IS IT MY IMAGINATION OR…is business slowing down this year?
I just had my second postponement of a major job in less than a month. Both postponements (to ‘next year’) are from established clients; both gave as the reason for putting the job off as financial–they’re spending too much elsewhere (on the principal residence, or kids in university, or whataever) and are feeling the pinch.
For the last several years, I basically couldn’t keep up with client demands. Jobs had been falling into my lap, chasing me around the countryside, and just generally keeping me as busy as I wanted to be with absolutely ZERO sales effort on my part. But this year, I’m getting a funny feeling in the pit of my stomach, where I do my most important thinking. So….
Just wondering if any of the rest of you are encountering the same phenomenon, especially those of us from The Great White North….
Dinosaur
A day may come when the courage of men fails,when we forsake our friends and break all bonds of fellowship…
But it is not this day.
Replies
Ours is slowing way down too. The forecsat for this summer is very bleak. Might have to go hunting for something else.
Shout out to Andy C. Namaste my friend.
http://www.hay98.com/
I ain't from the great white north, but...
Our customers, salesmen, and plant guys are all over me. Everyone wants their stuff and they want it NOW.
I've actually LOST orders because I couldn't get 'em designed quick enough. Our biggest competitor (my ex-employer) is an almost unheard of 4 weeks out.
I've been working 50+ hours a week, and am not even CLOSE to keeping up. I could work 80 or more, but ya gotta have a life.
Haven't seen any signs that it's gonna slow down. At least until Christmas.
We absolutely dropped dead in the middle of December through February. A few small repairs and a couple of bathrooms I already had booked. No phone calls, no nothing. One well established multi crew firm folded and a couple of small guys like me went to work in factories.
Then at the end of February we were slammed with phone calls and are booked 2-21/2 month out right now. And the phone is still ringing.
In February I started a newspaper ad and did a couple of home shows and that seemed to jump start things again. We are going to do a booth at the county fair this year too. I figure if there is some business out there it should be my business and I am going to go get it, hence the advertising campaign. Seems to have worked. But I still don't think there is as much out there. DanT
No slowdown here at all. Need a job?
No slowdown here at all. Need a job?
Not yet, at least I hope not. The commute to your place'd take a real dig outta my paycheck in gasoline....
What's happening here is kinda like some days when you go fishing--lots of hits on the lure, but when you reel it in, there ain't no fish there...or just a little crappie too small to feed ya....
Three days ago I got an e-mail canceling a DCA for adding two dormers to a house. That would have billed out about 8 grand, I guesstimate. They put it off till next year. (Along with the wrap-around enclosed deck and the complete new kitchen....) In the meantime I'm moving a garden bed for the same customer and laying a couple of tons of stone, all of which will bill out about $1500.
This morning I saw a $17,000 cedar shake re-roof and insulate job turn into a $1500 patch job. Again, they want to put it off till next year. Got a deposit check on the repair, but that'll only keep my lawyer churning for about a day, LOL.
Neither of these clients are poor, and neither is shopping for another contractor. They are both old established clients who don't call anyone else no matter what they need. They're just feeling tight in the ol' back pocket....
I don't know what to think. It's been totally insane for five years or longer; this is a boom-tourist-town and they've been flooding into the area like black flies in May and buying up every square inch with or without a house on it at ridiculous prices. 1-acre lots that have sat unsold for twenty-five years went for mid-5 figures when ten years ago you coulda had 'em for a grand flat. People have been buying perfectly good chalets and knocking them down to get lakefront, then building McMansions.
We've all been attributing this boom to two things: First, the mega development being done at the base of the mountain by my winter employer--largest single construction project since the Québec government built the James Bay Hydro dams in the 70s; and Second, the unbelievably low interest rates. My mortgage just flipped again and the rate has gone down for the fifth consecutive time in ten years. I took a 5-year re-up 7 years ago; couldn't believe rates would ever get lower than they were back then...but they have. I've taken 4 six-month renewals since that 5-year one ran out. I'm now heading for 4% or something like that.
So what's gonna happen now? Is the lagging US economy gonna scare us hardy Canucks into bumping up interest rates and hunkering down?
Dinosaur
A day may come when the courage of men fails,when we forsake our friends and break all bonds of fellowship...
But it is not this day.
A couple of fairly new world-class golf courses played by the big boys that come in on private jets, play 9 or 18 holes and leave, or hang out in their little vacation pad....and a bunch of retirees from California who sell their 30-yr.-old suburban ranch for $800K and come up here and build their dream home.
That and low interest rates and being a desireable area with a mild climate drives a building boom that seems endless, though I know it can't last.
