Thursday, January 24, 2008

Faltering Food Chain

Was at the Rocklin High School Crab feed (my first crab feed) last Saturday. Ended up seated next to a friend of a friend. He is a contractor, so I got some nice insider scoop from him....(he doesn't know about my secret life as a blogger).

He seemed pretty knowledgeable about industry trends and news. And had some very interesting rumors to report (which he didn't want spread and I respect that). He knows many of the local builders, so we mainly asked him about which ones are the most reputable.

He's been around for a long time, and seems to think this is one of the worst downturns. If I remember correctly he was thinking mid 2009 for things to start looking up. But I had already had 3 margarita's by then so my memory of this conversation is rather murky =)

The rumor was a pretty juicy one, so I do remember that.....will be sure to report if it pans out.


Paul said...

I've been in the fray or on the fringe of local building construction for several years. I can't say it is the worst situation in my time because I don't have good historical data, but it is serious. Major suppliers and subcontractors that I know tell me their sales are off 50%. As builders cut back more to reduce still excessive inventory, it is likely their sales will fall farther.

Although I don't profess to know the gossip, some major local builder bankruptcies are inevitable. Just look in the Business Journal at the weekly record of mechanics' liens recorded, and you will have a good indication of which builder(s) will be first.

But right behind the builders will be cities and counties that have spent money like drunken sailors during the building boom, who will now see all sources of revenue, and especially property tax revenue, decline measurably. (Not bankruptcy, of course, just major revenue reductions that will lag the real estate downturn by 1-2 years.)

And if you are "drunken sailor," please forgive my lack of political correctness!

big n rich said...

Contractors are going belly up every day.I have no idea where the hell they will find work. Maybe we should ship them to china on the boats after they drop off stuff at walmart?
My friend in construction has been out of work for 6 months.Had his truck repoed and can't even pay rent.He might be on the streets soon.

The government is going to give him a rebate check though.not sure if he meets the 3000 in income requirement.

Let face the facts here.Our economy is totally dependant on real estate going up in value these days.We basically mortgage the future by creating more debt to fuel the economy right now.Where is the money comeing from to loan all these home buyers money? for instance someone buys a house with 0 down for 400k.All of a sudden you have 400k injected into the system with a payment of maybe 2k / month.So how far can we push the limits here.I do not like an economy run like this at all.

Gwynster said...

"But right behind the builders will be cities and counties that have spent money like drunken sailors"

Davis city council approved a 12 acre parcel to be developed for housing. Oh are the local FBs screaming! But with budget cuts coming and declining sales activity here, the money for services has to come from somewhere. I suppose those FBs really think all those school dollars where going to magically appear in thin air.

Gwynster said...

where = were

The said...

Since I work in "the industry" I'd be interested in the good gossip...specially that which we finds on teh internets.

Joking aside, I hear tons of this stuff everyday and strangely enough some it has turned out to be true. The rest was either untrue, or just hasn't happened yet.

I guess we'll have to wait and see if BT's gossip was good or not :)

Sippn said...

Your ears likely do not deceive you but if you're the one looking for information, you're supposed to make the other guy drink 3 marg's!

But with that in mind I should pencil in your party.