Housing Construction Declines
Source: Associated Press/AP Online
Publication date: March 18, 2008
WASHINGTON – In another sign of troubles in the beleaguered housing industry, construction of new homes fell by a larger-than-expected amount last month.
The Commerce Department reported Tuesday that construction of new homes and apartments fell by six-tenths of one percent in February to an annual rate of 1.065 million units. That was a bigger decline than the two-tenths of one percent drop that Wall Street had been expecting, although January was revised up to show a stronger gain than originally reported.
And in a worrisome development for the future, applications for building permits plunged by 7.8 percent in February to an annual rate of 978,000 units, the slowest pace in 16 years.
http://www.toolsofthetrade.net/industry-news.asp?sectionID=1519&articleID=674408
John Wieland Homes Cuts Prices, Adds Warranty, Doubles Sales
Source: BIG BUILDER News
Publication date: March 12, 2008
A sales campaign featuring a combination of price reductions and lifetime warranties on its homes helped double John Wieland Homes and Neighborhoods’ sales in January and February.
The Atlanta-based builder, which also builds in a total of 60 communities in Charlotte and Raleigh, N.C, Charleston, S.C., and Nashville, Tenn., sold 89 homes during the event ran from Jan. 25 through Feb. 17. The sale brought in $50 million in revenue.
“It was very well received,” said Jennifer Nilsson, the company’s marketing manager. While the company did not release specific sales figures for each market, she said the promotion seemed equally successful in all the company’s markets.
The company offered price incentives of between $10,000 and $100,000 on every home, not just inventory homes. And, to give the sales campaign a new twist, it was dubbed “Sale of a Lifetime” because the company included a lifetime structural warranty on every house. Typically, the builder offers a 20-year warranty on its structures.
Wieland, like many builders who operate in Atlanta, had a challenging year in 2007. Last November, it suspended its $350 million luxury condominium project in Atlanta for at least 18 months and laid off 59 employees a few days later, the Atlanta Journal Constitution reported.
“The end of last year was the most miserable time of my life,” the newspaper quoted company founder John Wieland as saying.
The market fall caught the owner of the 35-year-old building company by surprise.
“I am shocked, and I don’t shock too easily,” he was quoted as saying last summer to EconoSouth, the Atlanta Federal Reserve Bank’s quarterly publication. “I don’t know anybody out there that is ‘doing well.’ And bankruptcies of the builders in Atlanta are starting.”
Edited 3/20/2008 8:10 pm ET by rez
Replies
And I wonder what line of work all the displaced carpenters will go into?
A Great Place for Information, Comraderie, and a Sucker Punch.
Remodeling Contractor just outside the Glass City.
http://www.quittintime.com/
Move to Toledo and start a renovation company?
Peach full,easy feelin'.
nah, not enough work considering the Ford plant closing, the Chrysler layoffs and the jeep slowdown.
A Great Place for Information, Comraderie, and a Sucker Punch.
Remodeling Contractor just outside the Glass City.
http://www.quittintime.com/
The longstanding GE plant here just totally closed down. Empty building.
Guys are glad to have something in sweating factory labor at $8 an hour.
Getting ugly.
I'm even thinking of curtailing my Lowes trips 'cause I keep getting larger monthlies on my CC.
Peach full,easy feelin'.
Not to worry.
there's gold in them thar hills.
-untreated wood.A Great Place for Information, Comraderie, and a Sucker Punch.
Remodeling Contractor just outside the Glass City.
http://www.quittintime.com/
there's gold in them thar hills.(quote)Yeah man,...........down here in the South of OH anyways........I saw a guy digging a chrome bumper out of the ground just the other day.....scrapping is getting tougher though...they have moved from the creeks to the hillside.
Down with Lowes! View Image
Peach full,easy feelin'.
I feel bad if I don't leave out some metal for the "pre" trash guys.
Toilets look funny on the tree lawn, but they usually go within the day.A Great Place for Information, Comraderie, and a Sucker Punch.
