My thought is this: the return of solid construction business is A LONG WAY OFF.
These are some of the reasons, in my opinion, and I’m referring to the US.
People’s imagined standard of living over the past fifteen years or so was never achievable on mass scale. (Too many square feet per person as an imagined “need”.)
Government supported to high a standard of living by both lending guarantee and housing subsidy programs and by ever more strict building codes.
The distance to existing homes from available work got too far.
Many people were lulled by heating and cooling utility prices that were not truly affordable/available for the long run IN THE TYPES OF HOMES THAT WERE BUILT.
And the killer: Building costs in MANY areas of the US are higher than the value of the completed new structure.
Sooooo,
People are going to learn to live with less. They are going to maintain their properties in a lesser manner. They are not going to build additions which they can’t borrow for and which will not increase the value of their properties nearly as much as it costs to build them.
People are going to live with more people per housing unit than many had become accustomed to (family members, friends, room-mates)
The volume, on a nationwide scale with some few exceptions, of available commercial space is going to take a LONG time to fill.
DIYer’s will become even more common with the likely long term effect of lowering those property’s values even more with poor quality remodeling and repair.
When the boomers retire, they will be looking to make up some of what they think they lost by trying to buy existing properties at bargain prices and NOT BUILDING THEIR DREAM HOMES. Added question here: What will boomer retirement look like?
I think it will be a good fifteen years or more before there is a strong nationwide construction market again.
Medical costs will continue to sink more and more of the middle class into poverty. Fewer families will spend on construction. More people will die sooner for lack of medical care and thus reduce the pressure to build more housing.
I don’t think construction will be the business sector that brings us around (and I have no idea what else will do it, either)
All these things and more suggest that construction as some of us knew it will not be around for quite awhile.
This all seems terribly dour as a future expectation.
What am I missing?
Replies
I heard recently of a development in Arizona that's doing OK building smaller, "affordable" homes in a "planned" development. Requires that you squeeze the nickle pretty tightly, but likely will be profitable before the McMansion business rebounds.
Unfortunately, you make a lot of good points.
Greed and hunger for status drove the home construction industry for too long and it had to all crash down eventually. We framed a 6,000 square foot house in 2005 for a HOUSE PAINTER who wanted to live in a gated community.
It was insane. The house was so lavish that when I said the homeowner was a 'painter', people assumed he was a world famous artist. When I corrected one guy after he commented "damn, he must sell a lot of paintings", he thought I was being facetious.
Even most of the GC's were worked for fell prey to the trend, building themselves 3-5,000 sq ft homes for no reason during the boom. Some of them have lost everything because they've been out of work for a year or two now. It's bad and I don't see it getting much better for at least 5 years.
What am I missing?
Nothing.
Only thing I see as a bit different is the DIYs, hiring their unemployed friends, neighbors, and whatever to do the work for cash.
The other day I had to take out a permit for a project. At the inspector's office everybody has to sign in. So I looked over the sheet and only recognized one name as being a contractor. Now a homeowner can take out a permit and have someone else do the work if that person is not licensed. So what I figured I was seeing was a whole bunch of cash work being done.
While I was waiting for the paperwork, a 50ish guy walks up to the counter and starts talking with the other inspector. 50ish guy says he is a new contractor and wants to know about getting permits. Inspector asks about the state card he needs to have. 50ish guy hands inspector a business card, "You mean this?" Inspector looks over at me and says, "Bowz do you have your cards with you that I can show him?" Inspector shows 50ish guy the cards and explains that he needs to be insured and take the required "new contractor courses" before they will give him a permit. I'm betting that in a few days a homeowner came in to get a permit that 50ish guy is now working on.
Bowz
"I'm betting that in a few days a homeowner came in to get a permit that 50ish guy is now working on."That works for me. Government should NEVER stand in the way of a homeowner building a house with whomever he wants...as long as it passes inspection, if its a zoned community.
Blue,
It would work for me too, if everything worked equally. But it hasn't been that way. I have had codes enforced on me that homeowners and their lackeys have ignored or been ignorant of, and gotten away with it. That is if they even have permits.
