When you've been around as long as I have you know that the architecture economy waxes and wanes dramatically...
I have a full time job but more freelance inquiries than I can handle right now, and every architect I know is looking to hire. Is everyone else this busy too? Are things going too fast for our own good right now?
Before the recession, it typically followed a 7 year cycle. So if it follows the old patterns, we're due to start slowing down next spring.
I usually judged it based on the really big projects. At the peak, you'll see a ton of cranes. The 'big investments' only happen when there is confidence. Being an architect, I know that multi-million dollar investment trigger was pulled 1-3 years ago. So when you stop seeing as many big cranes around town, it's time to start hunkering down and prepping for leaner times.
I'm in the same boat... not sure what to make of it... of the opinion that 3 solid years would be enough to weather a downturn. But who knows when that is coming. Other thing to keep in mind is chances of next downturn being shorter and less painful than the last. Oil economy has been in the tank for two years. But housing is still building steam...??? You figure it out... let me know :)
Non: True enough, but historically you never go much more than about ten years between peaks/troughs which makes us due.
Interest rates can't go any lower. The Federal Reserve is in a box. They have no room to push rates down so if the economy stalls they are out of magic bullets. The scary thing is that growth has been so anemic in this supposed "recovery". There just isn't any safety factor left.
Housing is trying to recover but is still not up to the level it should be. That's probably a good thing from an overbuilding risk standpoint. But it also shows how weak the consumer has been in this cycle. Housing could be a lagging indicator this time, since the middle class doesn't get the word about economic weakness until after the big boys have already figured it out.
For what it's worth, I'm getting freelance inquiries from 75% residential remodel (middle class homeowners feelin' good!) and 25% small businesses expanding.
The report from my Archinecter buddy visiting Seattle right now is that there are at least 11 active cranes on the skyline.
It's important to remember that cranes on the skyline today represent architectural commission that were done 2-3 years ago.
Also, big skyscrapers can't be shut down once they start coming out of the ground. They can represent a big slug of excess space by the time they are completed if the market cracks during construction.
I've heard that the average lag between construction and design is two years. During the great recession this seemed to play out. Our first layoffs in construction weren't until 2010. I was working for a large commercial contractor. I think the smaller residential guys got hit a lot faster. It makes sense... the drawings gotta happen first.
commercial construction can dry up because of banking policy, but that could leave hospitality, government, education, or other project types that are somewhat insulated from the problems they are facing. also, i do a lot of tenant work, so when a business is growing i get involved, and when a business is shrinking i get involved. the people who fill those big buildings also hire architects.
the part that really racks my brain is what effect financing really has on these buildings. i get that the building is owned by investors (often not people, but REITs or union pensions or the like), and financed through a loan from the bank, and there are terms like interest payments and such. so worse terms from the bank means investors are less likely to pay for the building. however, the building ultimately has to be paid for by having tenants paying rent. without that, the building is a bad bet for the investors, regardless of the financing terms. so if there are a lot of doctors, psychiatrists, insurance underwriters, and everyone else who works in a office, looking for office space, then buildings will have to be built. if they're all losing business because other people can't afford their services, then you get high vacancy rates, and buildings become less attractive as an investment because they aren't making money off leases.
the theory i'm currently operating on, is that if currency is being moved through the economy, things are probably going to be fairly healthy. unemployment is pretty low, which means people have money to spend and things should continue to be alright for a while. eventually markets will get saturated, so what buildings architects design might change, but there should still be work. on the other hand, wage stagnation means those people who are all working might not have as much to spend as they could, so less flow of currency and growth isn't as good as it could be.
lastly, the recession we had a few years ago was worse than most. we can hit a low point that is nowhere near as low as where we were. also, the fed should be raising rates.
Things are really busy in the Bay Area - lots of cranes in downtown SF - just like in 2007 - I see 1 - 2 years tops, before the next recession - Yahoo is going down the tubes
since that post wasn't long enough, i'm going to post another long thing. i just like the attention. i apologize in advance. if it's too bad, just pretend balkins posted it.
someone on here posted a link to seneca's letters to lucilius, which i've kind of been reading when not doing other things. here is something seneca said:
4. There are more things, Lucilius, likely to frighten us than there are to crush us; we suffer more often in imagination than in reality. I am not speaking with you in the Stoic strain but in my milder style. For it is our Stoic fashion to speak of all those things, which provoke cries and groans, as unimportant and beneath notice; but you and I must drop such great-sounding words, although, heaven knows, they are true enough. What I advise you to do is, not to be unhappy before the crisis comes; since it may be that the dangers before which you paled as if they were threatening you, will never come upon you; they certainly have not yet come. 5. Accordingly, some things torment us more than they ought; some torment us before they ought; and some torment us when they ought not to torment us at all. We are in the habit of exaggerating, or imagining, or anticipating, sorrow.
