While the current residential construction data is disappointing, it's important for producers to remember the current lower housing sales is a only cyclical setback.

Successful producers should learn from this experience to review their strategic plans and try to determine what the residential market be like in five years.

Lori Johnston recently wrote a timely story on this topic in DEVELOPER, a Hanley Wood magazine. Her readers are investors who must be on the far leading edge of the housing curve to survive and prosper.

In her article, "Geography Lesson," Johnston reports that many developers are now drafting strategic plans based on a population trend developed from census information. There are 20 unique areas in the United States in which more than 5 million people will live by 2040, or almost double the current number. There are now 11 metropolitan regions with more than 5 million souls. (Atlanta is number 11 with 5.2 million people, followed by Seattle-Tacoma with 3.8 million people.)

Johnston cites Robert Lang, director of the Metropolitan Institute at Virginia Tech University, who believes this "megopolitan" trend is extremely important. He predicts that 66% of all U.S. citizens will live in these 20 zones, although these areas comprise only 10% of the nation's land. But for material suppliers there's another important fact. "Seventy percent of new housing is expected to be in these 20 megopolitans," said Lang. "They are the nation's biggest market opportunities."

The best way I can explain this is to have you look at the growth of the region around Atlanta from 1990-2005, when more than 1.8 million people moved there. The population almost doubled in 15 years. If Lang and his fellow geographers are correct, we will be witnessing the growth of 10 more Atlanta-size metropolitan areas in the next few years.

It's a fair statement that the residential market will soon return to its former activity. The trick to success will be to know where. Just drop me an e-mail ryelton@hanleywood.com with your fax number on it, if you'd like to receive a copy of the article.

Rick Yelton
Editor in Chief