months and quarters now."