That is not a whine. It is a statement of one small reason to be looking elsewhere to make a living. ( perhaps within the industry, or perhaps out of it).
One other change I have noticed in the last year is people wanting to hire me just to do the complex work, and to tell them how to do the rest. They are not necessarily cheap, they simply need the work done and don't have all the money. I am not real comfortable with it, but I am even less comfortable doing nothing. However this week I am busy thowing junk out of the shop because we have an accepted cash offer on it. Two weeks to close though, so I am not pouring the champagne just yet.
Bowz
I don't think you're missing a thing, unfortunately.
However, certain trades will continue to work, if somewhat less than before. Anything that is essential maintenance or repair--roofing, plumbing, electrical. There will also always be insurance jobs--gut and redo's on basements flooded by blown out HW tanks, etc.
There may also be a new kind of specialty re-mod market opening up, as people try to figure out what the heck to do with those 5,000 and 6,000 SF monsters they can no longer afford to pay for. I'm thinking some are gonna divide them up in to apartments or condos.
Problem is, there will be more guys going after fewer jobs, so the competition will be very stiff and prices are gonna get cut to the bone. I think we are seeing the last of the days of $100/hour labour rates.
Any contractor with a lot of standing overhead is going to be sweating bullets if he survives at all. The safest guys will be those who keep the office in their home, own all their own tools and equipment outright, and have few if any permanent employees. But guys like big excavation contractors with a lot of leased equipment and a big garage or shop to pay rent on are gonna be squeezed hard.
There will be some shake-out....
Dinosaur
How now, Mighty Sauron, that thou art not brought
low by this? For thine evil pales before that which
foolish men call Justice....
"I'm thinking some are gonna divide them up in to apartments or condos."Big government stands in the way of common sense ideas like that.
Big government stands in the way of common sense ideas like that.Actually I thought it was small government--local zoning laws. I love to see fire-breathing lawyers go head to head with small-town oligarchies. Buncha part-time näzis....
Dinosaur
How now, Mighty Sauron, that thou art not broughtlow by this? For thine evil pales before that whichfoolish men call Justice....
It was your thread that got me to thinking about this. We see a lot of things in a similar light.
YOu must be a "radical libertarian" then LOL. That's where I tested on the politic test.
Sounds pretty close....
Blue it's not big government.. it's Fred, Mary, and Tom on the city council deciding.. That's an easy gig to get too. If you want to make a differance join up! Most of the council members will be in awe of someone who really knows the building industry.
There are issues involved that perhaps you haven't considered..
Frankly most communities want bigger more expensive houses because usually those kids are grown up and won't need expensive schools and other serves paid for by taxes.
If you divide those homes up and put two and three families in them, the school population is going to explode. That will require new buildings etc.. (and higher taxes)
Plus bitchy neighbors fueding over sound or pets or whatever. Adding to the cost of police work. Can you say more taxes?
Besides that one group may want a ball park while another group wants a tennis court etc.. (again more taxes)
I'm betting that almost all of those McMansions are zoned single family and can't be split into apartments or condos.
I'm betting that almost all of those McMansions are zoned single family and can't be split into apartments or condos.
I'm thinking you're right, but that could be changed. Zoning is local jurisdiction, and if enough people start screaming for a change, the village council will either have to change it, or get changed themselves at the next muny election.
Or, as I said to Blue, some gnarly lawyer with a bug up his arse and a McMansion he wants to stop losing money on might just take 'em to court. That could be fun to watch, actually....
Dinosaur
How now, Mighty Sauron, that thou art not broughtlow by this? For thine evil pales before that whichfoolish men call Justice....
I'm inclined to agree with that dour prediction.. that's why I've been trying so hard to find work out of my field. (construction equipment)
Some will continue to be sold but there is such a flood of near new equipment out there that any contractor is foolish to go through a dealer..
