That sounds awful. If you're experienced and good at what you do why don't you charge what you're worth?
Mar 18, 16 3:37 pm ·
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makingspace,
People aren't going to pay you what you feel what you are worth. People or your clients are shoppers. They shop and select based on price if you work in private sector clients. They look at what the services offered that they seek and need and what the price they are paying for it.
People don't spend the most on things when they can get the same thing at a lower price.
Architecture is a business and price wars is normal of any business in any occupation.
balkins bullshitting again, people NEVER select an architect or firm based on price; history,references, built work, personality are looked at way before price.
Mar 18, 16 5:25 pm ·
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I'm talking about the majority in general. All the starchitects combine is less than 1% of all the projects.
People look at price and value. It's interelated. JLC-1, you are talking about value. What is being provided. Certainly, history, references, built work, and personality are part of assessing value. However, when you take say.... 10 comparable architects or designers with comparable value... it boils down to price. Sure, people are hesitant on a name they don't know. They will look to known names but it isn't that sophisticated. The majority of project out there and the clients are not sophisticated people. They don't do QBS. That's public sector work and only a small percentage of LARGE projects in private sector. The majority of projects, you are selected based on price.
First off, they won't contact you if you have no name so you're not on the list to do the shopping. They shop at places they know have some history, reputation, etc. If it's an unknown, they probably won't even look at. However, you're competing with others they contacted. They don't just look at you. They look at a number of people.
Then price in relation to the value perceived. It's consumer shopping principle of "Bang for the buck". Most people knows a face value of the people they contact. They look in the phone book or names that they heard. Then they select on price.
They don't know the quality of your work. If you some how is a local "star" architect getting your name in the local newspaper all the time, people will probably seek you out.
In business, it's called "awareness". If you have "awareness" then people will be aware of you. If they don't know you exist or otherwise... no name.... they won't know to look for you.
If however, you are a known name, that puts you up higher on the radar. Ultimately its a price-value assessment.
That is how bid based selection works. That's how selection tends to work outside public style QBS (Qualification Based Selection) works.
If they know you and are personally familiar with you, you have a value advantage. However, if the price is too high in the perception of the client, you don't get chosen.
The client has their own personal price-value assessment and it often has zero formal criterion. They weight different things as they value to what they want done.
Most of my clients and prospectives had been those who I don't know who they are and they don't know me. I don't particularly list any prices. At least not in a long time. I don't particularly list what my services will cost because those services are priced upon knowing what the project is. When I know what I am getting into, then I can assess the price.
The fact that I am probably the only dedicated building design professional in the downtown area and I think for the most part the other building designer had been somewhat out of commission/retired. So I am not sure if or how soon he'll be back in the game. There is no full-time architect based in Astoria. My biggest competition right now are the design-builders and developer/designer-builders.
As it is, I am going to have to get into the contracting end.
Since it seems that people are looking for contractors before looking for architect/designers these days. There seems to be a culture of 'don't hire an architect unless you absolutely need to.' Therefore, clients only look for the architect or designer AFTER the contractor tells them to get plans prepared by an architect or designer. That's when the contractor doesn't want to deal with the design side. However, there are plenty that do the design side. They usually charge next to nothing for design. Astoria area isn't that different then any other smaller towns which makes up more of this country than all the large city metro & suburb/exurb areas combined.
The clients are not looking to spend a dime on any of us. We are just a nuisance and necessary evil as far as they are concern. Except for a minority, they don't come CLAMORING to us because they WANT us.
Not in 21st United States. They don't like Architects. The word Architect is vulgar in our culture. The profession is vulgar. This is the problem that Architect and building designers (as the client doesn't see any real difference between the two) face.
They don't come to us because they WANT an Architect. We are just another vacuum sucking up their money. That is how they see us because we aren't the ones producing what the client really wants. We produce a bunch of paper. ULTIMATELY, they don't want paper or digital files. They want the building.
When we stop building the buildings and being responsible for making that happen, that is when we as a profession lost real value to the people. That is why we are seen as a vulgarity. Yet some of us are a bit vulgar.
If it wasn't for the licensing laws, things would be very different for you.
Mar 18, 16 6:19 pm ·
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Essential point,
Clients do not and will not value Architects/designers or their work like an architect work.
They do not talk about aesthetics of buildings and their spaces like architect/building designer would. They won't because it's not normal. It's freakish and disturbing to people in general. People care about people not a shiny dick unless your a rich guy flaunting your wealth in a show off fashion as a statement. Most people which is the 98% of the people for whom are people I serve in MY business. They don't prioritize vanity.
They don't value it so whatever you or I think we are worth is irrelevant. The person who is paying us are the ones that makes that assessment. At that point, we can either accept what they are willing to pay us or not.
Mar 18, 16 6:33 pm ·
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Admins, lets delete the previous two replies from me. Thank You. It just more off tangent and debate of opinions which diverts attention from the original topic.
Mar 18, 16 7:49 pm ·
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Okay, for the rest... ignore the prior replies to Archiwutm8 and JLC-1. They were a tad overeactive and should be deleted by the admins..... SOMETIME!
"Rick, that's bullshit and you know it. When you have a name out there people will pay for it."
archiwutm8,
Yes if you have a name reputation it can surely help in price negotiation. Clients use basic consumer shopping principle of "Bang for the buck". They use some form of price-value assessment.
Your reputation, work history, etc. When all are comparable....its based on price.
I should have wrote price-value. It's based on price-value. People aren't looking to spend any more than they have to.
People don't buy things because it's expensive. (The majority)
Rich people that made it to richness had became rich not by spending but by investing and frugality. You never make it to upper class by wasteful spending unless you are a trust fund baby or something like that where you got your fortune by inheritance.
Sure, people don't want to spend even if it cost less if it's crap and they don't remotely like it.