The first of these three faults[1] may be postponed for the present, because the subject is under discussion and the case is still in court, so to speak. That which I should call trifling, you will maintain to be most serious; for of course I know that some men laugh while being flogged, and that others wince at a box on the ear. We shall consider later whether these evils derive their power from their own strength, or from our own weakness.
6. Do me the favour, when men surround you and try to talk you into believing that you are unhappy, to consider not what you hear but what you yourself feel, and to take counsel with your feelings and question yourself independently, because you know your own affairs better than anyone else does. Ask: "Is there any reason why these persons should condole with me? Why should they be worried or even fear some infection from me, as if troubles could be transmitted? Is there any evil involved, or is it a matter merely of ill report, rather than an evil?" Put the question voluntarily to yourself: "Am I tormented without sufficient reason, am I morose, and do I convert what is not an evil into what is an evil?" 7. You may retort with the question: "How am I to know whether my sufferings are real or imaginary?" Here is the rule for such matters: we are tormented either by things present, or by things to come, or by both. As to things present, the decision is easy. Suppose that your person enjoys freedom and health, and that you do not suffer from any external injury. As to what may happen to it in the future, we shall see later on. To-day there is nothing wrong with it. 8. "But," you say, "something will happen to it." First of all, consider whether your proofs of future trouble are sure. For it is more often the case that we are troubled by our apprehensions, and that we are mocked by that mocker, rumour, which is wont to settle wars, but much more often settles individuals. Yes, my dear Lucilius; we agree too quickly with what people say. We do not put to the test those things which cause our fear; we do not examine into them; we blench and retreat just like soldiers who are forced to abandon their camp because of a dust-cloud raised by stampeding cattle, or are thrown into a panic by the spreading of some unauthenticated rumour. 9. And somehow or other it is the idle report that disturbs us most. For truth has its own definite boundaries, but that which arises from uncertainty is delivered over to guesswork and the irresponsible license of a frightened mind. That is why no fear is so ruinous and so uncontrollable as panic fear. For other fears are groundless, but this fear is witless.
10. Let us, then, look carefully into the matter. It is likely that some troubles will befall us; but it is not a present fact. How often has the unexpected happened! How often has the expected never come to pass! And even though it is ordained to be, what does it avail to run out to meet your suffering? You will suffer soon enough, when it arrives; so look forward meanwhile to better things. 11. What shall you gain by doing this? Time. There will be many happenings meanwhile which will serve to postpone, or end, or pass on to another person, the trials which are near or even in your very presence. A fire has opened the way to flight. Men have been let down softly by a catastrophe. Sometimes the sword has been checked even at the victim's throat. Men have survived their own executioners. Even bad fortune is fickle. Perhaps it will come, perhaps not; in the meantime it is not. So look forward to better things.
12. The mind at times fashions for itself false shapes of evil when there are no signs that point to any evil; it twists into the worst construction some word of doubtful meaning; or it fancies some personal grudge to be more serious than it really is, considering not how angry the enemy is, but to what lengths he may go if he is angry. But life is not worth living, and there is no limit to our sorrows, if we indulge our fears to the greatest possible extent; in this matter, let prudence help you, and contemn with a resolute spirit even when it is in plain sight. If you cannot do this, counter one weakness with another, and temper your fear with hope. There is nothing so certain among these objects of fear that it is not more certain still that things we dread sink into nothing and that things we hope for mock us.
13. Accordingly, weigh carefully your hopes as well as your fears, and whenever all the elements are in doubt, decide in your own favour; believe what you prefer. And if fear wins a majority of the votes, incline in the other direction anyhow, and cease to harass your soul, reflecting continually that most mortals, even when no troubles are actually at hand or are certainly to be expected in the future, become excited and disquieted. No one calls a halt on himself, when he begins to be urged ahead; nor does he regulate his alarm according to the truth. No one says; "The author of the story is a fool, and he who has believed it is a fool, as well as he who fabricated it." We let ourselves drift with every breeze; we are frightened at uncertainties, just as if they were certain. We observe no moderation. The slightest thing turns the scales and throws us forthwith into a panic.
curt: The market could crash because the tenants suddenly have a drop-off in demand for their services and they close up shop or downsize, which puts their space back on the market, which would tend to depress rent levels. Or, too much speculative space coming on the market can depress rents even though tenants' own economics haven't changed. The builders have simply overestimated absorption. The last building to open its doors can't find enough tenants, so the owner panics and drops rents. The other landlords are forced to follow suit, and suddenly the prevailing rent roles aren't enough to service the debt on the building. The lender forecloses and ends up having to put the building on the market at a distressed sale price. The bank loses money and swears it will never make another real estate loan again as long as it lives. A combination of these two scenarios occurred in the oil patch in the late eighties. Denver, Houston, Dallas and parts of Louisiana and Oklahoma. It got pretty bad for several years.
Hopefully, lenders and developers won't be that reckless again, but that's only a hope. Builders will usually build anything somebody will give them money for, and lenders lose their institutional memories after a generation.