I do see recovery happening in other areas, but not for at least a decade or more in the construction industry.. (even with the stimulus money)
You like printing money, so why don't you become an equipment broker? Being a broker is just a way to print money; you don't have to own anything but a list of contacts--which I would assume you have, after all those years--and you rake x% off the top of each sale just for knowing who's got what and who needs what and putting them together.
Dinosaur
How now, Mighty Sauron, that thou art not broughtlow by this? For thine evil pales before that whichfoolish men call Justice....
Sure seems simple doesn't it?
I wish you knew what's really involved..
Most of the so called brokers I know are less than 1 week away from bankruptcy at any time even during boom times.. All it takes is one deal to fall out of bed and you wind up scrambling like your shirt is on fire..
Contractors can't wait untill you find them equipmment. The contract starts Now!!! That so called piece you checked out earlier may have that morning found another home or the guy who wanted so despirately to sell it may have a job lined up himself..
Darn few contractors are ambivolent about their needs. It's simply not in their nature..
Besides most contractors seem to know the others in their field. They meet regularly at bid openings and watch the competition like hawks hoping to find a technique or method to save time or money..
All those years I spent keeping people happy I couldn't have done it without a significant company behind me..
Just trying to help, seriously; the quote about brokers have a virtual license to print money came from an old friend of mine who made several million dollars a year as a broker, spent 99% of his time on the phone, lying in his king-sized waterbed, and only crawled out from between his twin girlfriends to drag his butt to the bank....
You're right--I don't know anything about the heavy equipment market. But it seems to me that the value of a broker to a buyer is his up-to-the-minute knowledge of who has what for sale where. So I guess you have to actually do some work to earn those commissions. Too bad....
Dinosaur
How now, Mighty Sauron, that thou art not broughtlow by this? For thine evil pales before that whichfoolish men call Justice....
It's certainly not about work..
Hopefully you know me well enough to accept that. If not I'll gladly share some examples with you..
The problem is the nature of the business itself..
Most contracts are given and started upon right away .. there is no time to go looking and check out equipment before hand. If you sell a bad piece of equipment the contractor grape vine is such that you really are pretty much out of business. Used equipment can have so many hidden issues from delayed maintinance to engines about to spill their guts..
If you sell a piece that turns out to be junk or bad, you either eat the piece or lose most of your market..
Sure you sold it as is where is but it was sold under your name and your reputation.. Few people will lay out tens of thousands of dollars and say oh well! I guess I just lost!
Like I said, I know next to nothing about the heavy equipment business. When I need a shovel or backhoe, I either rent it for a few days, or hire a contractor who's got one.
But I do know who can be trusted around here, and who can't. I am sure you were good at your job, so I am also sure you know who in your area beats the beejaysus outta his equipment, and who takes care of it. That puts you miles ahead of anyone who doesn't.
I understand what your point is, Frenchy, but it seems to me if you keep looking for the perfect, totally risk-free job, you're gonna be looking for a long time. And I can't think of anything else that requires as little up-front money to get started as brokering. You need some stationary, a phone, a computer, and a vehicle to get around in.
Like I said, I'm not criticising; just trying to be helpful. Ball's in your court now....
Dinosaur
How now, Mighty Sauron, that thou art not broughtlow by this? For thine evil pales before that whichfoolish men call Justice....
If there was a way in the world for me to stay in the industry I've worked in for nearly 20 years I sure would..
However like a contractor who sees a bad client I am able to quickly see shortcomings in most offerings.. Now I realize nothing will be perfect but just like the interview I went to last night. It's real easy to talk a good game. The issue is will the payoff exceed the risks involved..
They spoke in big broad generalizations to get me and frankly I was honered that they put that much effort in getting me to work for them. So I put on my best suit, shined up my best pair of shoes with a military spit shine. Put on the power tie and showed up..
Only 3/4 of the way through the presentation did I realize it was an insurance scam.. A twist on the refinance your home and buy insurance scam..
There were 12 "employees" there and only 3 interviewes.. the other 2 didn't look capable of any measure of sales success. While judging the employees based on appearances I could tell that they'd not been all that successful themselves.