Biggest problem here is getting good help....I've managed to find and keep a couple good ones, but I'm still on the prowl for a good lead journeyman.
I'm about to bid a $800-$900K custom. My crew and I do pretty much all from foundation to roof...sub drywall, utilities and HVAC....but I'm getting pretty fried wearing most of the hats, getting little sleep, working 7 days a week (at least for the past 6 weeks, finishing current house). Can't clone myself....and if I did, I'd feel sorry for my poor clone!
But real estate listings here average five days.
I've never seen a building boom persist like this, especially in this area, historically blue-collar (logging, fishing, Shipping, lumber and plywood mfg.), but has recently changed to retirement, tourism, casino....
Five days?!! Holy Spit! I thought it was fast around here at two weeks....
But how long can it last? And how hard will it crash? I've been figuring to sell and move someplace where land prices make some kind of sense for the last three years or so...but I'm stuck for the time being.
Last time this area bombed out was in the early 80s. I bought this place in 84 for a pittance; rebuilt it from soup to nuts and it's worth about 10-12 times what I paid for it now. Smartest deal I ever made in my life...if I can take advantage of it before the bottom drops out.
But from reading the posts in the thread so far, the signs I'm seeing here are far from universal. It seems to be spotty. Boss is working his butt off and falling behind. Others are having the same sort of thing happen to them in their area as I am in mine.
It'd be interesting to hear a bit more about the areas where things are slacking off. Are they all 'boom' towns of one sort or another that are about to boom-out?
Dinosaur
A day may come when the courage of men fails,when we forsake our friends and break all bonds of fellowship...
But it is not this day.
Upstate NY checking in to say everything seems to be fine. We, meaning me and my employee are busier than ever.
There is definitely a building boom going on here. I'd like to add another guy but everybody who knows anything about repair and remodeling are getting cold called by customers looking for someone to help them out. Therefore they are all 'contractors' now. Some union and Commercial guys are sitting around carrying signs at big jobsites and bidding on 'cash under the table jobs' while collecting unemployment just to make sure nobody can make any real money. But other than that it is pretty good.
I'm delivering a house bid today. Additionally without the getting this bid I'm booked for 3 months, at least.
Real Estate listings are turning over pretty fast. A neighbor of a customer put a sign on his lawn one friday morning and sold his house by noon about 3 weeks ago
Edited 6/5/2005 8:08 am ET by TMO
TMO,
where in upstate you at?
Syracuse or Rochester??
I'm in Elmira, and it is like we are a mile behind the curve.
by the time we see any improvement locally the peak is already past...ACTUALLY, IT'S QUITE GOOD ON TOAST!
Oneonta/Cooperstown area. Elmira and oneonta are very simalar in thier "behind the times" scenario. We've had a few good years recently though. And cooperstown is practically an anachronism unto itself.
Some development and tourism related building have kicked the local economy in the but.
You aren't looking for a carpenter with about 25 yrs experience are you???If you aren't one of the one's I'm talking about,you shouldn't have any complaints....
If your willing to work for $9-10/hour you bet.
Ha Ha! 9-10 would be ok if I were an 18 year old laborer who knew nothing about carpentry, or didn't own any of my own tools...but thats not the case.....If you aren't one of the one's I'm talking about,you shouldn't have any complaints....
Just kidding. But the pay scale in this area ain't exactly great. I have a great employee who I pay 10.00 but thats 10 with comp coverage, strictlly legit, and he gets to use a truck. He is more of a general helper than a lead mechanic though.
Edited 6/5/2005 10:30 am ET by TMO
yeah, I know the pay isn't as great up there, but then again the cost of living is far cheaper as well......down here it's so high that 18 an hour makes for substandard living, at least if you've got a wife and kids....
If you aren't one of the one's I'm talking about,you shouldn't have any complaints....
If you have your own tools and liability insurance you can do pretty decent around here. Some of my most profitable years came as a by the hour sub. I don't hire by the hour subcontractors but plenty of guys do. Additionally I would pay an employee more than 10 if they can run a job and stay productive. The guy I got can do lots of stuff but he works best as a helper dude. He is among the best available as far as his skill set goes.
Edited 6/5/2005 10:37 am ET by TMO
been working as a commercial superintendent on both commercial and residential projects for almost 8 years....anything from power line jobs, road reconstruction and restaurants, all of which are wood finished inside........drywall, you name it, but no plumbing or electrical......and my truck is loaded down when I pull onto site....If you aren't one of the one's I'm talking about,you shouldn't have any complaints....
