To put things into perspective, it is important to understand just how much the industry has constricted and how this ever-constricting market is impacting behavior in the AEC space. In 2006, residential construction spending reached its peak of $6.9 billion. Then, in 2007, the housing market started to show the results of the subprime lending practices of the past several years. We all know how this ended up playing out: with the world teetering on the edge of a global economic crisis at the end of 2008, mainly due to a massive housing and commercial real estate bubble.
Residential construction continued to lose ground in 2008, ending at a total of approximately $2.8 billion, a staggering loss of over $4 billion. However, that was only the beginning. In 2009, the construction of commercial properties came to a screeching halt as property values dropped and banks found they were unable to lend due to the mounting toxic assets on their books. Below is a graph showing the decline in spending on residential, commercial and institutional buildings with a year-to-year percentage change.