They were surprised when they went for the close with me that I said I wasn't interested. To give them credit they recovered gracefully since they'd gotten the other 2 and didn't want to queer their pitch by being too heavy handed..
"I don't think construction will be the business sector that brings us around (and I have no idea what else will do it, either)"
What will do it is when we have more money coming in to the country than we do going out of the country. The trade imbalance is staggering and is more of a threat to our national security than all terrorism and the war against it whether it is in Iraq, Iran, Pakistan, Afghanistan, or Korea. China is getting richer and the US is getting poorer by the minute.
If we had a continual positive cash flow coming into the country the banks and businesses affected by this downturn could weather the storm. Instead there is less money to go around and there will always be less money to go around until we stop the flow of money out of this country.
No one in politics even raises a whimper about it because it might tick off the Gods at Wal-Mart and their squeezing blood out of a rock method of forcing manufacturers to sell at the price Wal-Mart wants, not the cost it takes to produce the product. So at the end of the day we really have ourselves to blame because we are the ones that want it faster, better , cheaper.
Start buying locally made products from local merchants. It may cost a bit more, but in the long run it will save the country and it's citizens.
I'll step down off my soap box now, :-)
Constructing in metric...
every inch of the way.
It will be years before it fully recovers because the construction was a bubble married to the home bubble. Home values are still dropping and in the construction-crazy areas of the country literally more than half of mortgage holders are underwater (like Nevada). No longer watching their house appreciate like a helium balloon year after year and using HELOCs up to 100% LTV to pay for additions and remodeling there is naturally a huge contraction because there just isn't money around now. And there won't be even when the recession is over because homes are still depressed and lending standards on new properties are greatly tightened.I still get a kick out of watching HGTV and people looking to buy homes. They'll go into a kitchen that not only is perfectly functional but actually does not look bad or run down or old and they'll drop silly comments like "Well, we'd have to redo the kitchen". I mean, really, what's wrong with it? *borrowing* money to do optional home remodeling IS INSANE. In reality, though, it's simply not as possible as it used to be whether the new home owner thinks that 4 year old white fridge has to be stainless or not. If they don't have the cash they may not get the update.
There in theory would come a point where prices would be low enough that people with a reasonable amount of cash (eg, 20% down) would jump in and buy properties vs renting, and people in smaller homes would "trade up". But in fact that point may have already come but is being negated by the refusal of many banks to loan any money at all, even to relatively good risks.
As I stood before the gates I realized that I never want to be as certain about anything as were the people who built this place. --Rabbi Sheila Peltz, on her visit to Auschwitz
After reading both threads on basically the same topic, my take is that people in the middle of a storm are not the best ones to analyze it ferocity or duration. Or as others have said, its a recession when your neighbor is in trouble but a depression when you are in trouble.
All I am saying is the world as we know it hasn't come to an end.
Our personal seas have been a little choppy, but I'm speaking primarily about what I've seen and read.Are you a business owner?
You must still have your job.
As I stood before the gates I realized that I never want to be as certain about anything as were the people who built this place. --Rabbi Sheila Peltz, on her visit to Auschwitz
<You must still have your job.>
Me and the other 90% do still have jobs.....and thats the point. Trying to pass judgement on the economy without resorting to objective measures is futile. If people who aren't working simply offer up their opinions of the economy, all you will get is doom and gloom. GDP in the first quarter was down 2% and in the second quarter it was basically flat. The picture being painted here is not being reflected in the numbers.
Certainly the picture painted here is colored by the fact that the construction industry is among the worst hit by the recession. In fact, if you examine just the construction industry it probably qualifies as a "depression".But it's the construction industry that people here are most worried about (most of them, anyway), and saying the rest of the economy is getting along famously is essentially saying "eat cake".
As I stood before the gates I realized that I never want to be as certain about anything as were the people who built this place. --Rabbi Sheila Peltz, on her visit to Auschwitz
Maybe its not saying eat cake its saying get a different line of work.