I'll try and post some pics of the restaurants I've finished...not sure if I can get them on as the size of the pic may stop a lot of people from viewing....If you aren't one of the one's I'm talking about,you shouldn't have any complaints....
here's some pics.....hope they can be opened, still not sure how to resize them to get here properly so dial up connections can view without waiting hours....If you aren't one of the one's I'm talking about,you shouldn't have any complaints....
Very Adirondack Lodge look. Nicely done.
Thanks...this is a chain of rib places down here that are in the southwest states....just finished one in Roswell at the end of last year.....they're a pleasure to build....If you aren't one of the one's I'm talking about,you shouldn't have any complaints....
This is an article in today’s Wall Street Journal: <!----><!---->
<!---->
New Study Finds Real EstateFalls to 13% of Portfolio;Should Others Notice?<!---->
By ROBERT FRANK Staff Reporter of THE WALL STREET JOURNALJune 10, 2005; Page C3<!---->
Rich Americans cut back on their real-estate investments last year, suggesting that the wealthy believe the market has become overheated, according to a new study.<!---->
The World Wealth Report, produced by Capgemini and Merrill Lynch & Co., showed that Americans with $1 million or more in liquid assets cut back their real-estate holdings to 13% of their portfolios in 2004, down from 17% in 2003. The decline followed an increase in 2003. The rich increased their investment levels in hedge funds, bonds and cash.<!---->
"They're bringing down their total level of exposure and taking some risks off the table," says James P. Gorman, former head of Merrill's private-client group and now head of corporate acquisitions, strategy and research.<!---->
The report said that while the rich may not have sold off real estate last year, they allocated less of their total investments to real estate and real-estate-related investments. The drop is a contrast to everyday consumers, who continue to buy up homes and drive up prices. Since the wealthy are often at the forefront of investing and financial trends, market experts say their shift could be a leading indicator of a market peak.<!---->
"This behavior, which appears to be in anticipation of the sector overheating, is consistent with our belief that [the wealthy] are in general more informed than the average investor," the report said.<!---->
The report also said the number of financial millionaires -- those with $1 million or more in liquid assets -- grew 10% in the U.S., to 2.5 million from 2.27 million in 2003. North America produced more new financial millionaires than any region of the world. For the first time since 2000, North America surpassed Europe in the total number of financial millionaires, according to the report. Europe had 8.9 million financial millionaires at the end of 2004, compared with 9.3 million in North America. Asia's millionaire population grew by 8%.<!---->
The report said the main drivers of wealth world-wide were growth in gross domestic product, low interest rates and rising stock markets. The total wealth held by financial millionaires world-wide rose 8%, to $30 trillion.<!---->
Although I'm sure your realstate market is hot I question the five day turnover. By that I mean that I think most estate agents under sell proerty to flip them quick. They make more money in volume than they would if they asked for an extra 20-40k and waited a few months to get it.
I'm just quoting what was written last week in the local paper in an article about the real estate and building economy here.
Oddly enough, I live in an area that has experienced high unemployment for the past 20 years; it's still running about 9-10% in this county, but construction continues unabated and mid-priced homes are going fast at prices that reflect 10-16% annual gains.
For those of us who have been around here for awhile and struggled through some really slow times, the whole thing has us scratching our collective heads.
4-5 days here means selling the same day that offers are accepted on a listing - taking offers is deliberately withheld about that long.
The predominant pricing strategy (until the market cools) is to decide between two choices:
1) If the place is desireable, ask under expectation hoping to get a bidding war on the evening when offers are taken. Bidding wars with up to 10 unconditional bidders, and sales WAY over asking are common. Most agents will advise that, as soon as there are two registered offers, start at over asking and waive all conditions. It is common to see three or four home-inspectors doing their thing during a Saturday open-house and means there will be war. (Actually, people are now not holding open-houses).
2) If it has any detracting points to speak of, ask what you really want. Buyers who don't want to pay $400 per advanced home inspection to make the unconditional offer on fright night (again and again and again) come out the next day to make solid offers at 95 to 100% of ask with a home inspection in the next couple of days. If it doesn't sell in 2 weeks, then something is wrong. It is often withdrawn from market for a re-assessment and/or paint job, and relisted.
I do think bidding wars are down somewhat from a couple of years ago, due to more listings. But, they still happen, especially for stuff in limited supply like private driveway or 4 bedrooms in the older 'good' neighbourhoods.
Several of my clients who basicly live off the proceeds and keep the rule of never touch the capital will spend more in years the market is doing well, and back off to the minimal in years when it staggers as it has recently been doing. Even though profits are climbing, stock prices are stuck in the ditch, except for s few stars. That has kept many portfolios sorta flat and the clients less than willing to stick their necks out. Younger ones are in the growth phase of life and willing to spend more freely.
