I don't see this trend reversing for years, if ever.
We may have seen the peak for our lifetimes. Foreclosures will kill this market in the short term. Long term, baby boomers retiring into apartments, will kill construction. When the next wave arrives, single family homes may be out of style. Who knows.
There are tons of people not being counted on the unemployment roles. My husband is one of them, he's an apprentice electrician. He can't collect unemployment because of all the layoffs and part time stints he took to try and get by. He'd have been better off staying unemployed those times so he could have collected.
Plumbing supply shops laying people off, first time in over 10 years. Local housing contractor in business since 1984 told me this was "5 times" worse decline in work available than he as ever experienced before. His wife had to take full-time job and drop health insurance.
Seems to me we're reaching the point where it can't get that much worse for housing, no? Starts are down about 2/3 from the peak, and adjusted for total population they're unbelievably low. It is true that the country has more housing than it currently needs, but (a) much of that housing is in places where it's not needed (e.g. not enough local economy), leaving residual demand in other areas, (b) assuming a 50-year life for a typical residence, around 2% of the housing stock turns over every year anyway, and (c) there will always be folks building custom "dream" houses.
But the bottom could be an L-shape with a L____ong tail on it. No need to rush out and buy...
THIS CRISIS IS NOT ABOUT CREDIT, BUT ABOUT DEBT. WE ALL KNOW THAT.
HOW MUCH DEBT CAN EACH OF US TAKE? AND FOR WHAT PURPOSES? OUR "CONSUMPTION SOCIETY" HAS HIT A WALL, AND UNTIL THAT IS ACCEPTED BY ALL PARTIES, WE WILL KEEP READING ALL SORTS OF SILLY EXPLANATIONS FROM SO CALLED "EXPERTS".
WE SIMPLY CAN NOT KEEP GROWING BY ACQUIRING MORE AND MORE DEBT AND "STUFF".
IS THIS ALL BAD? OF COURSE NOT!
AMERICA, AND MOST OF THE WORLD, HAS A GOLDEN OPPORTUNITY TO TAKE A GIANT STEP TOWARDS IMPROVING Q-U-A-L-I-T-Y OF LIFE FOR ITS CITIZENS (HAVING UNIVERSAL HEALTH CARE WOULD SOLVE A LOT OF PROBLEMS...FROM DETROIT'S BIG 3 AUTOMAKERS TO WAR VETERANS).
WHO THE HECK NEEDS THE MOST POWERFUL ALLMIGHTY MILITARY MACHINE IN HUMAN HISTORY, WHEN YOUR FAMILY BACK HOME, YOUR STATE, PERHAPS EVEN YOUR COUNTY, IS FINANCIALLY BROKE, NOT TO MENTION YOUR FEDERAL GOVERNMENT AND MANY AMERICAN CORPORATIONS? I MEAN, WHERE ON EARTH ARE OUR PRIORITIES? YOU SUPPORT YOUR TROOPS BY MAKING SURE THERE IS A HOME-COUNTRY TO GO BACK TO WHEN THEY ARE DONE WITH THEIR MISSION, NOT BY UNNECESSARILY WORRYING THEM ABOUT HOW THEIR LOVED ONES ARE COPYING WITH A DISASTROUS ECONOMY BACK HOME (FROM JOB CREATION TO HOUSE MORGAGE PAYMENTS TO COLLEGE TUITION TO HEALTH CARE).
THERE IS NOTHING WRONG WITH BEING STRONG AND MILITARILY POWERFUL...AS LONG ASS...YOU HAVE A CONCRETE MILITARY MISSION, AND YOU CAN PAY FOR IT WITHOUT BREAKING THE BANK. THE SOVIET UNION LOST THE COLD WAR BECAUSE AMERICA BANKRUPTED THEM. THAT IS WHAT RONALD REAGAN DID. HOW IRONIC THAT OUR BELOVED USA IS GOING THE SAME WAY (BANKRUPCY) SOME 20 YEARS LATER...AND WE HAVE NO ONE TO BLAME BUT OURSELEVES.
