Check out these headlines from the Post-Dispatch:
• “Tight credit may have economy in death grip”
• “Housing starts dip to five-year low”
• “Scared bankers could worsen economic woes”
Those sound like today’s headlines, but they’re not. They’re from 1990 and 1991, the last time a banking and real estate blow-up landed the U.S. economy in a recession.
That was a mild dip, and it was followed by one of the greatest economic booms in U.S. history. That’s worth remembering.

Throughout the St. Louis region, there have been reports of abandoned development projects, slow home sales and dipping home prices. In downtown St. Louis, the Ballpark Village project went back to the drawing board after Centene Corp., a late addition, pulled out of the deal. Pyramid Construction Inc., one of the biggest downtown developers, is getting out of the business, apparently after losing access to financing. On 14th Street, the Skyhouse high rise and the Ford Condominium rehab project either are dead or on hold.
All this is pretty typical of what happens in a recession: Buyers pull back. Lenders get stingy. Construction stalls. Aggressive builders and developers can go broke.
It’s happening all over the metro area, not just downtown. In the first two months of the year, building permits fell 63 percent in the St. Louis region, according to MarketGraphics Research Group. At least two suburban developers are in trouble.
Problems downtown tend to get more attention, partly because the downtown boom of the last few years was so remarkable; after decades of disinterest, developers suddenly discovered a market in converting old warehouses and office buildings into loft apartments and condominiums. Construction of the new Busch Stadium opened up vacant land for Ballpark Village. Downtown was on a roll.

Then the credit crunch and recession hit. After years of bankrolling almost anyone with a blueprint, financiers and bankers started pulling back from anything even mildly risky. The St. Louis stall is happening all over the country: A $7 billion downtown project is on hold in Seattle. Downtown projects have been cut or delayed in New York, Phoenix, Atlanta and Las Vegas.
We’ve seen this movie before. Construction crashed in 1991 amid a commercial real estate bust, a sick banking system and a credit crunch. To a lesser extent, we saw it again in 2001, when the technology investment bust pushed the nation into its last mild recession.
Recessions end. And when this one is over, development will revive downtown and across the region, although it might not be as brisk as it was over the past few years.

Today’s economic slump is concentrated in the banking and housing industries. In some ways, that’s lucky for St. Louis. The big banking layoffs are concentrated on the coasts; our local financial institutions largely kept their noses out of subprime investments.
Home prices increased here over the last decade, but they didn’t skyrocket the way they did in some parts of the country. The result: Prices don’t have as far to fall to find equilibrium. In St. Louis County, median home prices in March were down 4.2 percent over the previous year, compared with 7.7 percent nationwide. In St. Charles County, prices didn’t drop at all.
An indicator called the PMI Market Risk Index predicts a risk of 28 percent that housing prices nationwide will fall over the next two years. In St. Louis, PMI puts that risk at 1.7 percent.
Still, it’s early in the recession; it’s not even official yet. Local housing prices probably still have a way to fall. Residential projects based on rosy projections for home prices won’t get funded. Some projects may not get off the drawing board.
But wise investors build for the long haul. Patience is a great virtue. This, too, shall eventually pass.