Also, often the mortgages on commercial buildings are not self-amortizing, like a home loan. They may have 30 or 40 year amortization schedules, but a five year so due date. If the building owner can't refinance, he is in trouble and ultimately the lender is in trouble.
The video I posted above talks about that problem.
banks can absorb a lot of bad decisions. that's why they make so many bad decisions.
your outline could happen, but it could also not happen, and we could see slow but stable growth for some time to come. the canary in the coal mine isn't dead yet so to speak.
One article I read said that homes (on a national basis, you have to adjust for location) below $300,000 are selling very well and homes and condos above $300,000 are not selling nearly as well and are glutting the market. This is because developers have built a glut of luxury detached homes and condos while at the same time the people who could afford them are getting nervous about the economy and are hesitant to lay out the big bucks for housing.
i read an article a couple years back about how developers were concerned that millenials aren't buying the $300,000 spec homes they were building
how the hell would a kid just out of college, with a shitty just out of college job, and saddled with unprecedented levels of student loan debt, afford a $300,000 house? did they expect starting salaries to suddenly jump to $100,000/year, or did they expect all these baby boomer parents to throw away their retirement and buy shitty ugly houses for their kids to live in (typically before they're married and have kids on top of all the other levels of stupid)?
still not a big deal. those houses were never worth more than maybe $150,000, and kb homes made piles of money, so losing chunks of it won't be that bad. if they were really on the hook for making such bad decisions, they wouldn't be making such bad decisions.
i'd be more worried about loss of jobs due to gas prices being so low. i have a friend in oklahoma who saw his building basically empty out. the oil towns that sprung up in north dakota are pretty much ghost towns. hopefully that industry is limited enough that it won't spill over too much.
A $300,000 house in 2006 cost you almost $400 more per month than with current intetest rates. Additionally, the large increase in renters over the past ten years have driven rental rates higher than mortgages in many markets. Doesn't make it any more affordable, but a young person could do well buying in this market with a house hack and the low rates.
As 2007 unfolded into 2008, our firm continued to stay busy and we needed to hire. Virtually every decent candidate we could find had extraordinarily high salary expectations ... at some point we just had to swallow hard and bring a few of those individuals on at those very high rates. Then, as the economy soured further and some of our projects were cancelled, those recent hires were the first members of our staff to be laid off.
You don't look at just a industry job growth, especially ones that lag behind like construction. Think of it this way; If a business hires and grows, then they need more space.... that comes in front of the design, financing, and construction of that space.
Mar 17, 16 5:27 pm ·
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If we have a more longer duration statistic charts with this level of detail over say...... 30-40 years. We can get a better picture of estimate. I would estimate on face value 1-2 years before the next recession. It will probably be more mild recession than the most recent one but would likely dip a little bit and resume again like the previous recession to the last. I estimate the effects of the next recession will begin affecting design oriented firms in the next year or two and the construction oriented firms in a year or so after that. The recession cycle would likely be 1-3 years long. I estimate closer to the 1.5 to 2.5 year pit. To catch back up to where we are today would be about 3-4 years from the beginning of the recession slip. Construction would be about 1-2 years behind the design side. Sounds usual.
Some areas will be hit first compared to other areas.
I'm going to work along this next recession cycle towards rebuilding capital, complete some goals (not architectural licensure.... that would take longer to complete) such as NCBDC certification, CCB license as an RGC (and/or developer license) are on the immediate goals but they will simply serve along the way.
However, the trick is timing it all out while doing stuff to rebuild financial. I just have to work on the process and get it done. Regardless, I'll just work on that in some way as well as possibly some other stuff.
It would somewhat support my argument. We didn't have as high of a momentum above the 50 line this time around so it shouldn't be as drastic as the last recession but these smaller swings are better then the hard drastic swing as the last recession was.
Predicting the future is of course a little folly as we will not know for any certainty how bad the next recession will be. How the leadership of the country will handle and respond to the situation will be a good guess.
I will be mildly optimistic that it won't be quite as bad as the last one.
Look at the chart, after a recession things get above 50 and stay up until the next recession, we’re already heading south...haven't even hit 55.
Geezertect has a handle on it…just based on my 40 years at it, I started to squint when things got crazy…always a sign of an ebb in the tide, good time for paying down debt that has exposure, good time to start subcontracting work out rather than hiring & renting more space to keep up….as stated there is still time to prepare.
Watch housing trends, it drives the real estate market and floats all boats…fuels banks for other things we do…there hasn’t been a single post war recession recovery that wasn’t pulled out by housing…it’s stalled because of the Middle Class crisis…the “big money” thinks they can move on without the Middle Class, but even the Fed is worried about that at .5% ….when they are, I am.
This is one reason I like being a residential guy with a wide skill set. At the moment I'm seeing a lot of new homes and big renovations. Along with a few smaller renovations I have about 20 projects on the boards, which is a lot for me.