THERE IS ALSO NOTHING WRONG ABOUT BEING A POLICE-PERSON, AS LONG AS YOU GET PAID FOR IT. THERE IS ALSO NOTHING WRONG ABOUT POLICING THE WORLD (WHICH IS WHAT AMERICA "DE FACTO" DOES), AS LONG AS YOU GET PAID FOR IT (IN WHICH CASE YOU BECOME THEN A "MERCENARY") AND YOU, AND YOUR CITIZENS, ACCEPT THE CONSEQUENCES OF YOUR ROLE ON THE "GLOBAL VILLAGE".
IT IS ALL ABOUT ALLOCATING A FINITE AMOUNT OF RESOURCES.
HOUSING MARKET IN AMERICA ISN'T GOING ANYWHERE UNTIL SUPPLY BALANCES WITH DEMAND. IT IS A MATHEMATICAL FACT.
IF EVERYTHING ELSE IN AMERICA DEPENDS ON STABILIZING THE HOUSING MARKET, THEN WE ARE SCREWED FOR A WHILE YET....YEARS, NOT JUST MONTHS OR QUARTERS.
CAMPING OUTDOORS WORKS JUST FINE FOR ME. ENJOY NATURE. IT IS WELL WORTHY.
ANSFA, you make a whole lot of good points. I would add, where will those Guardsmen work when they get back? More than likely their jobs they had before they went to Iraq are long gone now...What a way to reward them, welcome home, now starve.
Comrade Kristina writes:
ANSFA, you make a whole lot of good points. I would add, where will those Guardsmen work when they get back? More than likely their jobs they had before they went to Iraq are long gone now...What a way to reward them, welcome home, now starve.
ANSFA writes:
WHO THE HECK NEEDS THE MOST POWERFUL ALLMIGHTY MILITARY MACHINE IN HUMAN HISTORY, WHEN YOUR FAMILY BACK HOME, YOUR STATE, PERHAPS EVEN YOUR COUNTY, IS FINANCIALLY BROKE, NOT TO MENTION YOUR FEDERAL GOVERNMENT AND MANY AMERICAN CORPORATIONS?
Looks like a huge disparity between the total starts in the NE (-31.0%) and single family starts (0.0%). Looks like NYC condo market is probably finally turning south. All those WS layoffs finally affecting the numbers there. Same effect in the MW where total is down 13.7% but single family is up 11.5%. In the South on the other hand, total doing much better than SF. I know the numbers can be lumpy month to month and there is lots of noise (just look at the size of the confidence intervals) but this looks interesting.
I have been concerned about a surge of returning vets hitting the employment (unemployment) lines for some time, since it's timing would likely coincide with poor economic conditions.
The backdoor draft of National Guardsman has hit my family as well. You sign up to help your community in times of flood, fire, hurricane, now we retrain you to catch bullets.
Simple advice to those vets out there is get your VA disability rating immediately after your discharged, form a service-disabled veteran-owned company, and bid on government contracts.
1099 is independent contractor verses W2. W2s get laid off, and it's counted. 1099s get laid off, it's not counted.
Quite a few 1099s are on the Tech side as well providing IT services.
It has advantages in the billable rate (tends to be higher). It has disadvantages since you pay quarterly taxes that take more from your pocket then W2s, your healthcare is individually arranged (good for choice but bad for bargaining power since you have no consolidated bargaining).
Many companies prefer 1099 precisely because they don't have to carry the unemployment insurance, provide benefits, etc...many politicians prefer are well--since they are not counted.
I've tried to find the stats on the percentage of workers today that are 1099 vs. 10-20 years ago. Can't find it. I think it is a huge difference on a percentage basis.
Comrade Kristina writes:
Pavel, it means they are independent contractors or "self employed"...Thus, they pay no payroll taxes and are not eligible for unemployment.
My husband is also in these ranks. He lost all of his work from NVR in August (most of his work was in No Va & the exurbs).
Thankfully, he was able to jump on board at another large, local company that is stacked with govenment/commercial repair contracts, so we are no longer relying on new construction.
He still talks to fellow 1099'ers in the area who said they have ALL hit the wall since August. Guys who have been doing $2+ million in work since the '80's are running through savings, laying off employees and trying to doggy paddle. Whats amazing is everyone is of the current opinion that the housing boom is gone, forever. These are the same guys who, 3 months ago, were trying to tell my husband to "stick it out".
It would help alot with a chart like that to also show number of household created. To some extant, household formation is driven by the economy: people moving out/in with others. But it is also driven by demographics.
