With 33% of the entire fake Phoenix economy tied in some way to the Real Estate Industrial Complex (no real jobs there - they just sell houses to each other), this First Crash, the rapid decline in new homes being built, has to mean significantly less work for carpenters, roofers, foundation layers, stucco salesmen, architects, landscapers, painters, realtors, mortgage brokers, developers, etc. And those folks dry cleaners, auto salesmen, Home Depot workers, etc.
In other words, what's already happening in Phoenix means significant and growing job losses to come, and a tremendous crash in employment and to their economy.
More listings, less sales, declining prices, and a cycle spinning out of control.
One piece of good news though is that many of those homebuilding jobs went to Illegal Mexican Immigrants, who don't get direct social services and don't buy houses. So different than traditional unemployment for the State. However the question remains, will they go home? Will they start committing crimes?
New home permits and sales of existing homes fell sharply in April compared with the same month a year ago and they didn’t meet industry expectations they would match 2004 levels, the Phoenix Housing Market Letter reported.
RL Brown, author of the letter, said consumers have so far failed to buy up the growing inventory of new homes generated by an apparent wave of cancellations from consumers. He said this is because consumers haven’t been able to realize gains in their present homes in a faltering resale market.
And, he says, buyers have lost confidence in the current state of builder housing values.
Sales of existing homes so far in 2006 are down nearly 22 percent from the same time last year. Brown said the market should be showing some evidence builders have stemmed the flow of cancellations, adjusted their pricing policies and regained some momentum in their sales offices.
“It is becoming more and more unlikely that we will salvage a 2004-like year out of this quagmire,
Brown said builders haven’t been able to hold buyers to contracts even when customers are forced to fork over thousands in earnest mocancelingling the deal.
“Consumers are perceiving that the deep incentives builders are offering new buyers are indeed price cuts that will leave them with homes and mortgages that are perhaps $50,000 to $70,000 higher than what a walk-in can buy,” Brown wrote. “Builders can’t stomach giving the old buyers credits down to the ‘new price’ at closing and seeing those profits flushed out.”
May 26, 2006
Posted by blogger at 5/26/2006