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
weird. I see houses going up, it looks like things are still happening, but I'm hearing the same thing. Everyones slow. The drywallers are, the painters are (and it has to trickle down to hit them). Once again, I'm just counting my blessings. Know what I'm doing until at least October.
"If you pick up a starving dog and make him prosperous, he will not bite you. This is the principal difference between a dog and a man." - Mark Twain
I've noticed it as well, lots of phone calls, very few takers. And my wife just herniated a disk at the hospital where she works (or worked, anyway) so the lack of jobs is beginning to get alarming, at least in my household. I would surely hate to go back to the nuke plant; my stomach churns at the thought.
For the first five months of this year compared to the first five months of last year I'm down 66% in dollar volume.
Fortunately, I am doing a much better job of pricing for profit, so I'm not nearly as bad off on that end as on the gross (still sucks though).
I have about four days worth of work booked.
Oddly, there always seems to be more to do than I can get done.
Rich Beckman
Another day, another tool.
Last week the newspaper had the monthly summary of realestat activity.Headline was Home Sales are DOWN.But you looked at the number of SALES and they where higher than the previous month and the same period last year.But what was different was the number of unsold homes on the market.But there was no break down of how many where new homes (being over built) or older homes that people decide to put on the market.But new home starts was strong.
It's getting harder and harder to get subs interested in coming out to the island because they are all too busy on the mainland where they have no commute expenses or waiting in line for the ferry
Welcome to the
Taunton University of Knowledge FHB Campus at Breaktime.
where ...
Excellence is its own reward!
What island is that? I'm in Old Orchard. Things are getting crazy down here as the tourist season kicks in.
Dustin T
islesboroI'll be in So Portland next week for a visit to the cardiologist to find out if being too busy is killing me.
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
Hey, I can tell you the answer to that and I wont charge you near as much as your cardio Dr.
I'll even give you a guarantee!
Doug
I can gaurantee that you will die, too!;)
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
Here in coastal Alabama, we're not slowing down a bit. There's still repair work going on all 'round from Ivan, and the moratorium on new construction's gonna be lifted from several communities in a few days, so that means even more work (and less qualified help).
Took a peek at the classifieds last weekend, I counted 17 ads for carpenters and framers...I've never seen so many skilled labor ads.
Personally, I'm trying to get some inside work since this summer's lookin' kinda hot.
Hey BROWNBAGG, quit your job and come answer my phone man! ;-)Jason Pharez Construction
Framing & Exterior Remodeling
So there!
We can both go to work and save our money. No need for the doc.
Doug
We can both go to work and save our money. No need for the doc.
What are you saving your money for? We are all going to die anyway.
Dino,
I'm in MA, and I'm busy as heck. Actually getting to pick and choose jobs finally. But there's storm clouds brewing. Houses are starting to sit unsold for a lot longer than just a year ago. Home sales in the .75M to 2M range (my bread and butter) are tapering off substantially. No one seems ready to stop building them though.... yet.
I'm also getting more calls for addition framing though. Not a bad thing. The remodelers are balls out around here and many that usually frame themselves are subbing out the frames to keep up. Good for me. I'll shift gears and play that game as long as the money seems right.
You've always got work down here..... but the view isn't quite as nice :)
FWIW, in my area home sales are slow - I usually don't see many vacant homes this time of year (where the seller has moved out and is carrying a bridge loan aka two mortgages) but I'm stlll doing over 50% vacants this year.
Great time to be buying!
Being just a grunt, I guage the market by the carpenter ads in the classifieds.
usually by April they are 5-6 deep or more with a steady stream all summer.
I have not seen a sunday paper with more than 2 since Last spring.
I talked with one guy, I heard was hiring, and he had 30 apps to look over.
ACTUALLY, IT'S QUITE GOOD ON TOAST!
The fiancee and I are plannning a move back to upstate NY around the 1st week of August, I see Ft Drum is hiring like mad. I'm pretty sick of the classifieds down here in the OKC area looking for experienced carpenters and paying the phenomenal wage of 9-10 bucks an hour....There's about 100 or so jobs listed like this every day in the OKC paper....If you aren't one of the one's I'm talking about,you shouldn't have any complaints....
Perhaps everyone's moved to Alberta. Further west, on Salt Spring, I cannot take on any more this year.
Tip from someone on Breaktime years ago - put up your rates. Work will flow, he said.
Ah Saltspring, Whistler by the Sea. I live in Sidney and work on the islands alot.
Seems to be no shortage of money or work there.