Small contractor on the mid-atlantic coast. New construction has vanished. Small renovation and repair work are the only jobs available. Personally I've worked 4 days in the last month. I had three projects lined up for this winter- 1 cancelled, 1 reduced by 30%, 1 reduced by 25%. The 30% decline was for a guy from Pa. He's in the metals recycling business. Says his business has collapsed, can't get a bid on his inventory. Paid 850k cash for a small waterfront house back in August. Talking about saving some bullets for whats ahead.
"These are the same guys who, 3 months ago, were trying to tell my husband to "stick it out"."
The area we live in, DC and environs, is generally considered to be recession proof because of the federal presence. But there are troubling signs here, not only a very sharp reduction in housing prices and long waiting times until sale, but also warnings of deep cuts in local budgets. The jurisdiction just to the north of us, Montgomery County, Md., is considered one of the most affluent counties in the country, but I hear that it is now under budgetary stress.
"Millions. 90%, if not more of the residential construction workers are 1099ed."
Most residential subcontractors are the self-employed....small-time shops of single owners. Roofers, framers, trim guys, drywallers, masons, etc. The builder has to 1099 the sub. However, the sub pays cash (especially if they're illegals) or W-2's their labor.
But there are troubling signs here, not only a very sharp reduction in housing prices
I'm looking at moving to a larger home in MC. Something like 4000 sq ft, 2 acres. The prices have come down to something remotely reasonable, but what's holding me back are the property taxes. The property taxes haven't dropped along with the home prices. I don't want to pay $10k/yr in property taxes.
The builder has to 1099 the sub. However, the sub pays cash (especially if they're illegals) or W-2's their labor.
the bldrs. 1099 the contractors who in turn 1099 the subs, very few pay cash, if they do they are taxed for that as income. Illegals get 1099's and paid in cash. Fake names, fake SSN's are listed on tax returns of the contractors. Contractors are not held liable for fake SSN's used by sub contractors.
I used to pay cash all the time. The hourly rate for a cash laborer is less than a 1099 or W-2. There are a million reasons why workers want cash...they're illegal, owe back child support, like the no tax, need the wife/GF to qualify for welfare, etc.
I should add how irresponsible laborers are...I had a couple of workers who had no ID's or Driver's License but were as American as apple pie. Scared to go to the DMV and get an ID because they owed the court or child support or past tickkets. They would sign their check over to their GF/Wife who would then cash it. But when they got kicked out of the house and not even their mother would sign it then their only choice was cash. Great workers but horrible citizens.
What's the deal with gold this morning? Is Iran buying it all up?
Also, someone told me that it's possible to buy denominated gold coins to get out of estate taxes and gift limitations. I'm thinking that this is why the US mint has stopped minting gold coins. Does anyone here know something about this?
In Atlanta October new home sales are off about 47% YOY & permits are off about 67%. The Atlanta Business Chronicle had a front page article saying the GDP in GA has dropped more than any other state in the SE, and is neck & neck with Kentucky & Michican for the dubious title of worst in the nation.
Yesterday I was talking to some folks who have jobs in building supply sales. One guy who used to make mega bucks said he was "trying to figure out what to do with all of his spare time." Another said that 50% of the builders she used to sell to are out of business or idle. She said most of her sales now are to builders of the 6000 SF Mega McMansions. (Supporting the theory that bantered around here yesterday that only the very rich are buying now.) And finally, yesterday I referred a friend to another friend who sales stair parts--The report I got back was that the friend who sold stair parts was laid off on Monday.
Probably over a million to go, to work off the glut. At this rate, maybe another two years. Do you want to get it done fast, or drag it out, for employment sake?
The news on the housing front continues to be bad from the standpoint of overall residential investment. However, this may be a case where bad news is actually good news. With far too much inventory still on the market, the last thing we need is more new homes adding to the glut. This is just a simple collerlary to the first law of holes: When you find yourself in one, stop digging. In this case it is literal, as in stop digging new foundations. Still, this does mean that unemployment will continue to rise in the construction industry. In the official statistics the effect will be muted, since so many construction workers are independent contracters (1099) rather than employees (W-2).
