Yes, the crash in housing is leading to a massive and rapid crash at Home Depot and any company associated with feeding the housing beast. The suppliers to the housing bubble are just like Cisco and Level 3 Communications way back in the dot-com days, and most will now go belly-up, and their employees sadly shown the door (who will then default on their mortgages).
Get ready for some shocking performance and layoff numbers throughout the DIY and construction supply business, it just can't be avoided at this point in the cycle with housing starts crashing 30% - 50% in most areas.
When bubbles unwind, they unwind. When historic, epic bubbles unwind, they take the entire economy with 'em. Thank you Alan Greenspan.
Home improvement business slows with housing market
The slowdown threatens to shut down First Choice Flooring for good. "We haven't seen it this bad in 10 years," she said. "I'm considering selling it because of the market."
Trisler's First Choice Flooring is one of several businesses feeling the chill of the "cooling" housing market.
Sales of existing homes are down 33 percent and applications for new-home construction permits are slowing sharply. The declines are causing sales to drop at many local businesses that supply residential housing with products from carpets to sod for front lawns.
"Everybody is feeling it," said Molenaar, executive vice president for the California Professional Association of Specialty Contractors' San Diego chapter. "They just have to weather the storm."
Dick Marsala, a salesman for Direct Carpet Sales in San Marcos, said sales at his store are down at least 35 percent from last year.
"I can't figure it out," he said. "The economy's supposedly great and people are working.
An Encinitas home decorations store owner, who didn't want to be named, said store traffic has dropped from about 500 people per day three years ago to 10 today."People are scaling down," the owner said.
November 06, 2006
Get ready for millions of layoffs - Home Depot employees, construction suppliers, architects, furniture stores, landscapers, carpet salesmen ...
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16 comments:
>"I'm considering selling it because of the market."
Selling a business before a major recession may actually be a good idea. We're too far in the cycle at this point for anyone to buy it I'd think. Selling a business is only successful 25% of the time and takes many, many months.
Hats off to ya...
I have already seen a few going-out-of-business sales in the Wash DC area for furniture stores. Storehouse has about 15 stores in Maryland and Virginia, and they filed Chapter 7 about a month ago. Their prices are coming down but they are not 50% off yet.
The landscape architect in the article who switched to public works projects in 2004 is looking like a genius right now. The carpet salesman who said sales will pick up in January or February is not, and has justified why he is a carpet salesman.
And this is just the immediate impact. All the people involved in these businesses that serve the real estate bubble buy clothes, cars, eat in restaurants, take vacations. It's the multiplier effect in reverse now that business has dried up.
I guess that's why the GDP was so lame last quarter, duh. But it's a little odd that it doesn't show up much in the employment figures. It makes me mistrust the data.
Well, they have bogus yardsticks like "Core inflation rate" which mean next to nothing.
If you exclude food and energy prices, what is left?
If I didn't have to buy food, or pay for gasoline & electricity, I'd be a rich man!
Book cooking prevails.
"There are three kinds of lies: Lies, damned lies and statistics." - Mark Twain
Think about it --
Take anyone who is well-established and/or retired. Their house is paid off, they don't have a student loan anymore. Many people are without credit card debt, and have their cars paid off.
What percentage of their monthly expenses would "food and energy" costs be?
I'm guessing quite a bit.
Shows how bogus the "core inflation rate" is. I think inflation is much higher than the figures they release.
You can't double the money supply in 7 years and only have 3% inflation per annum.
Quote:
What percentage of their monthly expenses would "food and energy" costs be?
I am debt free, house paid off, etc. Food and energy is 41% of my total expenses. Not a small expenditure. Core inflation rate number is a joke.
Nobody really HAS to buy new furniture. There is always yard sale furniture for sale, or hand-me-downs to pick up from relatives.
Furniture is a truly discretionary durable good, and it is one of the early roses wilt when the economy falters.
oh boy Do i fore see big Christmas price cuts for sure..not that i am going all out for that holiday..christmas in my house every friggin weekend..enough is enough in my book.
If you have the money, the store's Christmas specials will be outta sight this year.Kinda offsets that fact that for very many of us there will be no Christmas next year.
Agreed on all fronts...but the really nice thing is that I live in Des Moines. We were immune to the overspeculation/hyper price growth...and we're immune to the mega drops. The newspaper just reported a slow down of 1.4% in home sales. That's why I moved from CA to Des Moines a year ago (cashed out before the crash). Not smart, just lucky I picked the right time. Now I'm an equity refugee and geographic arbitrageur and loving it.
trickle down baby!
I love buying my mattress from some roadside second hand store........mmmmmmm! Can't wait!
Wow, a furniture store going out of business - never seen that before.
Keith is full of B.S. Where I live the economy is booming and we have record low unemployment. Banks are tripping over themselves to lend money and people are buying over-priced houses or rennovating the ones they own.
Sorry guys, no HP or doom & gloom here. Keith bashes the NAR about dishonesty in the face of facts. Well Keith how about it? Can you admit that your calls for a HP are a bit premature?
Well, they have bogus yardsticks like "Core inflation rate" which mean next to nothing.
The core inflation rate is used to determine how much the yearly social security payments increase for the elderly (among other pay outs from the government). By removing energy and food prices from the yardstick, it means they have to pay less to those who are retired (because the core inflation goes up only slightly).
So they save billions of dollars by short changing seniors who can no longer afford medicine and food.
But of course - they actually started to believe their own propaganda. Which is why they kept interest rates so low for so long.
Karma... what goes around... comes around.
Keith is full of B.S. Where I live the economy is booming and we have record low unemployment. Banks are tripping over themselves to lend money and people are buying over-priced houses or rennovating the ones they own.
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Where i live it is very busy also, I can tell by the traffic in the morning.
But dont subscribe to the fact that the economy is booming Anonymous because you still see building going on or people going out to eat, a lot of folks I know personally are living paycheck to paycheck, credit card to credit card, equity line to equity line and they keep borrowing to support the their lifesyles..your right..great economy..borrow and spend...Sign me up..no wait Im all set.
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