Remodeling Contractor just outside the Glass City.
http://www.quittintime.com/
On the bright side the creeks will probably be nicer places without the scrap metal in them. Local river here had it's banks used as the town dumps for years, summer canoeing reveals tons ( and I mean tons) of old junk on the bottom each summer.
They can't get your Goat if you don't tell them where it is hidden.
The one good thing around here is that these guys are finally keeping their beer cans and not tossing them in my creek......more and more people picking them up these days.
now is the time to get rid of all unnecessary debts,
do not count on "it will get better by summer"
Unload all spec projects pronto, no matter in what construction stage they are
This is exactly as it started in the 80's. After loosing everything we now know better.
Get rid of all leased vehicles or buildings
No specs, no debt, no leases.
whew!A Great Place for Information, Comraderie, and a Sucker Punch.
Remodeling Contractor just outside the Glass City.
http://www.quittintime.com/
I always wondered:
There is no money to have a decent medical system.
No money to eradicate poverty
Now all of a sudden there are billions to save banks
Where is all this money coming from?
Printing numbers on a piece of paper?
Exactly-
buy now.........
pay later.A Great Place for Information, Comraderie, and a Sucker Punch.
Remodeling Contractor just outside the Glass City.
http://www.quittintime.com/
that is exactly the problem
sooner or later you have to pay
If there is no income you are in trouble. - see present situation
like I said , I might be the luckiest man alive-no debt.
as for the rest of the world-my apolgies.A Great Place for Information, Comraderie, and a Sucker Punch.
Remodeling Contractor just outside the Glass City.
http://www.quittintime.com/
Okay, Calvin, help me think through something....
From what I'm reading and hearing on MSNBC for example, they are saying the recession will last about as long as the last two, 10-18 months....unless something happens like Sept. 11.
If you don't owe anyone, your home and cars is paid for, for the most part, you can do your own repairs, and paper money isn't worth much, What's the way to get through what might be a long term Depression? (Food, clothes, electricity)
Thanks,
Bill
If you don't owe anyone, your home and cars is paid for, for the most part, you can do your own repairs, and paper money isn't worth much, What's the way to get through what might be a long term Depression? (Food, clothes, electricity)
Bill, I'm a little unsure of the answer you're looking for. With no debt one would initially seem to be sitting pretty. However, there's the costs of living that still rears it's head. Property taxes being a large one. Food, fuel and fun form a substantial portion. Throw in all the insurances, both personal and business and the costs of doing business and you still need to make money.
For all intents and purposes, the same amount of money you were making before (less depending on the amounts put to savings).
So I guess the answer would be to buy less, play less and cut your expenses, both business and personal. On the positive side, it might be a tad easier to not lose anything that you''ve worked so hard to build.A Great Place for Information, Comraderie, and a Sucker Punch.
Remodeling Contractor just outside the Glass City.
http://www.quittintime.com/
>Where is all this money coming from?
Printing numbers on a piece of paper?<When the Fed gets in trouble they just print mo money. Thats why your dollar doesnt buy anything much anymore. Its getting bad 'cause the Peso is slowly catching up with the US Dollar. That and some vendors in NY are starting to take Euros instead of Dollars now.The buyout of Bear Sterns was easy becuase JP Morgan is a big part of the Federal Reserve. At least Chase is which is a part of Morgan. They just aproved theirselves to buy out Sterns more or less. It would have been suicide not to though. Just prolonging the inevitable though.Doing away with the Fed would go along way to eradicating poverty IMO.Where there's a will, there are 500 relatives
I still have a picture from my dad where they carried papermoney in washbaskets on a wheelbarrow just to buy a loaf of bread.
Money was pasted on walls for insulation and rolled in tight wads to burn because that was cheaper than buying coal.
The Reichsmark (a goldcoin) was replaced later with papermoney printed in bills (as in billions) - in effect it was worthless. People started to barter in goods instead of getting paid in money
Could you explain your statement that JPMorgan big part of Fed Reserve please.