When things slow down, which of course they will eventually, people simply scale back and renovate their kitchen and add a master suite over their garage instead of building a big addition or a new house. When energy prices are high, people want to know how to make their homes more energy efficient, and even now with prices low, I'm finding that people are interested in saving energy. If I don't have any design work at all, I can go back to building and renovating houses.
If the shit really hits the fan, my wife and I moved from the city to a small, rural town, and are working on making it a largely self-sufficient homestead. We chose a location with lots of water security, standing timber and space for growing food. I sincerely hope it doesn't come to those being important features, but the 1950's version of the American Dream is over (no matter what Trump says) and at some point in our future, things may get as ugly as they are in other uncivilized countries. I may sound like a prepper, but I prefer to think of it as being prepared for the worst but hoping for (and working for) the best.
I'm not religious but I find this saying appropriate to the discussion: Trust in God, but row away from the rocks.
As for Xenakis' post, Yahoo sucks and deserves to die.
The only thing more ridiculous than economists making future predictions is a bunch of architects. Just keep keeping on, if you can't survive a year with 6 months of unemployment and some savings downsize and simplify your life.
^ History repeats itself. ^^Not much of a concern to some…just move ones spider plant & goldfish jar to mom’s basement and wait it out, to everybody else it pays figure it out.
We just recovered from the most significant recession since the 1930s. I think we're still all skittish because of it. I wouldn't extrapolate from past events, I think we have another two or three decent years ahead of us - unless you're in China
Mar 18, 16 12:23 am ·
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ivorykeyboard,
It could simply be that this next recession will just be barely noticed. Maybe viewed as a slower year or two than this last couple years but then resume back on course. It wouldn't necessarily be the next recession to worry about the next recession after that. The higher you go, the harder we fall. We just haven't got very high yet so to speak. I'm using a metaphor for the economic tables. The bubble has to build up enough hot air. It's kind of like the stock market in a sense. There are up and down cycles but the bigger recessions usually requires time for the bubble to build up and then do a real doozy on us.
I'm more concern about the next recession after the upcoming on. Remember, not all recessions have the same magnitude. We have small ones and big ones and some are bonafide depressions.
I think the next recession will likely be more a slide back like 3 steps forward, 1-1/2 to 2 steps back. It it these little rhythms to helps to keep occurences of big deep recessions, rare.
Canada's currency is down after the oil building boom has slowed
The EU isn't in a great place
South East Asia is insane at the moment. Too much to do and not enough hours in the day.
But I'm glad things in 'Merica are pretty great. Time to build up your savings, finish off those student loans and pay off your mortgage.
Is a slowdown coming? Sure, at some point. But nothing like what we just saw. And thanks to separation of powers, no matter who gets elected in 2016 we'll still be fine.
Diversification always helps. Never put all your eggs in one sector construction.
when i was a kid, my dad picked up his house and moved it like that. it didn't go very far or very fast, but we got to ride in the house as it went down the street.
+1 - "Stay valuable, not costly." - it's why I keep may rate under what everyone else with my exp. charges, downsized to a 300 SF studio in North Oakland(with rent control) and take public transit(Bart) and save - like the RadioHead song Fitter happier - "pragmatism - not idealism" -
Yahoo sucks and deserves to die - That may be - except if all the people that work there got laid off, demand for housing would go down causing projects to go on hold and this leads to lay-offs in our industry.
except if all the people that work there got laid off, demand for housing would go down causing projects to go on hold and this leads to lay-offs in our industry.
If housing demand went down, it would lower rents which might allow some of those worker bee types, like some architects, to move closer in instead of commuting from Sacramento every day. Plus, it would be wonderful to see all those little tech snots get an overdue taste of reality. If I sound bitter it's only because I am.
The economy and being busy - is a slowdown coming?
When you've been around as long as I have you know that the architecture economy waxes and wanes dramatically...
I have a full time job but more freelance inquiries than I can handle right now, and every architect I know is looking to hire. Is everyone else this busy too? Are things going too fast for our own good right now?
http://video.cnbc.com/gallery/?video=3000500594&play=1
Any time architects are beginning to gain weight is a red flag. We're supposed to be starving artists after all.
Architects are artist? Nah. Everyone is looking but only a percentage of those are paying well.
we'll see what happens in november, but until then, I don't see a slowdown coming
If architecture gigs ever start paying well, it will be time to run screaming to the nearest bomb shelter.
Before the recession, it typically followed a 7 year cycle. So if it follows the old patterns, we're due to start slowing down next spring.
I usually judged it based on the really big projects. At the peak, you'll see a ton of cranes. The 'big investments' only happen when there is confidence. Being an architect, I know that multi-million dollar investment trigger was pulled 1-3 years ago. So when you stop seeing as many big cranes around town, it's time to start hunkering down and prepping for leaner times.
Is'nt there technically always a slowdown somewhere up ahead?