We should also bear in mind that Architects/Building Design profession collectively is kind of publically perceived as vulgar and such where the clients don't hire architects UNLESS they absolutely need to. They often start with hiring a contractor only later (if the contractor or building official) directed to hire an architect/designer. More contractors are getting in on the design-build wagon. Especially in the smaller residential and light commercial sector.
Even I am having to change the business model from a dedicated building design to a design-build type business. First, I don't like the client having contacted some builder I don't know who the F--- they are, before contacting me while I do at least appreciate they directed the client to get a designer to prepare the plans. It puts a lot of external pressure that I don't particularly like to have by a builder during pre-design/design phase before pulling in the other players.
This is why as designer/architects, we should be the GC/CM in charge and take responsibility over the construction phase enough that we have oversight over who are contracted as subcontractors/subconsultants and so forth in their respected order.
Admins, lets delete the previous two replies from me. Thank You. It just more off tangent and debate of opinions which diverts attention from the original topic.
what the fuck is this supposed to mean? they'd delete them all if they were opposed to off tangent crap. i vote for mods to keep all your posts, or delete them all. no gray area.
Maybe Balkins should pay someone to be his personal moderator since it seems he is incapable of doing it himself. That ought to keep someone very busy during the next recession.
I do put a little bit of thought into the next recession hitting, but who really knows when that will happen. I look at it in that I might as well make hay while the sun is shining. We keep getting busier and busier with our fees increasing along with the amount of work, so enjoy the ride.
However, that doesn't mean we can expect this to continue for years to come. I do see a lot of the work we do changing. It is being overbuilt and the sites are becoming more challenging and more expensive. We are also struggling to find additional qualified staff to handle the current work load.
So, a recession and hit on our profession wouldn't surprise me, but the topic should focus on how to prepare for it, rather than trying to time it exactly.
With the last recession, I worked for a firm that was caught with their pants down. They had a lot of projects they were in the middle of, but were behind on their billing. The developers and clients want to believe their projects are still viable and will try to keep you working on them, even with a delay in pay. So we kept working on projects with full staff that were ultimately canceled and the firm left with noncollectable fees.
So a couple of good things to remember is that you only make what you have collected. Forget what is on the books. Avoid debt. Save what you can personally and in your firm. What would it look like if your income was cut in half or worse? What and who would be cut? What would you focus on? Are there other ways to earn income as an architect? You might be surprised where these questions will lead you.
Been super busy for two or three years. We had a a coupe of quiet months last year around tax time, but otherwise been very, very busy and projects getting better.
We've been talking about leasing a larger office, upgrading software, possibly hiring our first employee (just two partners since about 2012), but with all the talk of a pending recession, kind of makes me want to hold tight.
Larch, I think the key is to avoid long term obligations you can't get out of, you can always let people go, but a new bigger empty office you can't, long term debt is a no... you need to strike a balance between making-hay-while-the-sun-shines vs getting-ready-for-a-rain-storm... you are growing a little, not a lot, probably doing relatively quick projects... an LA needs to land a couple of Zoo's or a major state park to generate legs and enough cash to burn to make structural changes in infrastructure.
Think it has more to do with your tender size than the "economy"... you're on another thread talking about getting strung-out on receivables... that's always a sign to be prudent... slow pay usually means the money supply chain in your micro-market is beginning to slow... that comes from others in the chain getting cautious and unsure and it spreads.
You need to be sure the growth is real and sustainable before you grow...I would figure out how to keep it all going, hire as needed, without obligating myself to anything I can't jettison with a 2 week notice.
You know, one of the biggest, most prolific golf course architects in the country has his office right down the road from me, does golf courses all around the world ... he had a spurt of growth he wasn't sure of 30 years ago and was operating out of an old house... he rented some trailers and hired to keep up....and those trailers are still there to this day... house always well cared for, lawn is immaculate, with trailers out back, just keeps adding on trailers....guy is famous, prudent & rich.
I was having lunch with a contractor today, we were talking about a possible upcoming bust and how we were both projecting slow downs over the next year if we didn't get more work soon. We have lots of work in CA but not much in early phases.
Then, two phone calls and ten minutes later and my firm lands $75M in projects, meetings start Monday. The contractor knows that we'll bring him along if we can, just like he does for us. We stopped our complaining right quick.
It's a bit like a rollercoaster, this industry. When it's good, it's good, and when it's bad, it's really bad.
Mar 23, 16 10:38 pm ·
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JLC-1,
Some hollyweird star wanting a shiny phallic edifice?
Yes indeed Bowling Ball tis a roller coaster. I had to let people go last year. We had nothing to start second and third quarters. Even January this year was dead and then like a switch being turned on $5 million in new work. But Im old and something doesn't smell right so I'm treading very carefully here because these swings are just not normal.
I don't see another slow down for at least 2-3 more years. Everyone I know is very very busy right now. Unemployment is low, housing prices are high and steady, construction everywhere...if trump wins though who knows...
Yes, small projects. Even our 'bigger' projects are small. Have been working on some of those $4M homes jlc mentions but comparatively tiny site and landscape budgets. We're doing some exciting urban design work, but its all conceptual, eye candy type stuff at this point. Our plan is to keep building the portfolio toward those bigger projects we can chase down the road--the town centers, parks, and public work. I feel we've been on the cusp or just starting to find our way into some of this work, but we're hustling and working 7 days a week to keep up with it. I get the sense we may be in for a lull in the next month or two, but not necessarily due to the greater economic climate, just the pattern we're in, i think.
Everyone is busy yes. Big But, taboo thing to mention that since the great recession started, all the experienced architects have left, were fired. Consequently architect offices are doing strategy of having teams made up of perhaps one experinced person, surround him with a ton of recent to very new interns. The consequences of that are gonna be felt in numerous ways , longer hours, missed deadlines, lack of general knowledge, list could go on forever. I beleive the poop will hit the fan at some point.