What you are likely looking at is a down-turn in the economy, or uncertainty, in your immediate area. Is there one or more major local industries that are rocky? Could even be a subtle demographic shift toward a more conservative age group. Materials costs are also up meaning that unless real estate values are screeching, the perceived value of the work may be down to the 'would be nice...but' category.
I don't know if you've seen other posts from Ontario as opposed to PQ, but in Toronto, the renovation and infill markets are still extremely busy. I think I read that new home sales are still very strong too. I have an appointment to call a preferred contractor in January to book him for next summer. He's booked out farther into the future than he likes to commit.
Of course the question is how long will it last. Affordability for first time buyers is way down. I'm sure people getting into starter homes today (2 storey Semis with a 13' by 35' footprint at $450K) won't have spare cash for eons. But, interest rates have been at historic lows now for nearly 10 years, so a lot of people have paid down a mortgage and gained in equity. So far, we haven't seen early warning signs like high rates of speculation at 3% down or a condo market gone off -- but I'm not sure there was warning last time.
starter homes today (2 storey Semis with a 13' by 35' footprint at $450K)
455x2 SqFt. 'starter' homes at $450 K...? That works out to about $500 per square foot. Jeezus! Where are they located--on Yonge Street?
We've heard about the unbelievable cost of housing in TO but thank bog it hasn't gotten that bad here (except of course for the specialty 'condo' market--Intrawest can sell what is basically a 70,000$ condo for 475k or more just by sticking it at the bottom of a steep hill and spraying water all over that hill half the winter...).
There are multi-7-digit homes being built in this area, too...but these are all McShowplace jobs that nobody will ever live in. Guys like Tommy Hilfrigger, for instance, who comes buzzing in in his helo just long enough to tell the plumbing and tile subs to tear it out again (six times at last count) because he doesn't like the colour....
One local contractor I know has done four spec houses in the last six years, each well over 5 million. He told me that each and every one of them scared him grey and rubbery from conception until the ink was dry on the certified check....
Anecdotal news from the Pgh area (my mother, not Jeff Buck) is that everything has gotten so expensive it is making people slow down spending. Gasoline seems to be the driving force in this. Figures. But up North of 49, gas is and has been for decades twice as expensive (or more) as down south. Is it just perception...or are salaries not keeping pace?
I just jacked up my rates by the biggest single hike I've ever done. I had no choice, basically. So I'm now charging about half of what most big GCs would. But people aren't complaining about my prices, or the estimates in the DCAs. One client cancelled the DCA four days after ordering it before I even gave them a ballpark. The other was very happy with the figures I showed--even told me it was less than they'd paid for essentially the same job on their primary residence in Ottawa last year--but came to the conclusion they just didn't have it this year. Only way I can figure that one is they were fooling themselves into hoping my price would come in at half of reality, and it didn't.
Dinosaur
A day may come when the courage of men fails,when we forsake our friends and break all bonds of fellowship...
But it is not this day.
homes in our area are going up as fast as they can buy and old one tear it down and throw a new 2500 stucco paradise up for 550K.
However home sales, which just last year,,would easily sell in 15-20 days are now up to 300 days in some cases with an average of about 100-120 days. And they were selling for MORE than the list price, now they are averaging 3-5% below list
Something is happening
-----------------------------------------------------------------------------
"Have you seen my baseball?"
Your post reminds me to do this. Here is an example of old and new construction that explains why work is aplenty in the great smoke, Toronto. For more shock and awe, you can search by price at http://www.mls.ca
"Half million" means currently listed from $450K to $499K, and "Cool million" means on the market for $1M to $1.1M. These more vanilla infill homes can linger on the market, but not usually for more than a couple of months.
Wow, those would get maybe 40% of that here in Asheville, NC. Of course, in the Bay Area of Calif, they'd get double.
I read after a number of different $soothsayers, nastyprognosticators, forniforcasters and here is a copy of an article dated last week from a doomsayer among the bunch.
