The Big Story Blog

Twin Cities home building slump, how bad has it been?

Posted at 11:19 AM on November 18, 2011 by Paul Tosto
Filed under: Housing and mortgages, Jobs and unemployment

New housing construction used to be the business that seemed to save the economy. In past recoveries, when incomes started to rise and people went back into the housing market,work and money got spread around from builders to window manufacturers to tradesmen. It helped drive economic recovery across industries and economic classes.

As we're painfully aware, the Great Recession is different. As we've noted before, this time it's the economy that will have to save new housing construction.

The end of Rottlund Homes, once a Minnesota home building giant, offers more evidence.

The chart below shows monthly new housing permits in the Twin Cities metro area. The blue line shows monthly permits and the red line is the annualized average. The gray bars are recessions.

Click on the chart for a larger view, or click here for a really large view.

twincities.jpg

In the early '90s recession, Twin Cities housing starts took a dive but led the recovery, bouncing back quickly. The business barely missed a beat in the early 2000s recession.

It's a lot worse this time.

The rapid decline began two years before the official start of the Great Recession. Overbuilding, the weak jobs recovery and the mortgage crisis have throttled any kind of real bounce back.

Rottlund was among those that benefited most from that 15 year growth in new housing construction. It's the biggest victim so far of the five year collapse.


About Paul Tosto

Paul Tosto

Paul Tosto writes the Big Story Blog for MPR News. He joined the newsroom in 2008 after more than 20 years reporting on education, politics and the economy for news wires and newspapers across the country.