While a veritable crash in home building was among negative results of the Great Recession, a reversal of these factors is on the verge of creating a new housing boom.

Although rentals and leasing in metropolitan, suburban and rural areas filled the five-year period after the financial recession recovery, last year’s surprise single-family housing starts of 750,000 may soon come close to the coveted 1 million starts easily exceeded during this century’s first decade. A number of factors assure that a new post-crisis high is on the way:

1. Continued low mortgage rates will meld with increased credit made available by recovering commercial banks, as well as the emergence of nonbank lenders such as Quicken Loans, PennyMac and Freedom Mortgage. These appeal particularly to millennials and generation Xers due to their more simplified lending relationship.

2. As homeowning is returning to traditional regularity, both by foreign investors as well as the previously unemployed thousands finding jobs, demand for new homes is increasing. This includes co-ops in city apartment buildings, as well as ownership in the suburbs and in rural areas.

3. With overall new home sales expanding, supported by existing home sales, there is increasing pressure on shrinking inventories, which have currently hit decade lows. This has increased prices, generally, by 5% in each of the last two years.

4. Geographically speaking, the demand is strongest in the West and South, due to their faster-growing populations. Double-digit rising rates are especially noticeable in San Francisco, Denver, Seattle, Dallas and Portland, Ore.

But even more staid cities in the Northeast and the Midwest — such as Boston, Minneapolis, Columbus and Des Moines — are experiencing housing demand pressures, as new building had come to a practical standstill in the most recent years.

Such positive overall economic activity is creating a shortage of construction workers and those in affiliated trades, which had been in an unprecedented recession-era surplus. This has created shortages, as much of those unemployed had shifted to commercial, industrial and other building sectors where jobs could be found.

The big exception to this trend is in major energy-dependent cities, such as Houston, which have reverted from feast to famine, due to the depression in oil and natural gas pricing.

Permanent glut

While the oil glut has captured heavy media headlines since the legendary “energy crash” of mid-2014 that diminished the oil-per-barrel price from $100 to $30 during the first quarter of 2016, the resultant glut has expanded well beyond oil to encompass an ever-expanding number of economic entities. These would include a wide range of industrial commodities, such as iron ore (steel), coal, natural gas, copper, platinum, palladium, etc. — in addition to a growing range of agricultural products.

In attempting to rationalize the factors behind the spread of  “glut,” it’s imperative to analyze the amazing productive process that has been generated by undeveloped, developing and developed nations. These have increased their productivity and production at all levels of commodities, whether industrial, commercial, retail, agricultural or technological.

Although economic futurists were previously contemplating worldwide shortages at the beginning of this century, due to the expectation of global population growth, the extent of technological breakthroughs, as well as the production evolution of previous undeveloped demand economies, was not taken into account.

While much of the blame for the current overflow of oil, natural gas, copper and steel buying power has been laid on China’s demand doorstep, what has been overlooked is Beijing’s own production increases.

Not only has China become the absorber of much of the world’s economic production, it has risen to the top of global steel production, with an ability to increase production, where it had previously been in need of imports. Even Chinese oil production still places it among the world’s top dozen excavators and refiners.

While early 21st century projections in the demand/supply balance counted on a near doubling of the world’s population, the current 7.4 billion will easily reach the eight billion mark before the next decade has ended. But the unpredicted and incredible production and productivity to serve this number at increasingly growing supply levels were not taken into consideration.

Instead, the idea that peak availability in fossil fuels and agricultural necessities for a fast-growing world were considered the major problems the world would be facing has been replaced by wide-ranging overproduction. That is why a new inflationary spiral was thought to be inevitable in the near future, as the demand/supply balance was tilted in favor of the former.

At this point in time, the economic world will continue to seek a balance provided by more demand and supply limitation to keep the current production glut from careening out of control.

China’s GDP

When the World Bank all but crowned China as the world’s No. 1 gross domestic product champ a year ago, it did so by translating its $10 trillion GDP runner-up to the U.S. $18 trillion as having reached the top on the basis of purchasing power parity.

While leading economic analysts quickly denounced this quirk as misleading, it dramatized the growing belief that China would surpass the United States and all others as the runaway world leader long before mid-century. This premature celebration was somewhat reminiscent of similar gratification bestowed on Japan throughout most of the 1980s.

While by no means minimizing China’s stupendous economic miracle of the past quarter century, Beijing’s current problems are revealing the premature coronation awarded the world’s most populous nation (1.4 billion) and increasingly productive No. 2 global economic entity.

But with the five-year term ascension of the realistic presidency of Xi Jinping almost two years ago, reality quickly overcame the illusion:

• China’s GDP is indeed generating an annual gross domestic product in the low double digits. But a substantial component of this impressive achievement is based on becoming the world’s leading nation in hosting the divisions and subsidiaries of a large number of leading global corporations. They, long ago, chose to erect facilities in China, due to its capability of producing a wide range of products, meeting these conglomerates’ requirements in cost, quality and service reliability. Taken in total, this segment of China’s total exports comprise a significant percentage of goods shipped out and registered as exports.

• Part of the illusion created by China’s unprecedented production was generated with no relativity to the supply/demand balance that governs most of the world’s leading industrial powers. This has resulted not only in making China the world leader in raw steel production, but it produces more steel than the rest of the world combined.

• While China’s exports grew unabated, its recent focus on building the world’s runner-up consumption sector to the United States has created a massive global steel glut. Such lack of budgetary balance, which served the nation’s political, economic and social improvement position, put China into a fast-growing debt situation, which only now is being confronted. This is resulting in curbing its legendary investment in the U.S. Treasury debt, purchases of oil-producing companies in Africa, and soaring interest in foreign investments by China’s private sector.

• While the world-at-large has benefitted by China’s seemingly unquenchable appetite for a wide range of commodities, Beijing’s slamming on the brakes has created a glut in such imports as oil, iron ore, copper, platinum, etc., plus a huge amount of agricultural products. This severe slowing in the past year has been the primary reason for the current commodity depression, which is just beginning to turn.

When considering all these factors, it becomes increasingly obvious that, while China has become a member of the global leading export quartet (United States, Japan, Germany and China), its inheritance as the forthcoming No. 1 global GDP champion is far out of reach. It may even face increasing competition from India for its current runner-up slot, as the century’s third decade beckons.