The Federal Reserve is the central banking system for the US. Chase is a major part of the the Fed and also part of JP Morgan. The full name is JP Morgan Chase & Co.The POTUS has no say in the matter except to appoint the Governors. It is like the Supreme Court. They make their own decisions once appointed. They are seperate from the three branches of Government.They are also the reason the economy is going south too. At least 85% of it.Where there's a will, there are 500 relatives
last I knew the Fed. was a federal agency.
I'm still interested in how chase is involved?
>last I knew the Fed. was a federal agency.<Yes and no. It is bound by the basic rules of the Federal Reserve Act but does not need permission from any branch of the Government to do what it does. In fact, The Act specifically states that they (any branch of the government) cannot have any say in the matter so as not to pass any personal political agenda.Have you ever known of Federal politicians getting something fasttracked in less than 6 hours....on a Sunday before?Congress just checks in every once in a while to make sure that they are doing their job. They are like a subcontractor for the gov.>I'm still interested in how chase is involved?<Almost every bank in the U S is involved with Chase being probably the biggest one. Their impact on the Fed would be like KB Homes impact on the NAHB. A rather large one. Bear Sterns HAD to be bought out. Chase had the money. Who do you think the Fed was talking to about the buyout? It was probably negotiated out by the two.Try this out as a test. All government agencies have to keep open financial records. It is in the Constitution. Try to find the financials of the Fed and you will see what I mean. It is popular to blame this POTUS or that POTUS for the ecomony when the actual culprit (mostly) is really the Fed. Clinton did appoint Greenspan, but that is all the blame he can take for the economy. The rest is on Greenspan or Bernake who was appointed by Bush. They had no other say in the matter.Where there's a will, there are 500 relatives
Not that I know much but I read that POTUS can
't recommend just anyone for head of the Reserve. He is given a person's name (or maybe it's a list of a couple) that the bankers want so in effect the bankers control the reserve. The head of the reserve is ALWAYS one of the bankers, never one of the governments.roger
Reagan appointed Greenspan. Clinton reappointed and kept the ball rolling.
Edited 3/23/2008 9:42 am ET by robp
bambam,
Slight nit to pick.. Greespan was originally appointed by Reagan... and reappointed by every president.
Edited 3/23/2008 10:15 am ET by frenchy
> Slight nit to pick.. Greespan was originally appointed by Reagan... and reappointed by every president.<FrenchyThe reserve chairman is elected to 14 year terms so your math doesnt add up. I do know that Reagan appointed him first.Where there's a will, there are 500 relatives
so, what you are saying is that there is no direct control by Chase of the fed.
Who would you want talking to the fed other than it's direct customers?
Interesting side note, dimon, head of jpmorgan used to work for citibank.
Yes the fed was set up as an outside agency of gov, to help keep politics out of money decisions.
Citibank is largest bank in US.
Chase, wich is part of JP Morgan, is far from the largest cust. of Fed.
2nd. largest bank is Bank of America.
Some of your conclusions are rather weak.
>Citibank is largest bank in US.<You sure about that? Citibank was only ahead of Morgan by about 60 billion. Now they just aquired another 300 billion by the buyout of Bear Sterns.
At 10 cents on the dollar.>Chase, wich is part of JP Morgan, is far from the largest cust. of Fed.<No 3 before the buyout. Thats by '07 receipts.>2nd. largest bank is Bank of America.<Funny you should mention them as they used to be the Fed during the Civil War.>Some of your conclusions are rather weak.<I dont profess to be any kind of economist at all. I do not like the way the Fed is eroding the dollar day by day. By your words it SEEMS like you think this is the way it should be and everything is hunky dory. I hope that I am misreading that.Back in '73 my mother bought a program car with less than a thousand miles on it. It cost her 3 grand. It was a top of the line Mercury Grand Marquis. Minimum wage was $3.35 IIRC.Basically you could work for a thousand hours (minimum wage) and buy this car.Can you do the same at Minimum wage today? This is the point I have been trying to make. Not that the world is coming to an end. The Fed is the economy and visa versa. When they print more money the value of the dollar goes down. It will then take more man hours to buy that car, house or even pay for the national debt.Where there's a will, there are 500 relatives
73 min wage 1.65/hr
I don't think people on min wage should be thinking about buying a Mercury.
