Marketplace

Residential Construction Market

The residential construction market covers all aspects of home building, from single-family houses to condominiums and townhomes. The hottest segment of the entire construction industry during the late 1990s and most of the first decade of the 21st century, the residential construction market has fallen upon tough times after the "housing bubble" burst in 2007.

Members of the residential construction market are normally looking for projects which can be built using several methods. In most cases, home builders have their own architects and design teams on staff and are able to develop home designs on their own, which they then use repeatedly. They are able to work with a certain set of subcontractors to do specialty work. In some cases, the design/bid/build approach is used, where the design is already created by an architect and home builders bid on the right to build it.

The design-build method has been increasing in popularity in the residential construction market over the past decade, especially for more expensive homes. In design-build, the owner doesn't hire an architect to design the project, then seeks bids from a contractor. In this case, the owner solicits bids from a architect/contractor teams, who develop their own designs and include complete design and construction costs in their bids. This is different from the traditional process, where the architect completes the design before the contractors put in their bids.

In the management procurement method, the owner holds the greatest amount of control. Instead of hiring an architect to handle the project in construction, or hiring a consortium, the owner oversees every part of the process. They hire the architect, the construction manager and, in many cases, the subcontractors. Proponents of this method believe it speeds up the procurement process and increases flexibility throughout the building process.

The residential construction market has seen a decrease in activity of more than 30 percent over the past several years as the financial meltdown has limited the amount of buyers eligible for financing and a new construction glut has decreased the need for more new homes. It will take some time before the residential construction market is healthy again, which means tremendous opportunities exist for buyers who have the money on hand to spend.

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