I'm in the same boat... not sure what to make of it... of the opinion that 3 solid years would be enough to weather a downturn. But who knows when that is coming. Other thing to keep in mind is chances of next downturn being shorter and less painful than the last. Oil economy has been in the tank for two years. But housing is still building steam...??? You figure it out... let me know :)
Non: True enough, but historically you never go much more than about ten years between peaks/troughs which makes us due.
Interest rates can't go any lower. The Federal Reserve is in a box. They have no room to push rates down so if the economy stalls they are out of magic bullets. The scary thing is that growth has been so anemic in this supposed "recovery". There just isn't any safety factor left.
Housing is trying to recover but is still not up to the level it should be. That's probably a good thing from an overbuilding risk standpoint. But it also shows how weak the consumer has been in this cycle. Housing could be a lagging indicator this time, since the middle class doesn't get the word about economic weakness until after the big boys have already figured it out.
For what it's worth, I'm getting freelance inquiries from 75% residential remodel (middle class homeowners feelin' good!) and 25% small businesses expanding.
The report from my Archinecter buddy visiting Seattle right now is that there are at least 11 active cranes on the skyline.
It's important to remember that cranes on the skyline today represent architectural commission that were done 2-3 years ago.
Also, big skyscrapers can't be shut down once they start coming out of the ground. They can represent a big slug of excess space by the time they are completed if the market cracks during construction.
I've heard that the average lag between construction and design is two years. During the great recession this seemed to play out. Our first layoffs in construction weren't until 2010. I was working for a large commercial contractor. I think the smaller residential guys got hit a lot faster. It makes sense... the drawings gotta happen first.
That's exactly what scares me, geezer. The lag time.
that's a deep an complicated question donna
commercial construction can dry up because of banking policy, but that could leave hospitality, government, education, or other project types that are somewhat insulated from the problems they are facing. also, i do a lot of tenant work, so when a business is growing i get involved, and when a business is shrinking i get involved. the people who fill those big buildings also hire architects.
the part that really racks my brain is what effect financing really has on these buildings. i get that the building is owned by investors (often not people, but REITs or union pensions or the like), and financed through a loan from the bank, and there are terms like interest payments and such. so worse terms from the bank means investors are less likely to pay for the building. however, the building ultimately has to be paid for by having tenants paying rent. without that, the building is a bad bet for the investors, regardless of the financing terms. so if there are a lot of doctors, psychiatrists, insurance underwriters, and everyone else who works in a office, looking for office space, then buildings will have to be built. if they're all losing business because other people can't afford their services, then you get high vacancy rates, and buildings become less attractive as an investment because they aren't making money off leases.
the theory i'm currently operating on, is that if currency is being moved through the economy, things are probably going to be fairly healthy. unemployment is pretty low, which means people have money to spend and things should continue to be alright for a while. eventually markets will get saturated, so what buildings architects design might change, but there should still be work. on the other hand, wage stagnation means those people who are all working might not have as much to spend as they could, so less flow of currency and growth isn't as good as it could be.
lastly, the recession we had a few years ago was worse than most. we can hit a low point that is nowhere near as low as where we were. also, the fed should be raising rates.
Things are really busy in the Bay Area - lots of cranes in downtown SF - just like in 2007 - I see 1 - 2 years tops, before the next recession - Yahoo is going down the tubes
http://www.marketwatch.com/story/yahoo-staffers-fear-company-may-slash-20-25-of-its-workforce-2016-01-19
since that post wasn't long enough, i'm going to post another long thing. i just like the attention. i apologize in advance. if it's too bad, just pretend balkins posted it.
someone on here posted a link to seneca's letters to lucilius, which i've kind of been reading when not doing other things. here is something seneca said:
4. There are more things, Lucilius, likely to frighten us than there are to crush us; we suffer more often in imagination than in reality. I am not speaking with you in the Stoic strain but in my milder style. For it is our Stoic fashion to speak of all those things, which provoke cries and groans, as unimportant and beneath notice; but you and I must drop such great-sounding words, although, heaven knows, they are true enough. What I advise you to do is, not to be unhappy before the crisis comes; since it may be that the dangers before which you paled as if they were threatening you, will never come upon you; they certainly have not yet come. 5. Accordingly, some things torment us more than they ought; some torment us before they ought; and some torment us when they ought not to torment us at all. We are in the habit of exaggerating, or imagining, or anticipating, sorrow.
The first of these three faults[1] may be postponed for the present, because the subject is under discussion and the case is still in court, so to speak. That which I should call trifling, you will maintain to be most serious; for of course I know that some men laugh while being flogged, and that others wince at a box on the ear. We shall consider later whether these evils derive their power from their own strength, or from our own weakness.