The fed and treasury dept. finally got banks to start lending with their latest move.
By the way I bought a new plymouth duster that year $2751.
I'm not going to argue your #'s(lazy) but if you watch cnbc, citi is largest bank in the world.
JPMorgan raised their buyout to $10/share this morning.
Existing house sales up 3%.
Stock market took off.
Including homebuilders.
only 9.6 mtn supply of houses on hand, might mean that things will get going by summer.
as to yourlast point, alittle late, the dollar is on the way back up.
This will lower the price of oil and other commodities
"as to your last point, alittle late, the dollar is on the way back up. This will lower the price of oil and other commodities"Probably not. The USD index, now at 73, is way below its 50 day moving average, so last week's spike from 71 to 73 is just noise, not likely a break in the downward trend clearly established since 2003 when the index peaked at 120. The dollar is down because the U.S. government keeps printing money to buy stuff it otherwise couldn't afford. Add to that the $2-3 billion a day we borrow from Asians and it's easy to see how Americans manage to spend $1.08 for every dollar earned. All the talk of plans for mortgage (i.e. bank) bailouts will require lots of money to implement. Since it's an election year and raising taxes won't fly very far, where do you think all that money will come from? That's right, they will print it. The same thing has played out many times through history - governments print money and inflate their debts away.Trouble is people in other countries won't like getting paid with devalued dollars, and they will raise prices for oil, TVs, autos, you name it. Anything imported will get more expensive. On the positive side, our exports will become cheaper for others to buy, but outside of aircraft, military gear, and construction equipment, what exactly do we make here in the U.S. anymore?
you sir are rather simplistic in your take.
While I agree we as a nation borrow toomuch, we have a very strong
economy, not married to manufactoring anymore.
Ther are a lot of man. still in us.
Cars, tvs, chips,computors some that you forgot?
Latest #'s
Less than 2% of homes in forclosure
Less than 6% of hownowners have missed payment.
or as I like to put it 98% of homes not in foreclosure
or 94% of hownowners paying their mortgage on time.
Please your #'s are not quite accurate.
Hedge funds as much as 1000 to 1 leverage
investment banks 30 to 1 leverage
I think that the SEC should investigate hedge funds
I think they are playing games with the futures market in oil
supply is high, more is being found
The decline in dollar only accounts for $10-15 of price.
Why is it over $100/barrel?
"you sir are rather simplistic in your take."Yes I am. In fact I'm so simple I still believe debts have to be repaid, with interest. And I live under the quaint assumption that a group of people who consume more than they produce eventually have to make up for the difference and correct the imbalance through saving or extra work.This country now has a debt burden, public and private, of about $250,000 on the head of every man woman and child alive today. Most politicians say it doesn't matter, and some sophisticated types even claim the size of the debt indicates just how good our credit is with the rest of the world. Since I'm simple, perhaps you can explain to me how Americans will service and retire this debt? The debt equals 540% of an average worker's annual income. I don't know too many people who are eager to give up five years of their lives to pay for all this, but one way or another, we will have to do just that to put our financial house back in order.
the first thing you must do is account for the debt that is bogus
The national debt is suppoded to be around 10 trillion dollars.
Not so.
The SS trust fund makes up a portion of this debt.
In other words one arm of govern. owes another and it is then included in the total
Accounting gimicks that would land a business owner in jail for fraud
we as aa nation owe a lot but as a % of the GDP it is quite low
In fact it is lower than the % a bank would require of you to recieve a mortgage.
