Credit squeeze curbs home building, despite shortage

[son of baglimit]

http://business.theage.com.au/credit-squeeze-curbs-home-building-despite-shortage-20080707-34id.html

after reading the article, does anyone else believe the current shortage of tradesman will disappear as the developers slow down ?

i have so many major jobs around the house needing tradies, but no one answers the call.

 

[tech/a]

Speaking from my experience in SA.
Smaller builders are feeling the pinch,as are tradies who arent alighned with the big guys.
Small trade projects get hit first.Its the lower income earners who stop spending first.
Backlogs are beig caught up by some. For the trades like ourselves who are specialised we are still under pressure.Our smaller competitors are feeling it even now. Our suppliers report a downturn in orders but not from the larger players.

The shift has been away from domestic and to commercial.
Our forward order book is as always under demand but filling with commercial and larger domestic clients.

Tradesmen (For the trade) are still difficult to find (Good ones).
When the trade has a glut then those in the domestic field will find their trades easier to contract.

Just be wary of those who arent busy---there is a reason!

 

[wayneL]

For a preview of what's coming... check out the big UK builders.

Bovis, Persimmon, Taylor Wimpey, Barretts... all in deep deep doo-doo.

They are hemorrhaging staff, and money.

I live on a Taylor Wimpey development that is 75% finsihed... They have stopped working on it. Bloke across the road who is renting was offered a £350,000 (list price) finished detached house on the estate for £250,000, if he can complete in 4 weeks.

He's holding out for £225,000 and I reckon he'll get it. It's almost a good deal.

At £190,000 it will be a cash positive.... a bit hard to resist at that level. Stay tuned.

 

[tech/a]

Wayne.
I noticed I the States and possibly in the UK there are these very large builders who build estates before releasing them.
In the US back in 2002 when I was there I was blown away with 500-1000 home developements all built and established BEFORE release.
It was fine back then they were released then snapped up. No pre selling.

Different in Australia.
Well at least in SA.
Larger builders like Hickinbotham---one of our clients---buy the land sub divide it
making a squillion just on that (500 home developement) then sell off plan BEFORE construction.
If they dont sell a package they dont build it.

Herin lies a big difference I feel.

 

[wayneL]

Wayne.
I noticed I the States and possibly in the UK there are these very large builders who build estates before releasing them.
In the US back in 2002 when I was there I was blown away with 500-1000 home developements all built and established BEFORE release.
It was fine back then they were released then snapped up. No pre selling.

Different in Australia.
Well at least in SA.
Larger builders like Hickinbotham---one of our clients---buy the land sub divide it
making a squillion just on that (500 home developement) then sell off plan BEFORE construction.
If they dont sell a package they dont build it.

Herin lies a big difference I feel.

True.

But recently (during credit bubble) they've gotten used to selling off the plan and basically the folks move in as they're finished.

Also they've sunk vaaaaaaaaast sums into land banking... and they've paid absolute bubble prices for it.

Selling off plan was crucial to their cashflow under this new (and temporary) paradigm as these enourmous interest expenses gobbled up cash.

As off the plan sales stopped, they found themselves up to their @ss in alligators with no way out except to go cap in hand to banks and investors.

Unfortunately banks and investors have had a Damascus Road conversion and gone all risk averse.

Next step will be fire sales of their land banks imo... unless some muppet turns up with mountains of cash, they'' have no choice.

Cheap UK land coming right at you, very soon.

 

[Pommiegranite]

Wayne.
I noticed I the States and possibly in the UK there are these very large builders who build estates before releasing them.
In the US back in 2002 when I was there I was blown away with 500-1000 home developements all built and established BEFORE release.
It was fine back then they were released then snapped up. No pre selling.

Different in Australia.
Well at least in SA.
Larger builders like Hickinbotham---one of our clients---buy the land sub divide it
making a squillion just on that (500 home developement) then sell off plan BEFORE construction.
If they dont sell a package they dont build it.

Herin lies a big difference I feel.

tech/a here's a report on one of those estates:

http://www.telegraph.co.uk/news/wor.../US-housing-slump-creating-'ghost-towns'.html


US housing slump creating 'ghost towns'

By Catherine Elsworth in the Inland Empire
Last Updated: 2:01AM BST 05/07/2008

Welcome to the new "ghost towns" - brand new, immaculately tended communities with not a tumbleweed in sight.


JOHN DOOLEY
The deserted streets of Edenglen in southern California, where home-buying has dried up in the credit crunch

Financial analysts in California have identified the latest symptom of the devastating housing down-turn plaguing the US - tracts of freshly built, well-appointed homes where no-one apparently wants, or can afford, to live.
Aaron Deer, an analyst with Sandler O'Neill & Partners, toured housing developments in California's Inland Empire, a formerly booming property market 40 miles east of Los Angeles, for a report on the health of the building industry.
On his visit to developments in Ontario and Corona, which he pointed out are "actually healthier markets" compared to areas further inland, he found "a significant number of fully built homes sitting vacant along with a large number of additional homes still under construction".

And, "at one master plan community, the entire development appeared to be vacant. With the exception of crews working on new construction, it was a ghost town. The homes all appeared to be empty and there was no prospective buyers anywhere to be found."

 

[moXJO]

I'm flooded with work at the moment. And all the other trades I know are as well. I was talking to a builder in Sydney and he is flat chat.My Ex-apprentice is very busy in Sydney as well. Probably 2006 I had no work at all and I think a few good tradies up and left for the mines. I’ve been waiting on the current turn down. But so far so good. If anything there seems to be a lot more smaller jobs for tradies.And the bigger builders are feeling the pinch.

One of the builders I do work for is throwing up higher end type units, townhouses and villas like no tomorrow.When I was in Brisbane there seemed to be a heap of work on as well.So bit hard to tell.

 

[wayneL]

I'm flooded with work at the moment. And all the other trades I know are as well. I was talking to a builder in Sydney and he is flat chat.My Ex-apprentice is very busy in Sydney as well. Probably 2006 I had no work at all and I think a few good tradies up and left for the mines. I’ve been waiting on the current turn down. But so far so good. If anything there seems to be a lot more smaller jobs for tradies.And the bigger builders are feeling the pinch.

One of the builders I do work for is throwing up higher end type units, townhouses and villas like no tomorrow.When I was in Brisbane there seemed to be a heap of work on as well.So bit hard to tell.

That was the situation here not 6 months ago too.

 

[moXJO]

That was the situation here not 6 months ago too.

Yes been putting extra away in case.