Rumor I heard yesterday is that things will continue going fairly strong until the end of 2017 then we'll see a slowdown. But I can't cite the source of that info, so totally take it with a grain of salt. Because who the hell knows what's going to happen! I admit I really like this idea of being prudent and careful and not spending like there's no tomorrow.
The consequences of that are gonna be felt in numerous ways , longer hours, missed deadlines, lack of general knowledge, list could go on forever
Also mistakes, some big, that will be missed by the "experienced" member of the team. Lots of stress on that person. I wouldn't envy them. Liability insurance better be paid up.
Things already slowed down dramatically in 2015 Donna. There is a documented industrial and retail recession in the United States going back to Q1 2015. Services and real estate have softened the blow and kept gdp "technically" positive and out of recession. I simply dont see anyway this wont end spectacularly bad again with some major economy going into full blown crisis and triggering a new global meltdown. My bet is on Japan, Brazil or Italy.
Everyone I know is very very busy right now. Unemployment is low, housing prices are high and steady, construction everywhere
The busts always come fast. CNBC this morning had a piece talking about official government GDP figures that on average have to be later revised by 1.3 percentage points, meaning that a 2.0% GDP growth rate figure could be as low as 0.7% or as high as 3.3%. That's huge variance. Policy makers are flying blind. Always keep your seat belt fastened.
I'm picking up those small residential projects and slowly growing over the past 3 years. I've been trying to diversify, but probably can't do it w/in the next 3. I've always been about slow controlled growth. Working out of my house. Probably will either continue out of the house or monthly office if I do need employees. I sure don't want a slowdown though. Lots of work right now and even more inquiries. Average 1-2 inquiries a day. About 5-10% become real projects.
Discussing & some reading about all this is germane for architects of all stripes because R-Day is nearly impossible to predict for the average person….and that is by design. A lot of effort goes into keeping the picture cloudy…keeping things complicated, fudging figures & feeding pabulum to the clueless media….because the “big money” needs us to stay in the economy just long enough for them to get out.
Everybody’s life & exposure is different, just have to go with the preponderance of the evidence around you, which from where I’m sitting says: “caution”.
here's my 500 word response to the pessimism. hopefully most of what i typed has some content in it, and isn't too redundant or wordy.
bundy, i'm going to go back to my current theory that the most important thing in the economy is to keep currency moving. everyone has to be somehow be spending money instead of hoarding it. as an individual person it might be best for you to save so you have a backup in an emergency or so you can retire or send kids to college or whatever, but the macro view is, get money moving.
you outline 'services' as an industry ahead of manufacturing or retail. if that's so, it's because that's where people who have money spend money. retail shouldn't be that bad, it's just that if someone needs to replace a refrigerator or light bulb they can go to a box store instead of some hipster boutique. people would rather spend their money on services instead of better refrigerators. if retail at box stores went down, it would also mean manufacturing, warehousing, and distribution would go down, but i don't think that's happening.
a slowdown in manufacturing would mean a slowdown in decent paying jobs for a lot of people who might not have other avenues to find employment. that would suck because it means a bunch of people who need to have money and need to be spending money for us to make money, don't have money and aren't spending money. maybe those people can find jobs in a service industry to keep things going.
at some point residential needs to change so they're building affordable houses. i don't understand that market very well though. it seems to me houses are valued based on their use as an investment rather than their use as a house, so if there is still a bubble there, it needs to be popped so the value of a starter home can get back down to where it needs to be. once that gets sorted out, people will be spending money on houses again, and that will mean we get to design bigger realtor offices and banks and fun stuff like that.
if you're right that the service industry is leading the economy, then they're the bellwether to watch. when people stop spending money on services (sit out front of your local service place and see if people are coming and going), then it's time to start thinking about being concerned. it could change, so if people quit going to your local service establishment and start lining up at your local retail establishment instead, we'll be fine. if people stay home because for whatever reason they aren't spending money (either they don't have money, or they're just afraid to spend it), then i think it's likely slow times will follow.
curtkram, I believe the services industry is broadly weighted by firms servicing fortune 1,000 type corporations with global reach. As the global, interconnected economy grows anyone in their ecosystem will ride their wake. With each recession going back to the late 80s it seems those tapped into the global pipeline do better, get wealthier and their numbers grow. Conversely those left behind get poorer, more marginalized and that population is growing much larger. We are at the point you can look around and say its never been better, if you can get it, and its getting worse each day. I'm losing long time commercial clients by the dozen yet picking up million dollar homes like never before. The neighbors kid of a current client is about 30 , living at home while working full time out of economic necessity. I worry nobody will be able to buy these homes in the future, hell they can barley afford them now. The anecdotal evidence is everywhere, which is why I'll gladly take their commissions but I'm not hiring anytime soon. I'll add I worked with a developer a few years back who wanted to develop low cost starter housing for millennials but the pro forma never worked out even with a lender as partner. The average incomes couldnt support their best mortgage product at the time. Maybe credit profiles have gotten better since then.