The only people that get to do want they want irregardless of profit or loss are farmers because they get welfare checks. (Farmers hate when you call it that but what else would you call it?) Unless you can convince the government to give you deficiency payments like the farmers have done for years, your options are to do what you do profitably or get out.
All things considered (including looking out the window at the 4" of snow that has just fallen on the unharvested corn after 3 weeks of solid rain), I'm glad I'm not a farmer.
As I stood before the gates I realized that I never want to be as certain about anything as were the people who built this place. --Rabbi Sheila Peltz, on her visit to Auschwitz
10% unemployment rate does not equal 90% unemployment..
What's not counted is what are called discouraged workers. People who have used up all of their benefits and no longer report in.. Here in Minnesota that's a 1000 people a week.. That's why our unemployment rates are dropping while 8 people apply for every single job listed.. (and only one gets the job)
Nor does it count those people who are grossly under employed or working only a part time job when they want a full time job.. estimates vary but the consensus is that brings the real unemployment numbers up to over 20%
At the peak of the depression in the 30's there was 25% unemployment.. . How far are we really from that now?
Yes there are jobs out there,, jobs with no real pay such as telemarketers who are paid only for each sale they actually make not an hourly wage or anything else for the effort..
Doesn't count those who took "early retirement" either.
As I stood before the gates I realized that I never want to be as certain about anything as were the people who built this place. --Rabbi Sheila Peltz, on her visit to Auschwitz
good point..
Heard an interesting stat last night..
45% of baby boomers age 55 to 64 have no retirement either a pension, or saved 401K or IRA. 64% plan on working after retirement..
Fully 85% of all babyboomers have less than $100,000 saved or will be saved before retirement..
I wanted to add on to my house, county say, yes go ahead, make our day, so we can double your property tax. I think one problem with the economy is government schools, health care that want unlimted budget. They run out of money just raise taxes. do away with a captalism system and just take everything.
brownbagg
So who built all those roads and bridges you use to get around on? schools and police stations?
Somebody has to pay for all of that stuff and since you're part of it, you're selected..
Start with your clean sheet.. do away with all the taxes, but give ownership of each mile of road to those next to it.. if they are close to a bridge, give them the ownership.
There's your so called private enterprise..
Now what would it cost you to drive into town for supplies and groceries?
Fred is your friend so he won't charge you anything. Next to him is that jerk and he'll charge you $20.00 and his buddy won't let you cross his bridge at all. If you go back to go the other way around you'll have to pay the jerk another $10.00
Forget stuff like fire departments, electricity, phone, sewer and water, police etc.. they can't afford the fees.
Oh you may have some guns and ammo stored away but sooner or later you'll need new bullets. Not to mention gangs of lawbreakers could join together and outnumber you.. kill you and add your guns to their collection..
Oh, I dunno. I remember in 1982 everyone saying construction was done for 10 years. Turned out 86-89 were boom years.
Runnerguy
I'd love to have the future prove me totally wrong!
Yes. Wouldn't we all!!
One thing that's working in our favor is we aren't selling big screen TV's and the like. Everyone needs three things; food, clothing and shelter (ok, I know some smart a@@ will probably chime in here cutely with other "needs") and we're providing one.
Everyone needs a roof and the poplulation is growing at the same rate. That hasn't slowed down. I look at the local high school that graduates 500 seniors a year. We'll the class of 2009 probably aren't going to be buying a roof right now but those seniors who graduated in 2005 are probably looking now. There's always upward pressure.
Like I said, everyone needs a roof.
Runnerguy
everyone needs a roof.
That's been my business model for 25 years and I've never been hungry and I'm not hungry now. I have been seriously injured, but not hungry.copper p0rn
Yes, everyone wants a roof.It's the ebb and flow of need, compared to availability as per every individuals ability to afford what they prefer, that worries me.
True, everybody wants a roof, but we've overbuilt and it will take a substantial amount of time to absorb the surplus. And once it's absorbed the American public will, for at least a week or two, be leery of building more McMansions, so the average home will only be about 60% of what it was, employing only 60% of the home-building workforce in its construction.
