Friday, January 05, 2007

CBIA Chair: 'It was more like a stock market slump than a housing slump'

From the Sacramento Bee:

[A] chorus of industry officials believes the bottom is near. That's what to watch for in this new year. Will Sacramento lead the nation out of its residential real estate doldrums? What will prod buyers off the fence? And what will it take to sell your house?
...
In the Sacramento region, where the market saw housing starts "nosedive" from annual highs of 18,000 from 2002-2004 to just 10,000 new houses during 2006, [California Building Industry Association chief economist Alan] Nevin predicts a modest 2007 recovery. He sees 10,000 to 12,000 starts.
...
Thursday, Nevin acknowledged he didn't see the depth of 2006's downturn when offering predictions a year ago that in hindsight proved overly sunny. New CBIA Chair Wes Kuesder, a Los Angeles-area builder, said the entire industry guessed wrong about 2006. "What's unusual about this slowdown is the rapid downswing," he said. "It was different than the others, different than the last 30 years. That was a surprise." "It was like a memo went out" to buyers to just quit, said CBIA President Robert Rivinius.
...
Watch for a new round of construction management layoffs as 2007 begins, said Angel Ahumada, CEO of a Roseville-based executive search firm, Integrity Recruiting. Hiring will remain slow for building superintendents and customer service jobs as builders trim excess inventory and start fewer houses, he said..."If you look at the markets, San Diego and Sacramento were probably the worst hit. That's what we've seen from a hiring perspective," Ahumada said.
From the North County Times:
Independent economists suggest that Nevin's forecast is on the rosy side, and that fewer homes will be built. If the forecast is wrong, it won't be the first time. Nevin said last year's prediction was off by about 15,000 single-family homes statewide.

"I think it's just going to be a weak year all around for single-family construction in 2007," said Christopher Thornberg, formerly an economist with the prestigious UCLA Anderson Forecast and now a partner in a Los Angeles economic consulting firm. "It's not going to be until 2008 that we work through this inventory of single-family homes. I think we have massively overbuilt single-family homes, particularly in places like Riverside, San Bernardino, San Diego and Sacramento."
...
"In 2007, we foresee a situation where construction jobs will decline by 10 to 15 percent as the residential market trends downwards," Nevin wrote in the association's 2007 Housing Forecast, which was released Thursday.
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Around late summer, construction ground to a halt all over California, said Wes Keusder, a Costa Mesa-based home builder and chairman of the state building industry association. "It was more like a stock market slump than a housing slump," Keusder said. "That's what gave us the inventory that we are burning off now. Normally, you don't just all of the sudden have people stop buying houses on a weekend, but that's pretty much what happened."

8 comments:

Lander said...

"In San Joaquin County, the number of construction permits issued for construction of single-family homes, condos and apartments has fallen off more sharply."

"In the first 11 months of 2005, the number of housing building permits totaled 5,924, according to the Construction Industry Research Board, which tracks the building industry in California."

"Then came a 43.2 percent drop in the first 11 months of 2006 to 3,362 permits issued."

patient renter said...

Don't worry, I'll handle this one:

"Will Sacramento lead the nation out of its residential real estate doldrums?"
No.

"What will prod buyers off the fence?"
Lower prices.

"And what will it take to sell your house?"
A much lower price.

patient renter said...

"New CBIA Chair Wes Kuesder, a Los Angeles-area builder, said the entire industry guessed wrong about 2006"
Ironically, the entire industry's income depended on them guessing wrong... so it wasn't a difficult move.

arizonadude said...

This is a slump clearly based on the reverse phsycology of specualtion.What has really changed over the last year? We still have a relatively strong economy, low interest rates? Speculaive demand has got cold feet.I do not know how else you can look at this people.Look at how much sales are down year over year. Forty percent would be a good estimate of the amount of speculation out there. I do not know how else to say it.

TS said...

"the Bottom is near" yup, it is resting on your shoulders.still quite a bit of stuff being finished up here in sonoma county,i just love looking at soggy OSB exterior walls on 5,000 sq ft million $ plus homes.

Anonymous said...

New CBIA Chair Wes Kuesder, a Los Angeles-area builder, said the entire industry guessed wrong about 2006. "What's unusual about this slowdown is the rapid downswing,"

Not everyone. Bruce Norris called this in late 2004.

joseph said...

I am not sure there will be a much lower price on housing due to the influx of the Bay Area Inverstor keeping the demand high.
My wife and I were looking at a new subdivision here in Sacramento last month, and a large group of Asian Bay area buyer's came in, and anounced they wanted to buy 7 houses. My wife and I just looked at each other and walked out. We just can't compete with this.
Local buyers cannot compete with them as they will live 15 people to a house, pooling their money to pay the mortgage.
They don't really care about the price, and will continue to keep the prices high. True, they are making the house a hotel where they are just buying a room, which should be illegal due to HOA's.
But who can enforce this. NO one. I see it all the time. There are whole neighborhoods with only Bay Area transplants, All Asian that are living 5 per room. They dont have traditional furnitre, just beds everywhere. And yes, I am just a little envious. My American values don't see living for 7 years in a brother- in- laws garage with my wife and 4 kids as an viable option. But I will be damed if they are able to buy a house and we can't due to this. I suppose it is dog eat dog world, (no pun intended). They win, in a really sad sort of way.

Diggin Deeper said...

"My wife and I were looking at a new subdivision here in Sacramento last month, and a large group of Asian Bay area buyer's came in, and anounced they wanted to buy 7 houses. My wife and I just looked at each other and walked out. We just can't compete with this."

There are plenty of new home builders that are giving away the store, buying down the mortgage rates, and cutting prices to get you to buy...the inventory remains high and there's new developments going up as we speak. I can't believe there isn't a home out there for someone who wants or has to buy right now. The question really is why would anyone want to buy, when a renting option makes so much sense while the market settles out?