Also, " it seems to me houses are valued based on their use as an investment rather than their use as a house"
A house is derivative of the land beneath it. If the land is desirable, the house value goes up. If the land is undesirable the house could be worth less than it's cost. Location, location, location. Any home near an employment center will be unnaturally high do to there being so few employment centers anymore.
i don't think i would want a small business focused on multi-million dollar hoses right now, but i'm not that close to that market so i'm not going to pretend like i know much about it. regarding the developer you worked with who couldn't make money on normal priced houses, like i said before i think that's because "normal" price is based on a house's value as an investment rather than it's value as a house. until that gets fixed, there's just nothing that can be done. (edited to add, i submitted this comment before i saw your comment where you replied to this statement)
if you owned a big company instead of a small one, it would open up a lot of options for you. all this talk about how people should be "entrepreneurs" is really stupid in my opinion. there's nothing wrong with working for a living. it's not good for everyone to be the boss, and it's not good for anyone to be driven by greed and selfish motives. if you want to run a business, do it because you want to run a business and because you care about your business (which i assume is probably the case for you, but maybe not the case for self-ascribed "entrepreneurs")
Developers in the Bay Area wont talk to people making under $120,000/yr - the pro-forma just doesn't work and they don't like being forced to include over 12% BMR
curtkram, Ive always chased the work from market to market and always had a toe in the residential market because historically it was the one that always had work. But 2015 was like a repeat of 2007 for my firm as far as commercial went. Those big, stable jobs that kept people employed just died on the vine for me. I suspect it's regional. Your right, you have to really want to run a business because it's torture and filled with potential financial dangers. Are you willing to put your life savings at risk to make a few months payroll in hopes a developer will pay in full?
I just returned from a bunch of job interviews in Seattle and Portland, and my general impression is that multifamily housing, which has been booming for the past few years, is probably due for a mild slowdown soon. Barring some major catastrophe, I don't think people will suddenly stop building like they did in 2008 -- people are still moving to the region in droves, and they have to live someplace -- but developers seem to be growing a bit more cautious. My understanding is that rents in Portland are still in bubble mode, while rents in Seattle are starting to level off as new large-scale developments are coming online and pushing up vacancy rates.
It's a different story in the public sector, as all the tax revenue from these new developments is now making its way into public coffers, and construction is still going strong in K-12, higher ed, healthcare, infrastructure, etc.
Here in Cincinnati, it feels like the recovery barely got off the ground. Our biggest project (multifamily housing up in Canada) just went on indefinite hold, and another multifamily client seems to be perpetually short on cash to pay their design fees. I haven't heard of any layoffs at local offices yet, but they certainly don't seem to be in a hiring frenzy like they were a year ago.
GDP = M x V, where M is the money supply and V is velocity of money, i.e. the average number of times a dollar changes hands in the course of a year.
If consumers start saving too much, the velocity goes down and GDP starts dropping. If things get into recession territory, the Federal Reserve Bank tries to increase money supply to get the GDP number back up. Usually it works but sometimes they pump too much money into the system and inflation kicks up. Then consumers start overspending (too much velocity) because they want to get rid of dollars which are losing purchasing power. If things go too long, you have hyperinflation like we had in the late '70s as both money supply and velocity increased. Then, the Fed slammed on the brakes and we had the recession/depression of 1980-82.
After the tech bubble, the Fed goosed up money supply because they wanted to forestall a recession. They overdid things and kept interest rates too low for too long. Investors left the stock market and started pushing money into real estate, particularly residential. Since real estate is fairly easy to leverage through borrowed money, the return on investment really got good for a few years which prompted more and more speculation. The speculation made house prices continue to skyrocket and spawned the notion that residential real estate was risk free because prices never go down. The Fed was fat and dumb and happy and didn't react because they bought into the myth that house prices never go down. The banks and their regulators also drank the kool-aid. Eventually things had to crash and they did.
After the most recent crash, the Fed has been standing on the accelerator trying to get things moving again but consumers have been slow to spend because they are frightened about losing their job and are trying to rebuild their balance sheets. In Europe, they are flirting with negative interest rates to force people to spend their free cash or pay a fee on it. So far, we haven't seen that but the Fed has discussed it although they claim it hasn't really been studied yet. Bullshit. You can bet the farm they are studying it.
We are in a real bad box long term. The demographic trends are terrible, with an aging population taxing our social safety net while simultaneously spending less money (with the exception of health care which is going through the roof). At the same time, ordinary middle class and working class jobs are going away through technology and outsourcing, and the jobs that remain are seeing reduced wages. Since the consumer bee and worker bee is the same bee, falling wages mean falling consumer spending. Business had a great time squeezing its workers but now is facing fewer customers. Business investment has stagnated through this entire cycle. And the Fed is terrified of deflation, so they have kept interest rates near zero, which leaves them no room to drop rates if some exogenous event like a terrorist attack occurs.
It doesn't mean the end is near, but it sure looks like things are increasingly complicated, and there is no evidence that the powers that be really have an understanding of what their options are.
boomer retirement is in the stock market too, so a lot of that money is going to be divested as more people retire.
aside from QE and printing money, the right way for money to be circulated in the economy is to pay people for work. wages didn't rebound as well as the stock market. the government doesn't really have very good tools to manage the economy. if the free market worked, we wouldn't have wage stagnation and growing wealth inequality. concentrating wealth among few people is the opposite of circulating money.
government does what it feels like it has to do to protect the governed. it's kind of a problem that we elected idiots that don't want to keep government running, but there isn't much we can do about that. i believe the only workable solution is for private industry to change it's focus from greed and quick self-gratification to something where people care about what they're doing, care about their business, care about their communities. maybe the government should invest in some sort of marketing campaign that says having pride in your accomplishments is worth more than showing your neighbor you can buy your mistress bigger boobs.
aside from that though, QE did kind of work. it was filtered through the banks that caused most of the problem to begin with, which is a pretty inefficient way to fix the problem, but some of the money did get where it needed to get, and people are circulating currency, so things aren't that bad. you should be able to see people out spending money instead of people staying home because they're afraid.
econ 101 is about as far as i can go, because i'm an architect and not an economist. someone else will have to work out econ 201.
i bet that universal basic income idea would be a better vehicle to lift the economy in a way that would get currency circulating between the highest number of people possible. that's kind of what bush jr. was going for when he sent everyone a refund check, right?
i really just kind of repeated a lot of what you said geezer. sorry about the redundancy. still can be a fun conversation.