As I stood before the gates I realized that I never want to be as certain about anything as were the people who built this place. --Rabbi Sheila Peltz, on her visit to Auschwitz
Everyone needs a roof--- yes-- but that doesn't mean they are going to replace their existing roof anytime soon. In the roofing industry-- re-roofing existing buildings is the major part of the market-- NOT new construction. Even during boom times in construction---- replacing existing roofs outweighs new construction roofing activity. In the past--- I have had customers replace existing roofs---simply because they didn't like the color of an 8 year old roof-and since they got new siding last year-they want to coordinate the look------ that isn't happening now roofing is something that can be delayed---a while. yes the roof should be replaced-- but instead the customer goes with a repair---- so work for one man one day--instead of 4 men for 3 days. in the past- people might replace a roof-pre-emptively-- knowing it was near the end of it's life---- now-- they are waiting untill they have an actual,active problem' Almost exactly a year ago-- I sat down to structure my roofing business for '09 based on what I THOUGHT would happen.----- I figured roof replacements would evaporate---and roof repairs would BOOM--- pretty much what I remembered from the '80's Instead- what actually happened- was that even roof repairs---evaporated. We did do SOME roof replacements---- but only for people with MONEY. A few Doctors, a few retirees, a few insurance settlements, and a few inheritances. almost ZERO regular middle class folks. for the last 10 years or so--almost every roof we did-- was paid for on a home equity line of credit( I can tell by the check) I don't think I saw a single one of those checks this year( and a lot less checks over all!) I do basically ZERO new construction work-- but even in residential re-roofing---- I can see the market being very week for another 2-3 years. People can delay,delay,delay, nickel and dime repairs-- for quite a while. you may see the same thing with all sorts of durable goods, ---appliances, cars etc.-- people can put off buying new ones for another few years--- but the cars DO where out, the washing machine DOES fall apart- and the roof EVENTUALLY needs to be replaced.
stephen
You completely missed my point. Initially I wrote about "food, clothing and shelter". Instead of later writing metaphorically, I probably should have stuck with the word "shelter" or maybe even better, "house".
Runnerguy
one thing i have learned-- is that if someone misses the point of something I wrote-- the problem was probably in the writing- not the reading.
however-- if you want to extrapolate out to include "house"-- the gist of what I wrote holds true. It can almost ALL be put off indefinitely.
people in apartments- can stay put in apartments and not move into starter houses- others in starter houses- can stay put instead of moving up-and so on.
I have a 3700 sq. ft house-which varies from 3 people full time-- to 5 people full time ( depending on college schedules).
In todays economy-- I can easily see SEVEN people living here full time( and perhaps 3 generations under one roof)-within 2 years.-- Maybe even 4 generations and 8 or more people. the future could easily look more like the 1930's and multi generational housing. nothing says anybody has to resume building anytime in the forseeable future-- the new normal can easily be packed more densley.
stephen
Certainly we'll see families in McMansions, with 4 teen-age kids, have the kids remain in the house rather than move out. A lot of McMansions will be chopped up into "mother-in-law" quarters, skirting zoning rules.
As I stood before the gates I realized that I never want to be as certain about anything as were the people who built this place. --Rabbi Sheila Peltz, on her visit to Auschwitz
Well, everyone else that replied to my post understood the metaphor but, I'll dispense with the metaphor "roof", and post using the term "house" or better yet, "dwelling unit" so everyone understands.
And once again, I think you miss my point. Being the home building industry is built upon upward pressure. There's always more customers coming into the pipeline. Food, clothing, shelter. Everyone need's 'em.
Now, I haven't Googled this or anything so this is all coming off of the top of my head. I'm sure there will be numerous people to jump in if my numbers are even slightly off.
The US is now at like 300,000,000 people and in 2020 we're going to be at like 320,000,000. Now 2,000,000 people a year can be absorbed a little while in Mom and Dads basement but sooner or later we're going to need more roofs, oops, I mean dwelling units.