6. Do me the favour, when men surround you and try to talk you into believing that you are unhappy, to consider not what you hear but what you yourself feel, and to take counsel with your feelings and question yourself independently, because you know your own affairs better than anyone else does. Ask: "Is there any reason why these persons should condole with me? Why should they be worried or even fear some infection from me, as if troubles could be transmitted? Is there any evil involved, or is it a matter merely of ill report, rather than an evil?" Put the question voluntarily to yourself: "Am I tormented without sufficient reason, am I morose, and do I convert what is not an evil into what is an evil?" 7. You may retort with the question: "How am I to know whether my sufferings are real or imaginary?" Here is the rule for such matters: we are tormented either by things present, or by things to come, or by both. As to things present, the decision is easy. Suppose that your person enjoys freedom and health, and that you do not suffer from any external injury. As to what may happen to it in the future, we shall see later on. To-day there is nothing wrong with it. 8. "But," you say, "something will happen to it." First of all, consider whether your proofs of future trouble are sure. For it is more often the case that we are troubled by our apprehensions, and that we are mocked by that mocker, rumour, which is wont to settle wars, but much more often settles individuals. Yes, my dear Lucilius; we agree too quickly with what people say. We do not put to the test those things which cause our fear; we do not examine into them; we blench and retreat just like soldiers who are forced to abandon their camp because of a dust-cloud raised by stampeding cattle, or are thrown into a panic by the spreading of some unauthenticated rumour. 9. And somehow or other it is the idle report that disturbs us most. For truth has its own definite boundaries, but that which arises from uncertainty is delivered over to guesswork and the irresponsible license of a frightened mind. That is why no fear is so ruinous and so uncontrollable as panic fear. For other fears are groundless, but this fear is witless.
10. Let us, then, look carefully into the matter. It is likely that some troubles will befall us; but it is not a present fact. How often has the unexpected happened! How often has the expected never come to pass! And even though it is ordained to be, what does it avail to run out to meet your suffering? You will suffer soon enough, when it arrives; so look forward meanwhile to better things. 11. What shall you gain by doing this? Time. There will be many happenings meanwhile which will serve to postpone, or end, or pass on to another person, the trials which are near or even in your very presence. A fire has opened the way to flight. Men have been let down softly by a catastrophe. Sometimes the sword has been checked even at the victim's throat. Men have survived their own executioners. Even bad fortune is fickle. Perhaps it will come, perhaps not; in the meantime it is not. So look forward to better things.
12. The mind at times fashions for itself false shapes of evil when there are no signs that point to any evil; it twists into the worst construction some word of doubtful meaning; or it fancies some personal grudge to be more serious than it really is, considering not how angry the enemy is, but to what lengths he may go if he is angry. But life is not worth living, and there is no limit to our sorrows, if we indulge our fears to the greatest possible extent; in this matter, let prudence help you, and contemn with a resolute spirit even when it is in plain sight. If you cannot do this, counter one weakness with another, and temper your fear with hope. There is nothing so certain among these objects of fear that it is not more certain still that things we dread sink into nothing and that things we hope for mock us.
13. Accordingly, weigh carefully your hopes as well as your fears, and whenever all the elements are in doubt, decide in your own favour; believe what you prefer. And if fear wins a majority of the votes, incline in the other direction anyhow, and cease to harass your soul, reflecting continually that most mortals, even when no troubles are actually at hand or are certainly to be expected in the future, become excited and disquieted. No one calls a halt on himself, when he begins to be urged ahead; nor does he regulate his alarm according to the truth. No one says; "The author of the story is a fool, and he who has believed it is a fool, as well as he who fabricated it." We let ourselves drift with every breeze; we are frightened at uncertainties, just as if they were certain. We observe no moderation. The slightest thing turns the scales and throws us forthwith into a panic.
curt: The market could crash because the tenants suddenly have a drop-off in demand for their services and they close up shop or downsize, which puts their space back on the market, which would tend to depress rent levels. Or, too much speculative space coming on the market can depress rents even though tenants' own economics haven't changed. The builders have simply overestimated absorption. The last building to open its doors can't find enough tenants, so the owner panics and drops rents. The other landlords are forced to follow suit, and suddenly the prevailing rent roles aren't enough to service the debt on the building. The lender forecloses and ends up having to put the building on the market at a distressed sale price. The bank loses money and swears it will never make another real estate loan again as long as it lives. A combination of these two scenarios occurred in the oil patch in the late eighties. Denver, Houston, Dallas and parts of Louisiana and Oklahoma. It got pretty bad for several years.
Hopefully, lenders and developers won't be that reckless again, but that's only a hope. Builders will usually build anything somebody will give them money for, and lenders lose their institutional memories after a generation.
P.S. Balkins has sure gotten philosophical.
Also, often the mortgages on commercial buildings are not self-amortizing, like a home loan. They may have 30 or 40 year amortization schedules, but a five year so due date. If the building owner can't refinance, he is in trouble and ultimately the lender is in trouble.