"Accounting gimicks that would land a business owner in jail for fraud
we as aa nation owe a lot but as a % of the GDP it is quite low"Really? Businesses have to account for their pension plans and other promises made to retirees, the federal government does not. The "official" debt of about $10 trillion does not include the $40-50 trillion promised for social security and medicare.Using the official numbers our national debt (public + private) as a percentage of GDP is over 160%. That's a low number? Add in the social security, medicare, and pension promises and it jumps up to the 540% I posted earlier. This is all money we've promised to pay to ourselves and to banks in other countries. Again, where is it going to come from when we, as a nation, consume more than we produce? For the past ten tears we've been acting like a teenager with his first credit card. Life is good until the bill comes due...Recent events tell me the bill is coming due.
160% is low when compared to you and your mortage.
As far as accounting for ss etc., why should the gov. when private ind. don't .
you are mistaken when you say that co. have to account for.
Promises made to consti. are not contrac debt.
yes it is a huge #, remember that inflation is our friend when it comes to debt.
As far as ss, this should have been privatetized long time ago.
If you took 15% of you income and invested it in conservetive invest. it would be worth a lot more than you will ever recieve from ss..
One more thing, the number of 250000 is low using the10 trillion figure
We as a country should not owe this much, but a lot of this is because other countries do not play by the same rules we do.
ie. letting their currencies float the chinese in particular are playing this game.
The sooner we play hardball with these countries the sooner we can help our own countries...
All fed agencies have tokeep open financial records in the const.
Please direct me to where in the constitution it says this?
I agree that the former feds chief policy of low int rate for too long.
My understyanding was that this is what Pres. Clinton wanted.
His goal of house for everyone...
Frammer, like it go before one of those left-coast guys get involved with meaningless stats and the "sky is falling" mentality.
and you become dogmeat in the process.
be sorry, couldn't resist
Peach full,easy feelin'.
sorry, I love those left coast guys, and how the world is coming to and end because their real estate market is dead.
Super long article but interesting.http://www.nytimes.com/2008/03/23/business/23how.html?ref=businessroger
"Unload all spec projects pronto, no matter in what construction stage they are"Panicing like that can not only hurt the ecomny in general, but worse off damage you..
.
A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
that is what they also said in the 80s.
when you then loose 20 years of your life you will think differently.
That lost time can never be recovered.
housing values are going down, if it does not have positive cash flow it is a no brainer to cut losses and sell now rather than later and lose even more.
i couldn't agree with you more, and in fact i think that even more people will figure out that if they owe more on the mortgage than property is worth they will walk.
the more that walk, the more real estate declines, the more it declines, the more that will walk.
I'm guessing 4 years of declines yet to come. reading/listening to harry dent property will return to 1999 values. if you can't get it for less than 99 appraised value, you paid too much.
the one thing that is appreciating, and is expected to continue is agricultural land. the more that people invest in it, the more it will go up. i sincerely hope everyone jumps on that bandwagon quick so i can make some money!
interesting you mention 1999 levels. Talking with a banker and realtor, they said market activity in our area reflects 1999 levels, for days on the market ( and some other statistics). 1999 was not a bad year, just less than the boom years in between then and now. Prices are dropping, but I don't know if they are at '99 levels.
Talked with a different realtor yesterday, who was not as optomistic. She didn't comment on how far prices will correct, but clearly whatever is selling has a "correction" component in the sale price right now. One agent in their office has been in it 33 years, and has not had a closing since November which is his longest dry spell ever. Lots of marital and stress problems in the real estate office because agents have no income with out sales.
She mentioned two different sales she has had. Sold one house 3 years ago for $80K, and just re-sold it for $75K after owner put in $7K in improvements. Other one was sold couple years ago for $93K and she re-sold it for mid $80s after $12K in improvements. Add in the commision, and that is a pretty good hit for an owner to take.
Bowz
gentlemen:
WElcome to the real world.
I have lived in upstate NY for 50+ years. We have not had the price inflation on housing.
We have had an increase in home prices during the last 5 years after the 90's were flat.
Many people have put money into homes and when selling do not recieve back what they have invested.
The upshot is that you stop looking at house as investments, but as a place to live.
The overall statitics for US are down 3%.
Individual areas can be more or less.
The world is not coming to an end...
frammer52
Good point about your home not being an investment. Not in the traditional sense..