I'm not talking so much about moving up, as you say in your reply, as much about moving in. The move ups are driven by the moving ins and that comes from the 500 seniors I referenced in my initial post that graduated from my high school. Not so much now the class of 2009 but the class of 2004 or 2005 who are probably looking for a roof, I mean dwelling unit, now.
Sure, I agree, there will be some temporary absorbsion in existing housing square footage in the US due to the recession but with 2,000,000 people being added a year, the housing stock is going to have to go up. Basements are only so big.
Runnerguy
runnerguy..
you seem to forget that people die every year as well. The net differance isn't all that great. don't forget the generation Y which is the currant generation most likely to be in the housing market are coming into millions of new homes which have had several birthdays without owners. and an equally abundant field of reposessions.. Last year in the metro area alone there were 20,000 repos.
That exceeds the net population growth totally ignoring the unsold 30,000 + homes still on the market..
My daughter just bought a new home.. they got a home the contractor had spent $265,000 building. and he sold it for $225,000 In addition to taking the loss he paid off her college loans so she qualified, paid the closing costs himself, and carried the note himself When the bank she had been dealing with wouldn't grant her a loan. (nothing to do with her credit or ability to pay but everything to do with the company she worked for)
Darn few contractors can afford to do that sort of thing.. He took that sort of loss simply because he was tired of paying so much interest on a new house that was depreciating.
Untill the market goes through all those repossed homes and surplus new homes there won't be any building worthy of note.. Of the 1500 plus contractors and others I've sold to over the past couple fo decades only 4 remain in the business..
I have some contractors with many telehandlers just sitting in their storage yards.. they'd sell them except they are near new and they can barely get over scrap price for them..
you seem to forget that people die every year as well. The net differance isn't all that great.
My off the top of my head numbers were about population growth. It WAS the net difference.
Anyone can post the obvious that we're overbuilt now but at 2,000,000 poeple being added a year to the US population there's always been upward pressure on the roof... err, dwelling unit production.
Like I said earlier, in 1982 everyone predicted a very long time before building picked up again (a lot of story's just like your daughter's pick up good deals) and 1985-1989 were boom years.
Like I said, we aren't selling big screen TV's here. Everyone needs a roof....err dwelling unit.
Runnerguy
last months new home sales are up 9.4% from a year ago. That's very good news July home sales were up 3 percent while august was only up 1.5 % The Dow is up over 10,000 from it's earlier lows and we no longer discuss great depression but how soon the recovery will include new employment..
That's all good but very dependant on stimulus money.. How long before that makes enough differance so that employment returns is still up in the air..
Hopefully the one good thing about the H1N1 virus is that it will revell how skinny our employment levels are.. as businesses realize the real cost of too few people employment will return and with it the real basis for a strong economy.
runnerguy.
I do agree that everyone needs a roof..
The problem is the number of excess roofs out there exceeds the number of people willing to buy them..
Here in the twin cites in 2007 we had 30,000 unsold new houses and that number climbed to over 60,000.
Now the twin cities gains about 30,000 families a decade. (growth over loss) so we had nearly 2 decades of surplus homes..
Add the 20,000 foreclosures last year alone and the surplus housing industry is massive..
My daughter recently bought her first home.. She got it from a contractor who had spent $265,000 building it and was willing to sell it to them for $225,000 plus pay off their student loans so they qualified for the mortgage & pay all of their closing costs.
On top of that he carried the note! Yes he was that despirate to get out from under it.. He'd been making payments on it for over 2 years and the only time it had been occupied is when his kid came to visit.
Interest rates in 82 were 18%. Everyone knew that when interest rates came down, the business would return. Right now, the interest rates are the lowest they've ever been in my lifetime. What is going to turn it all around.
It's not a "new" economy. It's the same old one we've had. Same ups and downs. Same players. Same money. The only thing that continually changes is the scale of things. Bigger houses, bigger subsidies and bailouts, bigger players and bigger financial swings. Each time the economy rebounds it comes back its even stronger and with it things get even bigger and the next downturn will be?