In October, housing starts fell to a seasonally adjusted annual rate of 791,000, down 4.8% from September (828,000, revised up from 817,000) and down 38.0% from a year ago. By region it was a mixed picture though, with starts plunging 31.0% in the Northeast, and down 13.7% in the Midwest on a monthly basis. Starts actually rose 7.5% in the West and were up 1.5% in the South. Last month however, the Northeast was unusually strong, so some of the decline there looks like payback for that. On a year over year basis, the Northeast is also the weakest, down 51.6%, followed by the West (-39.1%), the Midwest (-38.2%) while the South was realatively the strongest, if you can call down 33.9% strong. The extreme weakness in the Northeast this month appears to be tied to the multifamily market, as single family starts were actually unchanged. I suspect the weakness on Wall Street is starting to affect the condo market in New York City and Boston.
The best indicator of future housing starts is building permits, and they were even softer than the data for starts. In October they fell to a seasonally adjusted annual rate of 708,000, down 12.0% for the month (from 805,000, revised up from 786,000 origionally reported) and are down 40.1% on a year over year basis. All regions of the contry were weak but the Northeast was by far int he worst shape, falling 23.7%, followed by the South (-13.5%) and the West (-8.8%). The Midwest was relatively strong on a monthly basis, down just 3.7%. On a year over year basis, the Northeast is once again the weakest down 51.0%, followed by the West (-48.0%). On a relative basis, the South (-36.3%) and the Midwest (-39.5%) were the least weak (can't really call down 36.3% strongest).
Avoid the homebuilders, they serve NO Economic function at this time, nor are they likely to do so for the forseeable future. I am frankly amazed that we have not seen more of the big publically traded home builders like D.H. Horton (DHI), Standard Pacific (SPF) or Beazer (BZH) file for Chapter 11 yet. I would not consider buying any of them until they are trading for pocket change prices (well under $1 per share). Stick with large non-cyclical firms with super solid balance sheets instead, like Pfizer (PFE) or McDonalds (MCD), nobody needs to have stocks like the homebuilders in their portfolios. If you want cyclical exposure, there are much better choices in some industrial names like Joy Global (JOYG) or Honeywell (HON).
charlie writes:
But there are troubling signs here, not only a very sharp reduction in housing prices
I'm looking at moving to a larger home in MC. Something like 4000 sq ft, 2 acres. The prices have come down to something remotely reasonable, but what's holding me back are the property taxes. The property taxes haven't dropped along with the home prices. I don't want to pay $10k/yr in property taxes.
charlie | 11.19.08 - 9:51 am | #
Just wait Charlie, just wait, remotely reasonable is not good enough, wait for "stupid cheap" in about a year.
Dont we have enough houses already?
One wonders how many construction jobs have been lost that don't register on the employment reports.
I don't see this trend reversing for years, if ever.
We may have seen the peak for our lifetimes. Foreclosures will kill this market in the short term. Long term, baby boomers retiring into apartments, will kill construction. When the next wave arrives, single family homes may be out of style. Who knows.
Still beat the forecasts, Equities UP with builders and bankers leading the way. BTW - who cares if these are historic lows, gotta be a bottom right?
I'm wondering about the numbers and changes for purely spec houses. The CB report doesn't have that data (it's probably hard to collect).
Herbert Hoover meet George Bush, George Bush meet Herbert Hoover.
Uncle Kenny writes:
One wonders how many construction jobs have been lost that don't register on the employment reports.
Millions. 90%, if not more of the residential construction workers are 1099ed.
There are tons of people not being counted on the unemployment roles. My husband is one of them, he's an apprentice electrician. He can't collect unemployment because of all the layoffs and part time stints he took to try and get by. He'd have been better off staying unemployed those times so he could have collected.
A little local color from Southeast -
Plumbing supply shops laying people off, first time in over 10 years. Local housing contractor in business since 1984 told me this was "5 times" worse decline in work available than he as ever experienced before. His wife had to take full-time job and drop health insurance.
The hits just keep on comin' . . . .
Seems to me we're reaching the point where it can't get that much worse for housing, no? Starts are down about 2/3 from the peak, and adjusted for total population they're unbelievably low. It is true that the country has more housing than it currently needs, but (a) much of that housing is in places where it's not needed (e.g. not enough local economy), leaving residual demand in other areas, (b) assuming a 50-year life for a typical residence, around 2% of the housing stock turns over every year anyway, and (c) there will always be folks building custom "dream" houses.
