ForConstructionPros.com

Okay, so you heard the entire debate about the economic bailout plan (officially known as the Emergency Economic Stabilization Act), and are aware of all the “deals” made beforehand with AIG and some of the investment banks. You also heard that this “fix” was required to shore up the banks and get the credit markets moving again. Hearing that, you’re probably thinking all will be right with the world now, and you can ignore last month’s column about tight credit markets.

Not gonna happen...

After President Bush signed the bill and I had a chance to listen to various “experts,” I went back to Ken Hedlund and Robert Frentzel, contributors to last month’s column, for their insight. Unfortunately, no matter who you talk to, it will take time to get the changes in the bill through the system; in the meantime, credit is going to be tougher to get than it was before things hit the fan. So, pretty much what we suggested last month is still on the table. Things may be a little better, but not to the point where credit will be easy to get.

Uncertainty in real estate lingers on

Banks are still nervous. They are still hesitant to loan funds to each other. The Federal transactions will take some time to complete, which will push out the recovery time. And like it or not, real estate — and thus construction — will not be high on any bank’s list when they sit down to discuss what markets to hit going forward.

Banks will also be more cautious with their lending policies. They will be pushing a de-leveraging model, which will require more collateral and less debt to avoid over-extending themselves based on conservative lending standards.

A recent survey of real estate executives suggests the majority are writing off 2009, with 92% of respondents holding a bearish outlook for the next 12 months. Of this group, 62% believe it will be 2010 before the real estate market stabilizes, with another 22% thinking it will be 2011. The multi-family housing market holds some 12-month potential, with the single-family market pushed out to 2010 and 2011.