The Housing Chronicles Blog: A decidedly somber affair at this year's PCBC

Thursday, June 18, 2009

A decidedly somber affair at this year's PCBC

Each year in June or July, tens of thousands of builders, suppliers and subcontractors converge on San Francisco's Moscone Center for the Pacific Coast Builders' Conference, but this year the total is down to just about 14,000 attendees (I also decided against attending this year due to a convergence of work deadlines). From the San Francisco Chronicle:

"California's home building industry is in the worst shape ever," said Horace Hogan, chairman of the California Building Industry Association, the trade group that puts on PCBC, and president of Brehm Communities, a Carlsbad (San Diego County) home builder, speaking at a news conference.

"Every builder I know has laid off most of their staff, and contractors and suppliers we've done business with for years have folded up shop." The show reflected that contraction. At the peak of the housing boom in 2006, it drew 35,000 attendees. Last year there were about 19,000. This year only 14,000 people came to Moscone. Even with a smaller exhibit floor, the aisles were noticeably underpopulated...

Hogan had a variety of grim statistics to tick off. Although the 65,000 housing starts in California in 2008 were the lowest ever recorded, "As bad as last year was, right now 2009 looks like it might even be worse," he said, citing projections of only 40,000 housing units this year. That sluggish pace means the loss of more than 360,000 jobs and $50 billion from the state's economy, he said.

California's $10,000 tax credit for people who buy a new home is something the builders would dearly like to see extended. They say not only does it help their industry, but it generates state and local taxes, creates jobs and stimulates the economy.

Sam Chandan, president and chief economist of New York's Real Estate Econometrics, had more downbeat news at a session on the economic outlook, predicting a huge wave of defaults in commercial mortgages.

"About $300 billion in commercial mortgages will come due between now and the end of 2009, and the same in 2010," he said. "We lack the capacity to refinance them. This will lead to a significant increase in defaults and delinquency rates for commercial mortgages..."

During the last downturn of the early 1990s in California, people could choose to find a job in another industry or move temporarily to Las Vegas or Phoenix to find work in the local building industry. But now with the entire economy in recession, there are few good substitutes.

And as for those commenters you always see online (probably sitting alone in their underwear) who quack, "Greedy builders! Had it coming! Get what they deserve!" please give it a rest, it's just not helpful, nor is it original. You could say the same thing about bloated governments, badly managed car companies, irresponsible bankers or media companies which haven't reacted quickly enough to the creative destruction fomented by technology. Like it or not, we're now in this together, and quacking out the same tired lines of schadenfreude is just boring.

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