Mar 24, 16 3:36 pm ·
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curtkram,
More or less an add to what you are saying. In Geography, they used terms to define economic sectors. Just for a loose sense of definition: (Yes, there are better sources but most of the ones I personally seen is in books so here it is)
Don't hang up on the details but the main points. There lists five sectors.
Primary, Secondary, Tertiary, Quarternary, Quinary (The last two are sometimes categorized with Tertiary as they are two specialized categories within Tertiary. The first three terms are most universal and the Quarternary and Quinary are special categories of activities within Tertiary).
Do note that countries or country-level political states and their political subdivisions are dynamic.
Primary Sector industries are about the core essential of life. In a large degree, this is still truly a primary sector as this is essential.
The Secondary sector of the economy is about manufacturing, processing, construction. As we know, our country is decreasing on this sector but is growing in the Tertiary sector.
When we look at ALL other countries the history of the world, when a country, kingdom, empire grows, its Secondary sector tends to be strong. However, growth plateaus, the need changes. However, in some ways, this is whats happening on some aspects of the Secondary Sector, but that doesn't account for the rust belt.
However, what happened in that area is certainly a factor of push and pull factors.
When it comes to housing:
We are facing issues such as building more houses than there are families or households. Another dynamic is the changes of our society. The nuclear household (the traditional household) and the traditions of multi-generational living is largely diminished by culture of broken households, dysfunction of family relationships, basically our run away from home and make up our own home. While that has to some extent driven increased demands in housing, it's also not sustainable if we are building houses for a family for just a person or two. However, we eventually catch up to the over building. Now with new housing demands for the third time for the babyboomers (first for when they were born, second for when they were adults raising children of their own, and now their retirement homes).... the retirement housing to housing the growing population of retirees of the baby boomer generation. So now, we have these retirement houses to build but we would have a housing supply pre-existing houses impacting demand.
Obviously, I am simplifying if not oversimplifying but there is a lot of mechanics to economy.
However, I do differ from curtkram's statement or I would more add a line of caution. You just can't sit in front of a service establishment and necessarily get a good prediction. Some service establishments are kind of insulated from the wild swings. We need to look at what ones are going to be informative indicators. Watching a lawyer's office and just sitting there might find yourself spending the night in jail for loitering when the law office calls the local PD to collect you. Joking aside, they just won't necessarily give any indicators. I would argue that there are certain sources of indicators that will be more noticeable. In some cases, by the time you see them having real problems, you should already be neck deep.
(pause)
Mar 24, 16 3:46 pm ·
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(EDIT: As I was writing this: Some more sources to the above definition............
Employment structure means how the workforce is divided up between the three main employment sectors - primary, secondary and tertiary. Employment structures change over time.
Countries in the early stage of development usually have a high percentage of the population in primary employment. This is because most people are engaged in agricultural activities.
As a country begins to develop an industrial base there is an increase in the secondary sector. An increase in machinery on farms means fewer people are needed. People tend to migrate to urban areas to get jobs in factories.
When a country becomes more economically developed there is a greater demand for services such as education, health care and tourism. Therefore the tertiary sector undergoes growth. By this time computers, machinery and robots replace people in the secondary sector hence the decrease in secondary jobs. )
Our country began its phase in the Primary sector. Then it had with the Industrial age some 150 or so years ago has moved into the Secondary Sector. While from an economics chart, our primary industry is substantial but we are much like the UK in that we have less need for jobs in the Primary sector because of mechanization. The Secondary sector which is largely about manufacturing goods. Virtually all of the manufacturing had been outsourced to countries that are developing from rice patty farming to economic power houses like China and other countries. They positioned their investment at a time when we began introducing and having invented the robotics with our partners in Japan and China like other countries not having to invest in the original R&D were able to bring about robotics production and replacing human work force demand... in the level of demand aside from their huge population.
As you know, with the rust belt, we are a country moving away from manufacturing to one of service oriented.
The tricky part of the business of tertiary sector it is easily outsourceable. Even Architecture could be outsourced.
The Secondary activities, weren't easily outsourced but in the case we had experienced, many aspects of the secondary sector activities had been outsourced into other countries willing to work for less money.
The Labor unions in some ways had been part of people losing their jobs in this sector. Constantly going on strike for pay raises was the downfall on many aspects of the Secondary sector in the U.S. Ultimately, artificially inflating the costs but all it does is raises the cost of things we buy. The more a company spends on labor, the more the product prices are going to go up. There is an economy factor where direct labor does not exceed a certain percentage level of the income from sales. So when you manufacture X number of automobiles or computers or whatever, there is only a certain percentage of each unit sold that goes to paying labor.
Higher wages or salaries for a particular job position does not mean an elevation in life style. We don't elevate ourselves by demanding more money unless we generate more revenue for each our of labor. If you can double production with the same labor rate, then maybe you can command more money. However, once we reach the limit, it plateaus yet we kept demanding more money.
All these factors lead to companies sending jobs into other countries because human laborers are replaceable as even the machines. They can cut their losses with the U.S. and go overseas and in 10 years be making more money for their shareholders. This is exactly the job the paid executives and business people of a company is to do. Business 101. If you are the CEO or other business executives/managers/etc. it is your job to generate income to the company owners. In other words, it is your job to make them richer and more money. That's their #1 purpose and job to do.
