Real estate, the residential sector in particular, is making bleak headlines around the globe in 2008. Plunkett Research has been warning of a potential crash since 2006 in what was obviously an overheated market. The real estate and construction sectors, including the many professions and fields associated with them, make up one of the largest components of the U.S. economy. here was more than $14.6 trillion in outstanding mortgage debt in America at year-end 2007. Sales of existing homes dropped dramatically in 2007, to about 5 million for the year (from 6.48 million in 2006), and sales of new single-family homes plummeted to about 775,000 (from 1.05 million in 2006). Clearly, homebuilders are suffering. commercial projects remained a strong, positive influence on the construction market through much of 2007. However, by the end of 2007, demand was off, and it was vastly harder to obtain financial backing for new commercial projects. The industry has been undergoing massive changes in recent years, swinging from booming to deteriorating. The major trends affecting this volatile sector are detailed in Plunkett’s Real Estate & Construction Industry Almanac 2008. Some examples include:

1) Subprime and Alt-A Mortgages Burn Overburdened Homeowners.

The housing, lending and construction markets enjoyed booming times through early 2006. Unfortunately, in many cases, the boom times were created by very aggressive lending to consumers who couldn’t afford the mortgages that they signed over the long term. At the end of 2007, 2.2 million American homes were in some stage of default or foreclosure on their mortgage.

2) Home Sales Slow/Prices Tumble.

Both new and existing home sales reached new highs in 2005, but the party was over by the end of 2006. According to the NAR, sales of existing homes fell 13.0% to 4.94 million in 2007 compared to the previous year. New home sales fell 17.7% to 1.05 million in 2006, and fell yet another 26.4% in 2007.

3) Global Housing Markets Crash.

The crumbling of housing prices worldwide may have started in the United States, but the financial foundations of housing markets, mortgages and prices were weak and ready to collapse in many major markets worldwide. In the U.S., Canada, Australia, Europe and elsewhere, mortgages were much too easy to obtain, appraisals were far too generous and demand was clearly stoked by over enthusiastic investors.

To find out more about these exciting trends and others, check out Plunkett’s Real Estate & Construction Industry Almanac 2008, or go to www.plunkettresearch.com and sign up for a subscription to Plunkett’s completely up-to-date online database!

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