The video I posted above talks about that problem.
banks can absorb a lot of bad decisions. that's why they make so many bad decisions.
your outline could happen, but it could also not happen, and we could see slow but stable growth for some time to come. the canary in the coal mine isn't dead yet so to speak.
True. I'm a worry wart. It's been my hobby for many years.
I'm confident in slow but steady, it's a lot harder to get a mortgage loan today than it was in 2007.
perhaps seneca can help provide a more optimistic perspective. though i suppose the stoics were much less exciting than the cynics.
Or the Balkinsites.
One article I read said that homes (on a national basis, you have to adjust for location) below $300,000 are selling very well and homes and condos above $300,000 are not selling nearly as well and are glutting the market. This is because developers have built a glut of luxury detached homes and condos while at the same time the people who could afford them are getting nervous about the economy and are hesitant to lay out the big bucks for housing.
here's an article for you
http://www.aspentimes.com/news/20809702-113/aspen-real-estate-market-soars-past-other-resorts
http://www.aspentimes.com/news/20946642-113/is-aspens-six-year-real-estate-surge-on-the
and an analysis to put it in perspective.
i read an article a couple years back about how developers were concerned that millenials aren't buying the $300,000 spec homes they were building
how the hell would a kid just out of college, with a shitty just out of college job, and saddled with unprecedented levels of student loan debt, afford a $300,000 house? did they expect starting salaries to suddenly jump to $100,000/year, or did they expect all these baby boomer parents to throw away their retirement and buy shitty ugly houses for their kids to live in (typically before they're married and have kids on top of all the other levels of stupid)?
still not a big deal. those houses were never worth more than maybe $150,000, and kb homes made piles of money, so losing chunks of it won't be that bad. if they were really on the hook for making such bad decisions, they wouldn't be making such bad decisions.
i'd be more worried about loss of jobs due to gas prices being so low. i have a friend in oklahoma who saw his building basically empty out. the oil towns that sprung up in north dakota are pretty much ghost towns. hopefully that industry is limited enough that it won't spill over too much.
Stay valuable, not costly.
A $300,000 house in 2006 cost you almost $400 more per month than with current intetest rates. Additionally, the large increase in renters over the past ten years have driven rental rates higher than mortgages in many markets. Doesn't make it any more affordable, but a young person could do well buying in this market with a house hack and the low rates.
+1 - "Stay valuable, not costly."
As 2007 unfolded into 2008, our firm continued to stay busy and we needed to hire. Virtually every decent candidate we could find had extraordinarily high salary expectations ... at some point we just had to swallow hard and bring a few of those individuals on at those very high rates. Then, as the economy soured further and some of our projects were cancelled, those recent hires were the first members of our staff to be laid off.
"value" and "cost" are far from being the same.
So how do you make your business more valuable than the next... I think the obvious answers are relationships and capital, but....
Construction Job Openings Reach 8 Year High http://www.builderonline.com/building/construction-job-openings-reach-eight-year-high_o?utm_source=newsletter&utm_content=Report%2FResearch&utm_medium=email&utm_campaign=BBU_031716%20(1)&he=39f4dde72a77f49a646432eb2a9d7c4078000181
You don't look at just a industry job growth, especially ones that lag behind like construction. Think of it this way; If a business hires and grows, then they need more space.... that comes in front of the design, financing, and construction of that space.
If we have a more longer duration statistic charts with this level of detail over say...... 30-40 years. We can get a better picture of estimate. I would estimate on face value 1-2 years before the next recession. It will probably be more mild recession than the most recent one but would likely dip a little bit and resume again like the previous recession to the last. I estimate the effects of the next recession will begin affecting design oriented firms in the next year or two and the construction oriented firms in a year or so after that. The recession cycle would likely be 1-3 years long. I estimate closer to the 1.5 to 2.5 year pit. To catch back up to where we are today would be about 3-4 years from the beginning of the recession slip. Construction would be about 1-2 years behind the design side. Sounds usual.
Some areas will be hit first compared to other areas.
I'm going to work along this next recession cycle towards rebuilding capital, complete some goals (not architectural licensure.... that would take longer to complete) such as NCBDC certification, CCB license as an RGC (and/or developer license) are on the immediate goals but they will simply serve along the way.
However, the trick is timing it all out while doing stuff to rebuild financial. I just have to work on the process and get it done. Regardless, I'll just work on that in some way as well as possibly some other stuff.
here you go rick
Thanks....
It would somewhat support my argument. We didn't have as high of a momentum above the 50 line this time around so it shouldn't be as drastic as the last recession but these smaller swings are better then the hard drastic swing as the last recession was.
Predicting the future is of course a little folly as we will not know for any certainty how bad the next recession will be. How the leadership of the country will handle and respond to the situation will be a good guess.
I will be mildly optimistic that it won't be quite as bad as the last one.
Look at the chart, after a recession things get above 50 and stay up until the next recession, we’re already heading south...haven't even hit 55.
