What will the new year hold for the housing and construction markets?
University of South Carolina Economist Doug Woodward is looking for a small growth in the housing market next year, but nothing big.
“It won’t be strong,” said Woodward. “It will be a long time before we see all this built-up excess inventory get taken away so that we can then see construction going on again. I don’t think there will be significant residential or commercial construction.”
The latest national report indicates that a tax credit for first-time buyers has sparked the best housing market in three years, but analysts say that even though the market is getting better that this is not a long-term rally. Home resales surged 7.4 percent in November.
Woodward says there is great uncertainty for the commercial real estate market. “We as economists don’t really know; the Federal Reserve might know and not be telling us,” he said with laugh. “This could be a surprise that hits us in early 2010–the powerful affect that will have on local banks.”
Dr. Woodward says local banks are watching the commercial real estate market with special focus. “The banking crisis we’ve had so far was primarily in the money center banks,” he said. “But this will be a problem on the local banks, if this commercial real estate crisis that people are predicting actually unfolds in early January, as some analysts are saying.”