You might think, why don't they just charge more money for the automobiles or computers. The market is competitive and when you go above the optimal point in the market you lose sales and lose revenue. At any given day, there is an optimal price point to sell goods or services. That is the point where you can get the most money per sale of good(s) or service(s). If you go under that, you may generate more sales but you are losing still because the profits are to small. What's the point of investing if you only get what you put in. In a way, you can often lose out because the money lost value over time.
that was close to 1,400 words. i did not read it. cut it down to 500 or less. read through a couple paragraphs and think about whether you're making a point that you've already made. if so, it only has to be made once with perhaps a couple supportive sentences. you don't need to support your claim with copy/paste or links unless there's a reason. also, try to have a point to the post. if you want to talk about how the economy has changed from agriculture to manufacturing to retail to service, then try to keep following words consistent with that point. if you want to talk about demographic changes, that's a good topic. if you want to talk about housing costs, that can be relevant. it seems you mish-mashed too many topics into a long stream of consciousness.
for example, this:
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More or less an add to what you are saying. In Geography, they used terms to define economic sectors. Just for a loose sense of definition: (Yes, there are better sources but most of the ones I personally seen is in books so here it is)
Don't hang up on the details but the main points. There lists five sectors.
Primary, Secondary, Tertiary, Quarternary, Quinary (The last two are sometimes categorized with Tertiary as they are two specialized categories within Tertiary. The first three terms are most universal and the Quarternary and Quinary are special categories of activities within Tertiary).
Do note that countries or country-level political states and their political subdivisions are dynamic.
----------------------
could be effectively reduced to "there are 5 economic sectors, Primary, Secondary, Tertiary, Quarternary, Quinary "
since tertiary, quarternary, and quinary were excluded from following statements (i think), those could have also been left off, further reducing your statement into a nice concise opinion that would be reasonable to read.
NPR just told me that Zillow has reported that rents have finally stabilized nationwide as a result of multifamily construction catching up with demand.
Can't imagine that this would help with residential starts-single or multifamily.
Mar 24, 16 7:12 pm ·
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It's probably because this country is built up. We are obsolete and not needed until there is either a major disaster wiping out a lot of what is built or a population demand. It's not like the U. S. is having a major population growth.
There are still need for housing as we have housing homeless people but there are people with lots of underutilized homes such as vacation houses or weekend houses that are empty of occupants so they aren't addressing population needs. However, if those were tapped into, it would solve a lot of housing needs.
So new construction is being built in many places to address housing of homeless. While, currently some solutions that are only partial and part-time are these places where homeless can get out of the cold, it doesn't actually solve the housing.
Part of the problem is that most of these people have psychological issues that makes them unwanted. There is definitely a social problem. Some people just can't live with other people and they can't really work with other people at all. They became engrained into this predicament and they can't see themselves out of it.
As for Astoria, we are seeing this problem because for one, we are just one of those places that Portland kind of pushes them out of their cities and they migrated down the road to here. We are seeing these issues these days and so many were never from Astoria. They just got kicked out those cities and got pushed along effectively, we get them. A dirty secret in some of the homeless population reduction in many cities is they got kicked out of those cities. Even physically transported out of the city onto the state highways and pointed a direction and told if they were to return, they be arrested or something.
This is how some portion of them literally got here.
When they have poor history with the police and substance abuse history as well as violence and other bad rep, no body wants them in their private owned property. This is the biggest hurdle with homeless population because a large number of them are homeless because of their own doings and they got themselves there.
Historically, the solution to these problems were that we had various kinds of institutions to send them to. For reasons or another, these places were shut down or discontinued and limited down quite a bit.
Some of these people would have been sent out to a land claim site where they can claim a parcel away from other people and build themselves their own home. Build a simple cabin and an orchard.
Then we create a bureaucracy that is so much about telling people what they can't do in an every growing list that there is no freedom. So we marginalized people who don't want to follow a societal path of bureaucratic socialism/communism/fascism. The idea of policing people over political correctness/incorrectness which is basically censorship in the most veiled yet bane manner. When we get to a point of thought control, what do we have?
We want to create affordable housing but how do we address the other issues that comes with homeless people? I think we have a societal issue there. I am not sure I even have an answer for that.
gruen - hopefully that makes it easier for young people to buy homes. I would like to own and I also want all these young people to hire me for their renovations and additions.
Mar 24, 16 9:33 pm ·
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What is affordable? That's a slippery slope.
These days a modest single family house of 2000 sq.ft. would have a project cost as much four of the piers of the MacArthur bridge aka municipal bridge of St. Louis around 1909-1910. Of course the rest of the bridge took many more years to build costing around $470,000*. * - Source: "The Design of Masonry Structures and Foundations" by Clement C. Williams, C.E. 1922. Pg. 312 (printed page number)
Calculation assumes a very paltry $125/sq.ft. construction cost x 2000 sq.ft. times 1.5 for contractor O&P and design services plus $95000 for purchasing lot, and misc. other expenses. Pretty modest.
Modest average size homes for a family of 3-4 costing as much as 4 bridge piers is amazing how much things blown up in costs in just about a hundred years.
Bright side is, labor wage is substantially higher than back then. However, with student loans about 1/4 of such a new constructed house. It's hard to build such. You are talking about the cost of buying an existing house at a steal or building a 500 sq.ft. lot on a piece of crap low cost property with nothing on it for next to nill.
At such point, MFR work would be appropriate and on vacant lots, it's difficult at time to just build a 500 sq.ft. mini-house due to minimum size development requirements of zoning laws often already there. So a little shanty hut isn't often permitted unless as an accessory structure to a primary structure.
The economy and being busy - is a slowdown coming?
geezertect
LOL - like many co-workers of mine who take Amtrak to Oakland from Fairfield/VacaVille and Sacramento
That sounds awful. If you're experienced and good at what you do why don't you charge what you're worth?
makingspace,
People aren't going to pay you what you feel what you are worth. People or your clients are shoppers. They shop and select based on price if you work in private sector clients. They look at what the services offered that they seek and need and what the price they are paying for it.
People don't spend the most on things when they can get the same thing at a lower price.
Architecture is a business and price wars is normal of any business in any occupation.
