Real Estate Investing

While all real estate is local, it appears that new construction has remained slow across the country and conversely, home builder sentiment also remains low.   According to MSNBC.com, National Association of Home Builders/Wells Fargo Chairman Sandy Dunn said,

“The crisis continues.  Congress and the Administration must step in with substantial incentives to bring qualified buyers back to the table as well as effective foreclosure relief programs if we are to end this negative spiral that is weighing so heavily on our national economy.”

Further, the article reports that “home builders have asked Congress to enact a 10 percent tax credit of up to $22,000 for homebuyers that purchase a home over the next year. They also are seeking a temporary interest-rate reduction on 30-year mortgages.”

In my own area where the housing market has actually remained fairly stable - but slow - new construction permits have tanked which is also impacting funding for the county,

The county and its three cities issued just 1,177 single-family home permits from January through November, a 50.8 percent drop from the 2,391 issued over the same 11-month period in 2007.

With the drop in homebuilding, city and county governments experience a drop in permit fees and a reduction in anticipated property tax revenues.

The Daily News Journal of Rutherford County, Tennessee further reports that the codes office that oversees permits has not filled vacant positions as a result of fewer permits being issued. 

What I find to be very interesting is the real lack of concern for builders.  I do think that the high volume builders could get sloppy sometimes when they threw homes together, but as one commenter said, don’t cut off your nose to spite your face,

The drop in the housing market serves all those greedy developers and homebuilders right. How dare them make so much money ! Yep, ha HA! they aren’t making money now!!!!! Neither are the blue collar workers like plumbers, electricans, block/brick layers, supply companies, carpet layers, big equipment operators, insurance agents, real estate agents, AND NO DEVELOPMENT TAX, coming in to the county for schools, roads, firestations, and general services provided by the county. And that means people aren’t spending as much in retail stores, restaurants and that means SALES TAX collections are down that go into schools, education, teacher pay and general gov’t services! DUH!!!!

Like the commenter above, I find it very interesting that the silence is deafening in regards to ancillary jobs related to home building.  The construction workers, plumbers, electricians, lumber yards, home supply stores, etc. have all been negatively impacted but you don’t read a lot about those positions.  However, those could be figured into the higher unemployment numbers we keep reading about.  Or NOT according to Business Week,

Contract workers, sometimes known as freelancers or independent contractors, face a special set of problems when it comes to being counted by the government. First, employers aren’t required to report layoffs of contract workers to the government, so when companies say they’re cutting their contractor workforce … no one knows by how much.

The recovery IS coming, but how long will we be at the bottom?  Tick tock, time will tell.