Don't know much about it so don't nobody go git riled at me but thought it might be an interesting read seeing this is a homebuilding site.
be watching bees eating CCA
The government and the press are finally beginning to recognize the big risk in the housing market that I've been warning you about for months ... Fed Chairman Greenspan admits "fluff" in the market and recognizes that many local areas could be "housing bubbles." View Image The Federal Reserve, the FDIC, the Comptroller of the Currency, and two other government agencies have issued stern warnings about high-risk mortgage lending. The Mortgage Bankers Association warns that high-risk adjustable and interest-only loans now account for a shocking two-thirds of the mortgage market. The New York Times asks, in a big bold headline "Is Your House Overvalued?" The Wall Street Journal says real estate speculators are buying houses on margins like they bought dot-com stocks in 1999. New York magazine has even gone so far as to use the normally-taboo "CRASH" word on its front cover. It asks its readers: "Is it coming? How bad? How soon? Is your apartment like a dot-com stock?" Good questions! But, alas, no one is giving you solid answers. Here are mine ... First and foremost, watch mortgage rates. As long as they stay low, the housing boom could continue for a while longer. But soon after mortgage rates rise sharply, the housing bust will be upon us. Right now, despite the recent rise in the Fed funds rate from 1% to 3%, 30-year fixed mortgage rates are still near their all-time lows. This anomaly cannot be sustained. Mortgage rates must rise sharply. Second, pay close attention to the actions of banking regulators. If they back up their warnings with firm actions, it could puncture the bubble. Third, don't assume you'll have plenty of time to react. When the bubble pops, it's going to happen fast. Panic selling will replace panic buying. Crashing values will replace surging values. Fear will replace euphoria. Fourth, brace yourself for a sweeping impact on the economy. As long as the housing boom continues, millions of Americans could continue to spend like drunken sailors and borrow like there's no tomorrow. But as soon as the real estate boom ends, Americans will snap shut their pocketbooks, with far-reaching consequences.
Lessons from Abroad The real estate bubble in the United States is not unique. Japan's recent 10-year depression was caused almost entirely by the consequences of their real estate bubble of the 1980s. Australia's economic slowdown — taking place right now — is also largely due to real estate problems. Their building approvals for houses and apartments have just plunged to the lowest level in almost four years. Their retail sales are stagnating. Their manufacturing has slipped to its lowest level in three years. Ditto for the U.K., where home sales have dropped 30%, while home prices have declined for eleven months in a row. But of all the advanced economies in the world today, I believe our real estate bubble is the most vulnerable of all. My reasons: * It's so big. Real estate is the single largest sector of the American economy, one of the largest sources of new private-sector jobs, and the biggest asset of nearly every household. * It's so speculative. In 2004, 36% of the homes bought in America were mostly for speculation. And most new home buyers are reaching for homes that are larger and more expensive than they would buy in normal times. * It's so deeply buried in debt. Residential mortgages alone now total over $8.1 trillion. That's even bigger than the $7.6 trillion debt owed by the U.S. Treasury Department, the most debt-hungry entity in the world. View Image * The debt is so risky. Borrowers can now buy homes with no money down, no documents, terrible credit histories, and even recent filings for personal bankruptcy. Then they're allowed to borrow with virtually no protection from rising interest rates and can wait years before paying back any principal. * The authorities have been so complacent. Economist Edward Yardeni, quoted in the New York Times, puts it this way: "The Fed chairman cleaned up the mess caused by the bursting of the technology and telecom bubbles, by creating another bubble. Now he has failed to stop the alarming deterioration of mortgage lending standards to stop the housing bubble." I agree. * Homes are so vastly overvalued. In relation to rents, homes are now more overvalued than at any time in history. And they're also the least affordable ever. Indeed, this chart, showing the affordability of an average home, has just sunk to the lowest level since the indicator was first compiled in 2000. Can the bubble continue for a while longer? Perhaps. But you have two choices: You can either take protective action now, before the bubble bursts. Or you can wait it out until the last minute and risk getting trapped in the decline. I recommend the former, with a well-planned, step-by-step approach.