Geezertect has a handle on it…just based on my 40 years at it, I started to squint when things got crazy…always a sign of an ebb in the tide, good time for paying down debt that has exposure, good time to start subcontracting work out rather than hiring & renting more space to keep up….as stated there is still time to prepare.
Watch housing trends, it drives the real estate market and floats all boats…fuels banks for other things we do…there hasn’t been a single post war recession recovery that wasn’t pulled out by housing…it’s stalled because of the Middle Class crisis…the “big money” thinks they can move on without the Middle Class, but even the Fed is worried about that at .5% ….when they are, I am.
Not a time to panic, just a time to get prudent.
This is one reason I like being a residential guy with a wide skill set. At the moment I'm seeing a lot of new homes and big renovations. Along with a few smaller renovations I have about 20 projects on the boards, which is a lot for me.
When things slow down, which of course they will eventually, people simply scale back and renovate their kitchen and add a master suite over their garage instead of building a big addition or a new house. When energy prices are high, people want to know how to make their homes more energy efficient, and even now with prices low, I'm finding that people are interested in saving energy. If I don't have any design work at all, I can go back to building and renovating houses.
If the shit really hits the fan, my wife and I moved from the city to a small, rural town, and are working on making it a largely self-sufficient homestead. We chose a location with lots of water security, standing timber and space for growing food. I sincerely hope it doesn't come to those being important features, but the 1950's version of the American Dream is over (no matter what Trump says) and at some point in our future, things may get as ugly as they are in other uncivilized countries. I may sound like a prepper, but I prefer to think of it as being prepared for the worst but hoping for (and working for) the best.
I'm not religious but I find this saying appropriate to the discussion: Trust in God, but row away from the rocks.
As for Xenakis' post, Yahoo sucks and deserves to die.
The only thing more ridiculous than economists making future predictions is a bunch of architects. Just keep keeping on, if you can't survive a year with 6 months of unemployment and some savings downsize and simplify your life.
I've become more and more certain that economists are really historians, far better at explaining the past than predicting the future
^ History repeats itself. ^^Not much of a concern to some…just move ones spider plant & goldfish jar to mom’s basement and wait it out, to everybody else it pays figure it out.
Mom's garage thank you very much!
We just recovered from the most significant recession since the 1930s. I think we're still all skittish because of it. I wouldn't extrapolate from past events, I think we have another two or three decent years ahead of us - unless you're in China
ivorykeyboard,
It could simply be that this next recession will just be barely noticed. Maybe viewed as a slower year or two than this last couple years but then resume back on course. It wouldn't necessarily be the next recession to worry about the next recession after that. The higher you go, the harder we fall. We just haven't got very high yet so to speak. I'm using a metaphor for the economic tables. The bubble has to build up enough hot air. It's kind of like the stock market in a sense. There are up and down cycles but the bigger recessions usually requires time for the bubble to build up and then do a real doozy on us.
I'm more concern about the next recession after the upcoming on. Remember, not all recessions have the same magnitude. We have small ones and big ones and some are bonafide depressions.
I think the next recession will likely be more a slide back like 3 steps forward, 1-1/2 to 2 steps back. It it these little rhythms to helps to keep occurences of big deep recessions, rare.
BRIC went bust(except India).
Canada's currency is down after the oil building boom has slowed
The EU isn't in a great place
South East Asia is insane at the moment. Too much to do and not enough hours in the day.
But I'm glad things in 'Merica are pretty great. Time to build up your savings, finish off those student loans and pay off your mortgage.
Is a slowdown coming? Sure, at some point. But nothing like what we just saw. And thanks to separation of powers, no matter who gets elected in 2016 we'll still be fine.
Diversification always helps. Never put all your eggs in one sector construction.
If asia paid enough I'd be glad to go for a year or two.
The recent Bacardi 'house party" pretty much sums up the housing market. This http://www.youtube.com/watch?v=Ogs6uD4xlNY will not end well.
Lifting and moving a house is pretty awesome, too bad we couldn't do it here in the UK.
when i was a kid, my dad picked up his house and moved it like that. it didn't go very far or very fast, but we got to ride in the house as it went down the street.
distant has it right
+1 - "Stay valuable, not costly." - it's why I keep may rate under what everyone else with my exp. charges, downsized to a 300 SF studio in North Oakland(with rent control) and take public transit(Bart) and save - like the RadioHead song Fitter happier - "pragmatism - not idealism" -
Yahoo sucks and deserves to die - That may be - except if all the people that work there got laid off, demand for housing would go down causing projects to go on hold and this leads to lay-offs in our industry.
except if all the people that work there got laid off, demand for housing would go down causing projects to go on hold and this leads to lay-offs in our industry.
If housing demand went down, it would lower rents which might allow some of those worker bee types, like some architects, to move closer in instead of commuting from Sacramento every day. Plus, it would be wonderful to see all those little tech snots get an overdue taste of reality. If I sound bitter it's only because I am.
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