But the bottom could be an L-shape with a L____ong tail on it. No need to rush out and buy...
THIS CRISIS IS NOT ABOUT CREDIT, BUT ABOUT DEBT. WE ALL KNOW THAT.
HOW MUCH DEBT CAN EACH OF US TAKE? AND FOR WHAT PURPOSES? OUR "CONSUMPTION SOCIETY" HAS HIT A WALL, AND UNTIL THAT IS ACCEPTED BY ALL PARTIES, WE WILL KEEP READING ALL SORTS OF SILLY EXPLANATIONS FROM SO CALLED "EXPERTS".
WE SIMPLY CAN NOT KEEP GROWING BY ACQUIRING MORE AND MORE DEBT AND "STUFF".
IS THIS ALL BAD? OF COURSE NOT!
AMERICA, AND MOST OF THE WORLD, HAS A GOLDEN OPPORTUNITY TO TAKE A GIANT STEP TOWARDS IMPROVING Q-U-A-L-I-T-Y OF LIFE FOR ITS CITIZENS (HAVING UNIVERSAL HEALTH CARE WOULD SOLVE A LOT OF PROBLEMS...FROM DETROIT'S BIG 3 AUTOMAKERS TO WAR VETERANS).
WHO THE HECK NEEDS THE MOST POWERFUL ALLMIGHTY MILITARY MACHINE IN HUMAN HISTORY, WHEN YOUR FAMILY BACK HOME, YOUR STATE, PERHAPS EVEN YOUR COUNTY, IS FINANCIALLY BROKE, NOT TO MENTION YOUR FEDERAL GOVERNMENT AND MANY AMERICAN CORPORATIONS? I MEAN, WHERE ON EARTH ARE OUR PRIORITIES? YOU SUPPORT YOUR TROOPS BY MAKING SURE THERE IS A HOME-COUNTRY TO GO BACK TO WHEN THEY ARE DONE WITH THEIR MISSION, NOT BY UNNECESSARILY WORRYING THEM ABOUT HOW THEIR LOVED ONES ARE COPYING WITH A DISASTROUS ECONOMY BACK HOME (FROM JOB CREATION TO HOUSE MORGAGE PAYMENTS TO COLLEGE TUITION TO HEALTH CARE).
THERE IS NOTHING WRONG WITH BEING STRONG AND MILITARILY POWERFUL...AS LONG ASS...YOU HAVE A CONCRETE MILITARY MISSION, AND YOU CAN PAY FOR IT WITHOUT BREAKING THE BANK. THE SOVIET UNION LOST THE COLD WAR BECAUSE AMERICA BANKRUPTED THEM. THAT IS WHAT RONALD REAGAN DID. HOW IRONIC THAT OUR BELOVED USA IS GOING THE SAME WAY (BANKRUPCY) SOME 20 YEARS LATER...AND WE HAVE NO ONE TO BLAME BUT OURSELEVES.
THERE IS ALSO NOTHING WRONG ABOUT BEING A POLICE-PERSON, AS LONG AS YOU GET PAID FOR IT. THERE IS ALSO NOTHING WRONG ABOUT POLICING THE WORLD (WHICH IS WHAT AMERICA "DE FACTO" DOES), AS LONG AS YOU GET PAID FOR IT (IN WHICH CASE YOU BECOME THEN A "MERCENARY") AND YOU, AND YOUR CITIZENS, ACCEPT THE CONSEQUENCES OF YOUR ROLE ON THE "GLOBAL VILLAGE".
IT IS ALL ABOUT ALLOCATING A FINITE AMOUNT OF RESOURCES.
HOUSING MARKET IN AMERICA ISN'T GOING ANYWHERE UNTIL SUPPLY BALANCES WITH DEMAND. IT IS A MATHEMATICAL FACT.
IF EVERYTHING ELSE IN AMERICA DEPENDS ON STABILIZING THE HOUSING MARKET, THEN WE ARE SCREWED FOR A WHILE YET....YEARS, NOT JUST MONTHS OR QUARTERS.
CAMPING OUTDOORS WORKS JUST FINE FOR ME. ENJOY NATURE. IT IS WELL WORTHY.