Step 1Get out of the way of these vulnerable stock sectors! Vulnerable sector #1. Home builders. As soon as the bubble bursts, expect a glut of new and used homes on the market along with a decline in the sales at most home building companies. Up until now, new home buyers have been able to buy homes they can't really afford by rushing into high-risk loans. But if federal regulators put muscle behind their words and start cracking down on these loans, sales could dry up quickly. New home sales are already suffering: March's sales gain, which was previously reported at 12%, has just been revised down dramatically — to only 4.5%. Plus, the rate of appreciation in home values is slowing. Prices rose just 3.8% between April 2004 and the same month this year, the smallest gain since December 2003. Major stocks to avoid: Beazer Homes (BZH), Centex (CTX), Lennar (LEN), and Ryland Group (RYL). Vulnerable sector #2. Mortgage lenders. Until now, these companies have been virtually printing money. Last year, for instance, homeowners cashed out with roughly $700 billion of their home equity — with home sales, refinancing, or home equity loans. Just five years earlier, in 1999, the equivalent total was just $266 billion. But as mortgage rates rise ... regulators clamp down on high-risk loans ... and home prices go soft, this money printing machine could grind to a halt. Buyers simply won't be able to tap into a limitless supply of equity any more. Subprime lenders — banks and mortgage companies that target borrowers with weak credit — are particularly vulnerable. Major stocks to avoid: Countrywide Financial (CFC), Accredited Home Lenders (LEND), and New Century Financial (NEW). Vulnerable sector #3. Diversified banks. In the fourth quarter of 2004, total interest bearing assets at all banking institutions tracked by the FDIC rose by $207 billion. Of that figure, a whopping 71% was from residential mortgages, home equity loans, and mortgage-backed securities. Add in construction loans and commercial real estate loans, and you find that banks relied on the real estate business for almost 80% of their growth. And despite this big exposure to real estate, banks have slashed loan loss reserves to the bone. The FDIC reports that provisions for loan and lease losses were just $6.2 billion in this year's first quarter — down 18% from the same quarter last year and the lowest level since late 1999. Major bank stocks topping my list of the most vulnerable: HSBC Holdings (HBC), Citigroup (C), Wells Fargo (WFC), Golden West Financial (GDW), and Fremont General (FMT). Vulnerable sector #4. Retailers. Watch out especially for stores specializing in home improvement goods, yard supplies, furniture, appliances, and other related goods. Avoid: Home Depot (HD), Lowe's (LOW), La-Z-Boy (LZB). Vulnerable sector #5. Construction-related businesses. These include makers of materials ... suppliers of lumber, concrete, carpet, and paint ... companies distributing or leasing construction equipment ... and more. The basic rule of thumb is clear-cut: If the company has been living off the housing bubble, it's vulnerable.
A person with no sense of humor about themselves is fullashid
Edited 6/9/2005 9:31 am ET by razzman
When you say that "Intrawest" can sell...... OK are you up by Mont Tramblant?"Sir! You are drunk!"
"Madam! You are ugly, and tomorrow I shall be sober!!" Winston Churchill
are you up by Mont Tremblant?
Yeah, I'm right in it. I work for the mountain as a pro patroller in the winter, not particularly liking having to pre-heat my nailgun before it'll function, LOL....
This place has seen more than one boom-bust cycle. When Joe Ryan bought the mountain in 1936, there wasn't one man in ten with a job around here. Standard Chemical's wood alcohol plant had gone tits up a few years before and that was the only game in town. But once he bought it and started building the resort, things started to boom....
I bought my place near the depths of the last bust, in the mid eighties, by pure luck. Now the more thoughtful of us are starting to wonder just how long this insanity can last. Falling-down shacks twenty kilometers from the nearest lake and 45 minutes by bad roads from the mountain are selling in the high eighties and nineties when ten years ago you could have had seven of them for the same price.
There's a bad downside to all this, too. The locals can't afford to live here anymore. More than half the time, when someone inherits a fully-paid-off family home from a parent, he is obliged to sell because he cannot afford the real estate taxes on it. My taxes, for instance, just doubled in one shot. Ouch....
I'm still getting work; my customers are still loyal, and they aren't bitching because I had to raise my rate to keep up with the out-of-control cost of living in this tourist town. But the big projects--the ones billing in 5 digits--are falling through. I am trying like hell to fill my schedule with lots of small stuff.
Dinosaur
A day may come when the courage of men fails,when we forsake our friends and break all bonds of fellowship...
But it is not this day.
I live in Montreal, specifically DDO.
Parents live in Sutton so that is where we do all our skiing.
As for Sutton the same thing about house prices. The (as my Dad would call them) Tout risques. for tourist. Are buying up everything and the locals can't afford to rent anything let alone buy.
The house next to my parents may go up for sale by the land lord. it's a duplex with no land and in need of major repair work. Nothing structural but the lady upstairs never left her apt. for four years and smoked heavily.
At least Mom and Dad own theirs."Sir! You are drunk!"
"Madam! You are ugly, and tomorrow I shall be sober!!" Winston Churchill
I'm on Long Island in NY. One crew that I've used and worked with is really dragging. They keep on talking about how good things are, and how much money everyone else is making, but a gc they were doing work for is so far behind on paying that even the laborers are getting frustrated. If you put a gun to my head, I'd say construction is slowing down. There are still some nice/big projects around, but less of them than last year or the year before.
On the RE end, we've had some crazy price appreciation over the last few years, so that's not a bad thing. And Dino, I'm with you. Capture the appreciation while you can. I sold one of my buildings last year to a developer. 17 months later, he's still waiting for approvals.
Don
Central Ct.- Never been busier
My dilemma is how to work around vacations. I planned 2 separate weeks with an on week in between. DW actually thinks I'll be working that week.
