"We have overbuilt the apartment market already and we are well on the way to overbuilding the office market," says Jim Noteware, a property developer.
When the housing market can respond to demand by adding to supply, there is a greater risk of overbuilding.
Indeed, Daniel Greenberg, a Washington journalist, has argued that universities are overbuilding, and are ending up with underused lab space as the NIH budget flattens out.Meanwhile, according to the Department of Education, the average annual cost of a standard four-year course at an American university has trebled since the 1985-86 school year.
But overbuilding in Ireland or Spain reached chronic levels, too, and yet their house prices have not corrected to the same extent as those across the Atlantic.What about demand?
Overbuilding and the popping of the housing bubble in Britain (the largest single source of second-homers) caused prices to slump.
The rates for many of those ARMs jumped at the same time that overbuilding undercut the housing market; foreclosures mounted, and investment banks that under recent deregulation had been allowed to overleverage their assets foundered, resulting in the bankruptcy or sale of several major financial institutions.
While overbuilding during the housing bubble bears some of the blame, so, too, does the lack of new households: when people are doubling up, there's little demand for owning or renting.
This was a case of overbuilding, he concluded.
"I think there was overbuilding here when the market was high," said Amy Krolak, a Halstead broker who grew up nearby, "because we didn't foresee the pullback in the economy.
Lending by state-run banks was one of China's most aggressive forms of stimulus last year, but analysts constantly warned that banks could face the risk from overbuilding and nonperforming loans.
There's also the risk of overbuilding at the extreme high end.