LIFE IS GOOD, AND GETTING BETTER.
HAVE A GREAT ONE!
Caps Lock, dude.
That's it, by the way.
This will be the L______ong Depression!
Starts and permits are still about 90% to high given market conditions.
ANSFA, you make a whole lot of good points. I would add, where will those Guardsmen work when they get back? More than likely their jobs they had before they went to Iraq are long gone now...What a way to reward them, welcome home, now starve.
Today will be very ugly. Turning point ugly.
ANSFA: Please check you caplock, it appears to be stuck.
Is there any way to index this chart to population/. gdp?
Get to work crazyvermonter
ova: Pony TimeSharing writes:
Today will be very ugly. Turning point ugly.
On what basis?
ANSFA, no need to shout
Is there any way to index this chart to population/. gdp?
Excel. Also, there are household size issues.
Comrade Kristina writes:
ANSFA, you make a whole lot of good points. I would add, where will those Guardsmen work when they get back? More than likely their jobs they had before they went to Iraq are long gone now...What a way to reward them, welcome home, now starve.
That is a great, depressing point.
rent_to_own, what do you say to this ?
ANSFA writes:
WHO THE HECK NEEDS THE MOST POWERFUL ALLMIGHTY MILITARY MACHINE IN HUMAN HISTORY, WHEN YOUR FAMILY BACK HOME, YOUR STATE, PERHAPS EVEN YOUR COUNTY, IS FINANCIALLY BROKE, NOT TO MENTION YOUR FEDERAL GOVERNMENT AND MANY AMERICAN CORPORATIONS?
TBC, I suppose another war would solve that problem...shudder
These guys should just take a year off. That might clear the market of excess inventory.
perhaps we could put incoming military into something like the ccc?
bring back some of fdr's programs that might fit todays climate. just a thought.
New thread pig is up.
Comrade Kristina writes:...What a way to reward them, welcome home, now starve.
Starve, wait 2 years for disability payments and get foreclosed. See link:
Newest Veterans Hit Hard by Economic Crisis - NY Times
Looks like a huge disparity between the total starts in the NE (-31.0%) and single family starts (0.0%). Looks like NYC condo market is probably finally turning south. All those WS layoffs finally affecting the numbers there. Same effect in the MW where total is down 13.7% but single family is up 11.5%. In the South on the other hand, total doing much better than SF. I know the numbers can be lumpy month to month and there is lots of noise (just look at the size of the confidence intervals) but this looks interesting.
Off the posted topic, and the topical thread:
I have been concerned about a surge of returning vets hitting the employment (unemployment) lines for some time, since it's timing would likely coincide with poor economic conditions.
The backdoor draft of National Guardsman has hit my family as well. You sign up to help your community in times of flood, fire, hurricane, now we retrain you to catch bullets.
Simple advice to those vets out there is get your VA disability rating immediately after your discharged, form a service-disabled veteran-owned company, and bid on government contracts.
Seriously.
Anonymous, but, but we're number 1! We're the greatest! ACK...I can't even fake it anymore. We suck.
"90%, if not more of the residential construction workers are 1099ed."
Please explain the term.
Pavel, it means they are independent contractors or "self employed"...Thus, they pay no payroll taxes and are not eligible for unemployment.
Deficits don't matter:-)
Wow, this is going to make the Bonus Army look like an Easter parade, methinks.
"Pavel, it means they are independent contractors or "self employed"...Thus, they pay no payroll taxes and are not eligible for unemployment."
Thanks.
Pavel,
1099 is independent contractor verses W2. W2s get laid off, and it's counted. 1099s get laid off, it's not counted.
Quite a few 1099s are on the Tech side as well providing IT services.
It has advantages in the billable rate (tends to be higher). It has disadvantages since you pay quarterly taxes that take more from your pocket then W2s, your healthcare is individually arranged (good for choice but bad for bargaining power since you have no consolidated bargaining).
Many companies prefer 1099 precisely because they don't have to carry the unemployment insurance, provide benefits, etc...many politicians prefer are well--since they are not counted.
blackhat writes:
Pavel,
1099 is independent contractor
I've tried to find the stats on the percentage of workers today that are 1099 vs. 10-20 years ago. Can't find it. I think it is a huge difference on a percentage basis.
Thanks all.
