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Construction in a Different Direction: Infrastructure September 24, 2009

Posted by John Watch in AccuriZ News.
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The Housing in Crisis report showed that at the end of 2008, we had an excess of 5  million vacant homes on the market (excluding vacation homes and foreclosures). During this second quarter, about 18.7 million vacant housing units remained on the market (including foreclosures, residences for sale and vacation homes) based on property data from public records. With incentives like the $8,000 tax credit, there has been a push for new home construction, even if the 581,000 new single family homes this year is a dismal comparison to the booming days of 2005/2006.

New construction creates employment and stimulates growth, which are all positive necessities. In the real estate market, housing starts and building permits are signs of recovery, as we are witnessing today. But with the national population growth at about 4 million people annually and a swelling number of vacant units, it will take at least three more years before true market levels begin to appear. The housing market does not need to cease construction, but construction directed at different sectors of the ecnonomy could provide the same employment without further straining the housing market.

America faces serious problems with deteriorating roads, highways and bridges. In January, the American Society of Civil Engineers produced a Report Card for America’s Infrastructure, raising critical concerns. The report states that in New York, 42% of bridges are structurally deficient on functionally obsolete. This is just a small fraction of the problems faced all over the country. Construction in these areas is not only critical for our current downturn, but for generations of Americans to come.

Until the demand of new housing comes back into balance with the overwhelming supply we have seen this decade, the housing market’s true levels will remain unseen. But what is clearly forseeable is the further deterioration of America’s infrastructure that we must act on now to see a change in the future.

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