Tuesday, May 31, 2011

INDUSTRY LEADER INTERVIEWED BY WALL STREET JOURNAL

In a recent article in the Wall Street Journal, leaders from several industries were interviewed about the state of the economy and how it's affecting their prospects for the near future.

Many economists had predicted that the nation would start to see the beginnings of a reboot of the entire nation but that's not happening.  Auto makers are finding it hard to push their cars onto the public without large discounts or low lease rates.  Computer makers are scaling back their estimates and cutting orders for new machinery and supplies.

With economic growth expected to be at 2.5% this year, American businesses will have a tough time adding new workers to their workforces which will further dampen growth.

One of the industry leaders that was asked his opinion of the housing segment was Vic DePhillips, President of Signature Custom Modular Homes in Moosic, PA.  As the owner of one of the most progressive factories  and also one of the well regarded people in our industry, his comments reflect the entire modular housing industry.

With home prices falling and sales depressed, both builders and buyers are on edge.

After starting off the year on a high note, Victor DePhillips' optimism is waning. The chief executive of Signature Building Systems, which employs about 165 workers, says he has seen orders slow in the past month or so.

While things aren't nearly as bleak as they were during the depths of the downturn, qualified buyers seem to be holding back, possibly because they think prices still have further to fall. "It's a little scary," Mr. DePhillips said. "I don't know what to attribute it to."

With the Fed cutting the stimulus packages along with state and local governments trimming their budgets to balance their books, employment and economic recovery will start to trail off leaving us with a "new norm" to contend with in the future.

Be prepared to see modular home factories merge together to save themselves from going out of business or bought outright by large investment houses looking to keep them alive until the recovery begins.  Recovery will happen but not for the housing industry until the glut of foreclosed and distressed homes clears the books and new home prices stop falling.  

Now that Fannie Mae and Freddie Mac appear to be no-starters for new home starts, the banks are tightening their lending policies to the point that most home buyers are willing to sit back and wait for more favorable conditions.  

4 comments:

Anonymous said...

Coach - your link within your blog on Dephillips does not work.

Coach said...

I just tried it.....works for me.

Dennis said...

Same for me Coach. Most of the links I get from you won't work. The WNEP link did work though.

Anonymous said...

Merge, is this what has happened to Design homes?