Comrade Kristina writes:
Pavel, it means they are independent contractors or "self employed"...Thus, they pay no payroll taxes and are not eligible for unemployment.
My husband is also in these ranks. He lost all of his work from NVR in August (most of his work was in No Va & the exurbs).
Thankfully, he was able to jump on board at another large, local company that is stacked with govenment/commercial repair contracts, so we are no longer relying on new construction.
He still talks to fellow 1099'ers in the area who said they have ALL hit the wall since August. Guys who have been doing $2+ million in work since the '80's are running through savings, laying off employees and trying to doggy paddle. Whats amazing is everyone is of the current opinion that the housing boom is gone, forever. These are the same guys who, 3 months ago, were trying to tell my husband to "stick it out".
It would help alot with a chart like that to also show number of household created. To some extant, household formation is driven by the economy: people moving out/in with others. But it is also driven by demographics.
Small contractor on the mid-atlantic coast. New construction has vanished. Small renovation and repair work are the only jobs available. Personally I've worked 4 days in the last month. I had three projects lined up for this winter- 1 cancelled, 1 reduced by 30%, 1 reduced by 25%. The 30% decline was for a guy from Pa. He's in the metals recycling business. Says his business has collapsed, can't get a bid on his inventory. Paid 850k cash for a small waterfront house back in August. Talking about saving some bullets for whats ahead.
"These are the same guys who, 3 months ago, were trying to tell my husband to "stick it out"."
The area we live in, DC and environs, is generally considered to be recession proof because of the federal presence. But there are troubling signs here, not only a very sharp reduction in housing prices and long waiting times until sale, but also warnings of deep cuts in local budgets. The jurisdiction just to the north of us, Montgomery County, Md., is considered one of the most affluent counties in the country, but I hear that it is now under budgetary stress.
Someone said in a comment yesterday that this was an older trader saying:
Always fade "always", always fade "never"
I guess you might also include:
Always fade "forever"
Millions. 90%, if not more of the residential construction workers are 1099ed.
Joe the carpenter | 11.19.08 - 9:01 am | #
In California, most aren't even 1099ed. Their illegal and off the books.
"Millions. 90%, if not more of the residential construction workers are 1099ed."
Most residential subcontractors are the self-employed....small-time shops of single owners. Roofers, framers, trim guys, drywallers, masons, etc. The builder has to 1099 the sub. However, the sub pays cash (especially if they're illegals) or W-2's their labor.
But there are troubling signs here, not only a very sharp reduction in housing prices
I'm looking at moving to a larger home in MC. Something like 4000 sq ft, 2 acres. The prices have come down to something remotely reasonable, but what's holding me back are the property taxes. The property taxes haven't dropped along with the home prices. I don't want to pay $10k/yr in property taxes.
The builder has to 1099 the sub. However, the sub pays cash (especially if they're illegals) or W-2's their labor.
the bldrs. 1099 the contractors who in turn 1099 the subs, very few pay cash, if they do they are taxed for that as income. Illegals get 1099's and paid in cash. Fake names, fake SSN's are listed on tax returns of the contractors. Contractors are not held liable for fake SSN's used by sub contractors.
C,GM.BAC, CSX, CCL,CCJ,UBS, all hitting 52 week lows.
Bye bye builders.
Sorry for using CAPS.
Keep the exchange of ideas going.
Have a great day.
????
The builder IS the contractor.
I used to pay cash all the time. The hourly rate for a cash laborer is less than a 1099 or W-2. There are a million reasons why workers want cash...they're illegal, owe back child support, like the no tax, need the wife/GF to qualify for welfare, etc.
Cash is quite common.
"There are a million reasons why workers want cash..."
Easier to pay hookers in cash than with credit cards, too.
I should add how irresponsible laborers are...I had a couple of workers who had no ID's or Driver's License but were as American as apple pie. Scared to go to the DMV and get an ID because they owed the court or child support or past tickkets. They would sign their check over to their GF/Wife who would then cash it. But when they got kicked out of the house and not even their mother would sign it then their only choice was cash. Great workers but horrible citizens.
What's the deal with gold this morning? Is Iran buying it all up?
Also, someone told me that it's possible to buy denominated gold coins to get out of estate taxes and gift limitations. I'm thinking that this is why the US mint has stopped minting gold coins. Does anyone here know something about this?
