Construction business
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Construction business
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Why Did Commercial Construction Maintain Stability During the Housing Bust?

We all remember the housing market turmoil of the past decade. In 2006, we saw housing prices surge as if it would never end. But it inevitably did, and as the country sank deeper into recession, home prices, sales, and new construction plummeted.

However, amid what some experts call the biggest real estate bubble since the 1920s, commercial real estate – and commercial construction – managed to hold on to some semblance of stability during the multi-year roller coaster ride.

lw blog photo

leyla.a via photopin cc

The role of real estate investment trusts

What factors contributed to this?

According to a study that appeared in the Journal of Portfolio Management, real estate investment trusts, which are securities that sell like stocks on the major exchanges, played a central role.

Among other things, real estate investment trusts (REITs) invest in shopping malls, office buildings, warehouses and hotels. According to the study, the REITs increase transparency of the real estate market and enable investors to spot overvaluation and undervaluation more quickly. That means, for instance, that if REIT prices fell in a particular city, it would be a signal to pull back on commercial construction in that region.

Commercial construction in East Tennessee

In East Tennessee, we managed to escape much of the construction problems, both in the housing market and the commercial market. But at Leon Williams Contractors, we think it’s important to keep an eye on all industry trends, since any of them can affect our local area.

We have been deeply committed to providing excellent design-build services to our clients since 2002. As value engineering experts, we have spent the past 12 years simplifying the building process for our clients through innovations in quality, time and cost – an approach that withstands the test of time, no matter how much instability the market experiences.

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