Rick, that's bullshit and you know it. When you have a name out there people will pay for it.
balkins bullshitting again, people NEVER select an architect or firm based on price; history,references, built work, personality are looked at way before price.
I'm talking about the majority in general. All the starchitects combine is less than 1% of all the projects.
People look at price and value. It's interelated. JLC-1, you are talking about value. What is being provided. Certainly, history, references, built work, and personality are part of assessing value. However, when you take say.... 10 comparable architects or designers with comparable value... it boils down to price. Sure, people are hesitant on a name they don't know. They will look to known names but it isn't that sophisticated. The majority of project out there and the clients are not sophisticated people. They don't do QBS. That's public sector work and only a small percentage of LARGE projects in private sector. The majority of projects, you are selected based on price.
First off, they won't contact you if you have no name so you're not on the list to do the shopping. They shop at places they know have some history, reputation, etc. If it's an unknown, they probably won't even look at. However, you're competing with others they contacted. They don't just look at you. They look at a number of people.
Then price in relation to the value perceived. It's consumer shopping principle of "Bang for the buck". Most people knows a face value of the people they contact. They look in the phone book or names that they heard. Then they select on price.
They don't know the quality of your work. If you some how is a local "star" architect getting your name in the local newspaper all the time, people will probably seek you out.
In business, it's called "awareness". If you have "awareness" then people will be aware of you. If they don't know you exist or otherwise... no name.... they won't know to look for you.
If however, you are a known name, that puts you up higher on the radar. Ultimately its a price-value assessment.
That is how bid based selection works. That's how selection tends to work outside public style QBS (Qualification Based Selection) works.
If they know you and are personally familiar with you, you have a value advantage. However, if the price is too high in the perception of the client, you don't get chosen.
The client has their own personal price-value assessment and it often has zero formal criterion. They weight different things as they value to what they want done.
Most of my clients and prospectives had been those who I don't know who they are and they don't know me. I don't particularly list any prices. At least not in a long time. I don't particularly list what my services will cost because those services are priced upon knowing what the project is. When I know what I am getting into, then I can assess the price.
The fact that I am probably the only dedicated building design professional in the downtown area and I think for the most part the other building designer had been somewhat out of commission/retired. So I am not sure if or how soon he'll be back in the game. There is no full-time architect based in Astoria. My biggest competition right now are the design-builders and developer/designer-builders.
As it is, I am going to have to get into the contracting end.
Since it seems that people are looking for contractors before looking for architect/designers these days. There seems to be a culture of 'don't hire an architect unless you absolutely need to.' Therefore, clients only look for the architect or designer AFTER the contractor tells them to get plans prepared by an architect or designer. That's when the contractor doesn't want to deal with the design side. However, there are plenty that do the design side. They usually charge next to nothing for design. Astoria area isn't that different then any other smaller towns which makes up more of this country than all the large city metro & suburb/exurb areas combined.
The clients are not looking to spend a dime on any of us. We are just a nuisance and necessary evil as far as they are concern. Except for a minority, they don't come CLAMORING to us because they WANT us.
Not in 21st United States. They don't like Architects. The word Architect is vulgar in our culture. The profession is vulgar. This is the problem that Architect and building designers (as the client doesn't see any real difference between the two) face.
They don't come to us because they WANT an Architect. We are just another vacuum sucking up their money. That is how they see us because we aren't the ones producing what the client really wants. We produce a bunch of paper. ULTIMATELY, they don't want paper or digital files. They want the building.
When we stop building the buildings and being responsible for making that happen, that is when we as a profession lost real value to the people. That is why we are seen as a vulgarity. Yet some of us are a bit vulgar.
If it wasn't for the licensing laws, things would be very different for you.
Essential point,
Clients do not and will not value Architects/designers or their work like an architect work.
They do not talk about aesthetics of buildings and their spaces like architect/building designer would. They won't because it's not normal. It's freakish and disturbing to people in general. People care about people not a shiny dick unless your a rich guy flaunting your wealth in a show off fashion as a statement. Most people which is the 98% of the people for whom are people I serve in MY business. They don't prioritize vanity.
They don't value it so whatever you or I think we are worth is irrelevant. The person who is paying us are the ones that makes that assessment. At that point, we can either accept what they are willing to pay us or not.
Admins, lets delete the previous two replies from me. Thank You. It just more off tangent and debate of opinions which diverts attention from the original topic.
Okay, for the rest... ignore the prior replies to Archiwutm8 and JLC-1. They were a tad overeactive and should be deleted by the admins..... SOMETIME!
"Rick, that's bullshit and you know it. When you have a name out there people will pay for it."
archiwutm8,
Yes if you have a name reputation it can surely help in price negotiation. Clients use basic consumer shopping principle of "Bang for the buck". They use some form of price-value assessment.
Your reputation, work history, etc. When all are comparable....its based on price.
I should have wrote price-value. It's based on price-value. People aren't looking to spend any more than they have to.
People don't buy things because it's expensive. (The majority)
Rich people that made it to richness had became rich not by spending but by investing and frugality. You never make it to upper class by wasteful spending unless you are a trust fund baby or something like that where you got your fortune by inheritance.
Sure, people don't want to spend even if it cost less if it's crap and they don't remotely like it.
We should also bear in mind that Architects/Building Design profession collectively is kind of publically perceived as vulgar and such where the clients don't hire architects UNLESS they absolutely need to. They often start with hiring a contractor only later (if the contractor or building official) directed to hire an architect/designer. More contractors are getting in on the design-build wagon. Especially in the smaller residential and light commercial sector.
Even I am having to change the business model from a dedicated building design to a design-build type business. First, I don't like the client having contacted some builder I don't know who the F--- they are, before contacting me while I do at least appreciate they directed the client to get a designer to prepare the plans. It puts a lot of external pressure that I don't particularly like to have by a builder during pre-design/design phase before pulling in the other players.