I guess were so slow that we're going to be chasing work for the next month or two. We have two guys in Illinois this week and a couple maybe three going to Toledo next week.
It beats working at the shop which is what I'm doing today. Building fence out of unistrut. Tell me this guy aint a redneck.
Shout out to Andy C. Namaste my friend.
http://www.hay98.com/
You gonna be one of the guys to Toledo?
And really a big cardbd envelope w/high postage and a money order?
Remodeling Contractor just outside the Glass City.
Quittin' Time
Edited 6/7/2005 6:45 pm ET by calvin
I'm on standby. I'll let you know if I make it.
Well sure high postage and money order. Only the best for the fest.
Shout out to Andy C. Namaste my friend.
http://www.hay98.com/
You devil.Remodeling Contractor just outside the Glass City.
Quittin' Time
Not going to Toledo,They're actualy going to Dunkirk. Hey doesn't our mega rich friend HubCap live there?
Anyway I'm going to Mount Vernon Illinois next week to do a two or three day camera job. And so the chase goes.
Shout out to Andy C. Namaste my friend.
http://www.hay98.com/
I knew the pool shootin "fast denny from dunkirk" and assumed that was around findlay or fostoria. Other than that, ? Hub's from the east of Columbus...what's the name........gahana mebbe. If those boys find dunkirk and it's near those two towns I mentioned, tell em to find New Reigel and go to the Cafe for ribs.
enjoy your trip.Remodeling Contractor just outside the Glass City.
Quittin' Time
I think Dunkirk is just outside of Columbus. Between there and Maryville.
They won't go out. They'll work 15 hour days and head home as soon as they can. They're all hen pecked.
Shout out to Andy C. Namaste my friend.
http://www.hay98.com/
"I'm going to Mount Vernon Illinois next week to do a two or three day camera job."
When will you be there? that's only a couple of hours from here.
If Olivia Newton-John married Wayne Newton, then divorced him to marry Elton John, she'd be Olivia Newton-John Newton John.
Tuesday and Wednesday. Half way for supper one night?
Shout out to Andy C. Namaste my friend.
http://www.hay98.com/
Works fer me. Salem is closer to Mt. Vernon. And Vandalia is closer to me. Everything that's roughly halfway between the 2 is tiny little farm towns that I know nothing about. Being as you're on the road, how about somewhere in Salem? Should be a half hour drive for you.We could shoot for Tuesday evening, and switch to Wednesday if things don't pan out for Tuesday. I should be free both evenings.I'll email ya later with contact info.
I try to take one day at a time, but sometimes several days attack me at once. [Jennifer Unlimited]
Roger that Ron.
Shout out to Andy C. Namaste my friend.
http://www.hay98.com/
We're in the NorthEast and we're booked thru Mid-October from here and we have 2-3 inquiries for projects that would book the first availability in October. We do additions and renovations.
We're in the NorthEast and we're booked thru Mid-October from here and we have 2-3 inquiries for projects that would book the first availability in October. We do additions and renovations.
Are the projects the same size as in previous years, or are you getting more smaller ones instead of fewer larger ones?
Dinosaur
A day may come when the courage of men fails,when we forsake our friends and break all bonds of fellowship...
But it is not this day.
The projects are getting bigger. Interestingly, the smaller projects are the ones that have begun to tail-off.
Do you have any idea if that is the general trend in your area, or is it just your company?
Dinosaur
A day may come when the courage of men fails,when we forsake our friends and break all bonds of fellowship...
But it is not this day.
Well, its only my observation you're getting but I am seeing far more additions going up than I've noticed before. Housing prices have gone thru the roof (like everywhere else) so folks have equity they can borrow against to expand which seems to be whats happening. Basically, we went from jobs ranging from $30-$50k to jobs ranging from $50k - $200k on a regular basis. Some of this can be attributed to an architect who likes my work and is giving us quite a bit of solid referrals. Obviously, I would like to see us continue in this range, but you never know what tomorrow brings. Why do you ask?
Just scoping anecdotal evidence for a financial prognostication is all....
As I said, we're in a boom-town and a lot of us are starting to wonder when it's gonna bust. General trends in the economy have a trickle-down effect on places like this once the boost from the promoter loses its initial shine....
Dinosaur
A day may come when the courage of men fails,when we forsake our friends and break all bonds of fellowship...
But it is not this day.
Where is this boom-town located? What type of work do you do?
Quebec, about a hundred miles north of Montreal. I do 95% renovations and remod's.
Dinosaur
A day may come when the courage of men fails,when we forsake our friends and break all bonds of fellowship...
But it is not this day.