In Atlanta October new home sales are off about 47% YOY & permits are off about 67%. The Atlanta Business Chronicle had a front page article saying the GDP in GA has dropped more than any other state in the SE, and is neck & neck with Kentucky & Michican for the dubious title of worst in the nation.
Yesterday I was talking to some folks who have jobs in building supply sales. One guy who used to make mega bucks said he was "trying to figure out what to do with all of his spare time." Another said that 50% of the builders she used to sell to are out of business or idle. She said most of her sales now are to builders of the 6000 SF Mega McMansions. (Supporting the theory that bantered around here yesterday that only the very rich are buying now.) And finally, yesterday I referred a friend to another friend who sales stair parts--The report I got back was that the friend who sold stair parts was laid off on Monday.
Low housing starts is a good thing. The growth was unsustainable (obviously).
Probably over a million to go, to work off the glut. At this rate, maybe another two years. Do you want to get it done fast, or drag it out, for employment sake?
My take, cross posted from Zacks.com:
The news on the housing front continues to be bad from the standpoint of overall residential investment. However, this may be a case where bad news is actually good news. With far too much inventory still on the market, the last thing we need is more new homes adding to the glut. This is just a simple collerlary to the first law of holes: When you find yourself in one, stop digging. In this case it is literal, as in stop digging new foundations. Still, this does mean that unemployment will continue to rise in the construction industry. In the official statistics the effect will be muted, since so many construction workers are independent contracters (1099) rather than employees (W-2).
In October, housing starts fell to a seasonally adjusted annual rate of 791,000, down 4.8% from September (828,000, revised up from 817,000) and down 38.0% from a year ago. By region it was a mixed picture though, with starts plunging 31.0% in the Northeast, and down 13.7% in the Midwest on a monthly basis. Starts actually rose 7.5% in the West and were up 1.5% in the South. Last month however, the Northeast was unusually strong, so some of the decline there looks like payback for that. On a year over year basis, the Northeast is also the weakest, down 51.6%, followed by the West (-39.1%), the Midwest (-38.2%) while the South was realatively the strongest, if you can call down 33.9% strong. The extreme weakness in the Northeast this month appears to be tied to the multifamily market, as single family starts were actually unchanged. I suspect the weakness on Wall Street is starting to affect the condo market in New York City and Boston.
The best indicator of future housing starts is building permits, and they were even softer than the data for starts. In October they fell to a seasonally adjusted annual rate of 708,000, down 12.0% for the month (from 805,000, revised up from 786,000 origionally reported) and are down 40.1% on a year over year basis. All regions of the contry were weak but the Northeast was by far int he worst shape, falling 23.7%, followed by the South (-13.5%) and the West (-8.8%). The Midwest was relatively strong on a monthly basis, down just 3.7%. On a year over year basis, the Northeast is once again the weakest down 51.0%, followed by the West (-48.0%). On a relative basis, the South (-36.3%) and the Midwest (-39.5%) were the least weak (can't really call down 36.3% strongest).
Avoid the homebuilders, they serve NO Economic function at this time, nor are they likely to do so for the forseeable future. I am frankly amazed that we have not seen more of the big publically traded home builders like D.H. Horton (DHI), Standard Pacific (SPF) or Beazer (BZH) file for Chapter 11 yet. I would not consider buying any of them until they are trading for pocket change prices (well under $1 per share). Stick with large non-cyclical firms with super solid balance sheets instead, like Pfizer (PFE) or McDonalds (MCD), nobody needs to have stocks like the homebuilders in their portfolios. If you want cyclical exposure, there are much better choices in some industrial names like Joy Global (JOYG) or Honeywell (HON).
charlie writes:
But there are troubling signs here, not only a very sharp reduction in housing prices
I'm looking at moving to a larger home in MC. Something like 4000 sq ft, 2 acres. The prices have come down to something remotely reasonable, but what's holding me back are the property taxes. The property taxes haven't dropped along with the home prices. I don't want to pay $10k/yr in property taxes.
charlie | 11.19.08 - 9:51 am | #
Just wait Charlie, just wait, remotely reasonable is not good enough, wait for "stupid cheap" in about a year.
i wonder how we can cope up with the present housing status????