Stocks can be purchased and resold without serious consquences, oh you'll take a loss or gain a profit depending on various factors. But you won't have to take the children out of school, pack your belongings, and move if you are forced to sell because you can no longer afford the house.
On the other hand nothing is a better long term investment than your home.
You can control a major asset with a little down payment. Something that is not usually available to stock investors. In addition the purchase of a home with it;s attending mortage is tax deductable with corresponding reduction in your income tax debt.. Realestate values don't typically flutuate dramatically since they are primarily a family's shelter and the need for shelter doesn't go away if the investment isn't doing well..
Realestate will appreciate at the rate of inflation plus the rate of population growth adjusted for desirablity of the location.. For example waterfront property values will soar as retirement nears and the babyboomers seek that home by the beach/lake etc.. intheir retirement. Whereas bedroom community's values will decline as there are fewer workers seeking their own little patch of lawn.. especially in the further outlying areas..
That formula can be examined by looking at countries outside of the United States. In Europe or Japan for example it is normal for two or more generations to make mortage payments and 50 year mortages are the norm..
The losses you are reporting are those occuring right now.. not to homes owned and sold at more even times.. While it is true you can buy at the peak and then be forced to sell. The opposite is also true..
I bought my first home with Nothing down and a borrowed $50.00 from the realitor. Today I own 4/5ths of my home worth more than 2.4 million.. in spite of a regular pattern of taking out equity for living expenses.
My sister is in a similar position. Owning 3/4 of a million dollar property when less then a decade ago she was forced to declare bankruptcy.
Neither of us are forced to sell so should the market soften we can simply hang on untill the market returns..
while technically that doesn't meet the requirements of an investment it is more than 60% of the average families wealth..
Finally considering that less than 5% of the professional stock market analists have a net return greater than the growth of the DOW Jones over a 5 year period and the difficulty of selecting investments which yield higher returns, realestate can and is a great "investment" especially now.. I bought during a period similar to this and the growth of the value of that home and this home have made the vast majority of this familys net worth..
The double in price every decade often quoted is not adequite to describe highly desireable property such as waterfront..
as far as the stock market, the best investment for average person is either s&p index fund or etf.
I believe that a persons net worth is tied up in most families homes,
but the average person should not be using this as a bank,
except in cases like yours.
frammer 52,
We'll have to disagree about which index fund is better. While I do own some S&P 500 most of my fund money is in the Dow and for me based on when I bought and the market today. I'm a little ahead in the Dow. Both have been lousy returns.
The deal about my home though I really don't feel that smart.. I mean I saw this when I made my first home purchase.. Instead of a larger more modern house I accepted what I could afford on the lake.. In retrospect highly desireable property like waterfront or hobby ranches etc.. will continue to always out perform bedroom communities which have the sole function of being relatively close to work..
Population will continue to grow and we will have the same amount of land.. The Result has to be higher demand.. but desireable land will always command a premium over ordinary land..
Edited 3/24/2008 8:30 pm ET by frenchy
"in spite of a regular pattern of taking out equity for living expenses"
if thats not an "investment" and the best one you ever had i don't know what is!
by your own words you are using your house as your own personal savings account.
for most people in this country their house is the biggest investment they will ever make. one of the main reasons housing got nuts is that more people are treating them as such (speculators)
"by your own words you are using your house as your own personal savings account."Savings account?When I take money out of a savings account, I don't have to pay it back. That isn't true for home equity loans or cash-out refis. Unfortunately a lot of Americans are confused about that difference.
no you don't have to pay it back, not if you don't want a savings account.
