We seem to have quite a few commenters who draw very negative conclusions about the future of the new construction market from a very limited base of facts and impressions.
Impression: geez, there’s a lot of new stuff out there. Disaster looms.
Fact: Chicago’s population is not growing – the Census Bureau projects it will decline from 2005 to 2010. Disaster looms.
Please explain to me how the following facts can be squared with the “disaster looms” scenario.
Fact one: The Census Bureau is projecting that the number of households in Chicago will increase from 1,078,370 in 2005 to 1,101,734. That’s 23,000+ households that have to be housed somewhere. Population decrease is irrelevant to housing demand if household formations are growing.
Fact two: The Census Bureau estimates that the number of households with incomes in excess of $100,000 will increase by nearly 70,000 from 2005 to 2010. The $125-$149K group increases by nearly 20,000 and the $200K+ group by nearly 15,000. That’s a lot of purchasing power – and increased purchasing power generally translates into demand for a different type of housing.
If anything, if interest rates remain stable and the economy doesn’t falter badly, and if builders pull back enough during the current slowdown, the new housing supply may become very tight during the next few years.
All my numbers are from Metro Chicago Facts Online. To anticipate, I’m aware that I’m suggesting that very different conclusions can be drawn from a very limited – but far more relevant – base of facts.