[lbo-talk] Homebuilders losing confidence in the recovery

Chuck Munson chuck0munson at gmail.com
Mon Jul 19 23:04:31 PDT 2010


Let me share some perspective about this from the Midwest. I was wanting to comment about this subject this morning, but was looking for an appropriate thread.

This is the first recession that has affected Kansas City during my lifetime. The recessions of the 1980s and 90s didn't have much impact here, as the area was experiencing a huge building boom in the suburbs.

Now, everything is either at a standstill or collapsing.

Some of you are familiar with my long, fruitless efforts to find regular professional employment. I currently consider myself to be a self-employed, small business owner. But in May I landed what I was hoping would be a full time job, painting houses in the suburbs for a guy who has been working as a carpenter/painter for decades. I have a college degree in painting/sculpture and some experience as a painter/handyman, so I am no novice to painting houses.

Things were going very well with this job. The painter liked my work and was teaching me some advanced techniques. After three weeks of work, he told me that he was going to finish one project by himself. I didn't hear from him for several weeks, then we touched base and he said that there wasn't any work. He was obviously frustrated. This is a talented, blue collar professional who doesn't have to advertise--he gets all of his work from word-of-mouth and is busy year round. He said that the economy just sucked. The past few years, jobs just piled up on him, which is one reason why he hired me. But now, the work is scarce.

Last week we had part of the roof on our house redone. The weather this spring blew out most of the shingles on the roof above our garage. We hired a roofer who lives in the neighborhood and his crew replaced the roof. We were talking to him and he says that he's been doing roofing for years, but lately everybody and their uncle is hanging up a shingle saying they do roofing.

I'm sure that this is the case across the economy in many communities. People are desperate for income, so they are turning to work doing services for other people. It's even more frustrating that they do this in the housing market, when no new homes are being built and people aren't remodeling.

By the way, when I visit local Home Depots and Lowes stores on weekdays, they are mostly empty. You rarely have to wait in line at the contractor check-out stations.

Finally, the house next to ours is rumored to have sold for $205,000. This is around 30,000 less than other houses on the block are valued. My take is that the owner, who is a retired doctor living in a retirement community, priced the house to sell quickly so the proceeds could be divided up among his children. They didn't fix up the house, hence the lower selling price.

The retail and commercial real estate market around here isn't much better. The number of empty units in suburban strip malls is becoming more obvious as the weeks go by.

Chuck

On Tue, Jul 20, 2010 at 12:41 AM, Steven Robinson <srobin21 at comcast.net> wrote:
> Homebuilders losing confidence in the recovery
>
> By Alan Zibel,  Real Estate Writer
> The Associated Press
> July 19, 2010
>
> Washington - Homebuilders are feeling increasingly pessimistic about their
> industry, more evidence that the economic recovery is slowing.
>
> The National Association of Home Builders said Monday that its monthly
> reading of builders' sentiment about the housing market sank to 14 - the
> lowest level since March 2009. Readings below 50 indicate negative sentiment
> about the market.
>
> The weak job market and an increasing number of foreclosed properties have
> prompted builders to limit construction of new homes. A modest revival in
> sales over the past year ended in May after federal tax credits expired at
> the end of April.



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