Edited 3/24/2008 9:26 pm ET by segundo
The problem in the mortgage industry is directly tied to the country's largest banks. Take Citi for example. They are leveraged 40 to 1 today, up from 18 to 1 just a few years ago. For every dollar they have out on loans, only 2.5 cents in reserves are available to cover bad loans or defaults. Other big banks are rumored to be in even worse shape. Some large hedge funds, sitting on _trillions_ of dollars of derivatives contracts, are leveraged 100:1!This means even a small decline in RE prices and a modest uptick in defaults on mortgages will make these banks and hedge funds insolvent. Insolvent banks are supposed to be closed to protect the depositors and that is what the Fed does to small fish who get in trouble. They show up on Friday, shut the place down, and reopen it on Monday under new owners. But what happens if it's a Citi, WaMu, or Wells Fargo that needs to be reorganized? TILT! Not even the Federal Reserve can fix a problem that big.Weird stuff is going on behind closed doors in DC and New York, banks are afraid to lend to each other (for good reason) and the powers that be keep saying everything is fine, move along. I don't buy it for one minute.
I'm with you on this one TJK. Weird things are going on. I think it will all balance out but if they let it run it's course, the banking system would collapse. Bob's next test date: 12/10/07
So you would rather loose 50% of a $250k investment than 20% of a $300k investment..
.
A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
BillHartmann,
I agree with your assesment.. while it might be tought to take a loss virtaully any reasonable assesment of the market in the future means things will return. They will eventually start to appreciate.
300 million americans and growing steadily. Homes will have to be found for all of them.. The economy may be down now but it will return.. the only question is when..
If the bank forces you out then you have no choice if they don't you hunker down float with the tides and wait for a returning tide to recover..
I'm getting a laugh out of some of the arguments about how housing will go.
Some of you live in areas that have been flat for years. The same steady, no boom, no bust type economies. two summers ago when I took my son to Sparta Ill. for the Grand American trap shoot, I stopped and had lunch with Boss Hog.
He lives in one of those areas. Slow but steady. No boom. No bust.
If you've lived your whole life in that type of environment, you probably struggle to understand why some of the people here are in such a panic.
In the late 80's, things around here (N.J, Eastern P.A.) crashed and crashed hard.
In the span of a month the development we were framing in went from selling the same model for $425K to $375K.
Now imagine you are the guy who bought in at $425? You put zero down and are negative am ( the gimic of the day as far as mortgages were concerned)? You just went over $50k upside down overnight.
The guy I bought my house from in 1996 had been there since 1987. he put money down and never refinanced. he lived there 9 years. 8 of them after things crashed.
He wrote the mortgage company a check at closing to cover what he couldn't make up at sale.
Friends of mine had purchased a house in 1986. When they got divorced in 1997, they had to come up with $30K to unload their house.
People who bought at the top of a market fueled on by risky, dangerous financing lost in a big way.
Sound familair? It should. 'round my way builders have been discounting to get rid of inventory. prices have dropped. Sales are almost no existant. Houses that would sell before the sign could be planted are now showing up with "Price Reduced" signs.
New work has ground to a halt. Remodeling will not last the duration of the storm either.
Why? Simple, so many people took equity or were in over their heads to begin with that there is not equity left to pay for things like kitchens or baths or decks.
If you're loaded with debt? You should be worried today.
Just like last time, it will take a while for the other shoe to fall and then even longer for things to straighten out.
Forget the housing market propeganda.......look at the classifieds. How many Harleys, boats, jetskis and snowmobiles are for sale.............that starts when guys have been out of work long enough to have run short on cash.
Here's a clue. I was gonna order a new Sportster 1200 from the Exchange service. That is until I called to amke sure the dealer I wanted would be able to deliver it for me. That's when he told me he had a floor full of them and would do whatever it took to beat the price I was getting from the Army/Airforce exchange.
.that starts when guys have been out of work long enough to have run short on cash.(quote)Your right......I always took notice (especially in AK the kind of pickup a guy had.......and how many fancy do-dads were for sale cause guys need the money for a plane ticket to the lower 48
I just watch two indicators. "Work Wanted" in the trades section and "Tools for sale" Always a good indicator of where things are at currently. Back in the early 80's I did business with a guy who prowled the US , buying shop tools and large units of construction tools from the hardest hit areas of the country. He would then truck them to areas that still were showing some growth and resell them. Made a good living off the carcass of the beast .
They can't get your Goat if you don't tell them where it is hidden.