This is why as designer/architects, we should be the GC/CM in charge and take responsibility over the construction phase enough that we have oversight over who are contracted as subcontractors/subconsultants and so forth in their respected order.
Admins, lets delete the previous two replies from me. Thank You. It just more off tangent and debate of opinions which diverts attention from the original topic.
what the fuck is this supposed to mean? they'd delete them all if they were opposed to off tangent crap. i vote for mods to keep all your posts, or delete them all. no gray area.
^ hear, hear!
Maybe Balkins should pay someone to be his personal moderator since it seems he is incapable of doing it himself. That ought to keep someone very busy during the next recession.
Whenever the next conflict begins, it will be 2007 all over again.
I do put a little bit of thought into the next recession hitting, but who really knows when that will happen. I look at it in that I might as well make hay while the sun is shining. We keep getting busier and busier with our fees increasing along with the amount of work, so enjoy the ride.
However, that doesn't mean we can expect this to continue for years to come. I do see a lot of the work we do changing. It is being overbuilt and the sites are becoming more challenging and more expensive. We are also struggling to find additional qualified staff to handle the current work load.
So, a recession and hit on our profession wouldn't surprise me, but the topic should focus on how to prepare for it, rather than trying to time it exactly.
With the last recession, I worked for a firm that was caught with their pants down. They had a lot of projects they were in the middle of, but were behind on their billing. The developers and clients want to believe their projects are still viable and will try to keep you working on them, even with a delay in pay. So we kept working on projects with full staff that were ultimately canceled and the firm left with noncollectable fees.
So a couple of good things to remember is that you only make what you have collected. Forget what is on the books. Avoid debt. Save what you can personally and in your firm. What would it look like if your income was cut in half or worse? What and who would be cut? What would you focus on? Are there other ways to earn income as an architect? You might be surprised where these questions will lead you.
Landscape Architect, small business owner here...
Been super busy for two or three years. We had a a coupe of quiet months last year around tax time, but otherwise been very, very busy and projects getting better.
We've been talking about leasing a larger office, upgrading software, possibly hiring our first employee (just two partners since about 2012), but with all the talk of a pending recession, kind of makes me want to hold tight.
Larch, I think the key is to avoid long term obligations you can't get out of, you can always let people go, but a new bigger empty office you can't, long term debt is a no... you need to strike a balance between making-hay-while-the-sun-shines vs getting-ready-for-a-rain-storm... you are growing a little, not a lot, probably doing relatively quick projects... an LA needs to land a couple of Zoo's or a major state park to generate legs and enough cash to burn to make structural changes in infrastructure.
Think it has more to do with your tender size than the "economy"... you're on another thread talking about getting strung-out on receivables... that's always a sign to be prudent... slow pay usually means the money supply chain in your micro-market is beginning to slow... that comes from others in the chain getting cautious and unsure and it spreads.
You need to be sure the growth is real and sustainable before you grow...I would figure out how to keep it all going, hire as needed, without obligating myself to anything I can't jettison with a 2 week notice.
You know, one of the biggest, most prolific golf course architects in the country has his office right down the road from me, does golf courses all around the world ... he had a spurt of growth he wasn't sure of 30 years ago and was operating out of an old house... he rented some trailers and hired to keep up....and those trailers are still there to this day... house always well cared for, lawn is immaculate, with trailers out back, just keeps adding on trailers....guy is famous, prudent & rich.
today we got another 4+ million house for the year, breaking ground in spring 2017, no ifs or buts.
I was having lunch with a contractor today, we were talking about a possible upcoming bust and how we were both projecting slow downs over the next year if we didn't get more work soon. We have lots of work in CA but not much in early phases. Then, two phone calls and ten minutes later and my firm lands $75M in projects, meetings start Monday. The contractor knows that we'll bring him along if we can, just like he does for us. We stopped our complaining right quick. It's a bit like a rollercoaster, this industry. When it's good, it's good, and when it's bad, it's really bad.
JLC-1,
Some hollyweird star wanting a shiny phallic edifice?
Yes indeed Bowling Ball tis a roller coaster. I had to let people go last year. We had nothing to start second and third quarters. Even January this year was dead and then like a switch being turned on $5 million in new work. But Im old and something doesn't smell right so I'm treading very carefully here because these swings are just not normal.
We'll have to see where things really goes.
I don't see another slow down for at least 2-3 more years. Everyone I know is very very busy right now. Unemployment is low, housing prices are high and steady, construction everywhere...if trump wins though who knows...
You guys are making me nervous.
carerra
Yes, small projects. Even our 'bigger' projects are small. Have been working on some of those $4M homes jlc mentions but comparatively tiny site and landscape budgets. We're doing some exciting urban design work, but its all conceptual, eye candy type stuff at this point. Our plan is to keep building the portfolio toward those bigger projects we can chase down the road--the town centers, parks, and public work. I feel we've been on the cusp or just starting to find our way into some of this work, but we're hustling and working 7 days a week to keep up with it. I get the sense we may be in for a lull in the next month or two, but not necessarily due to the greater economic climate, just the pattern we're in, i think.
Everyone is busy yes. Big But, taboo thing to mention that since the great recession started, all the experienced architects have left, were fired. Consequently architect offices are doing strategy of having teams made up of perhaps one experinced person, surround him with a ton of recent to very new interns. The consequences of that are gonna be felt in numerous ways , longer hours, missed deadlines, lack of general knowledge, list could go on forever. I beleive the poop will hit the fan at some point.
Rumor I heard yesterday is that things will continue going fairly strong until the end of 2017 then we'll see a slowdown. But I can't cite the source of that info, so totally take it with a grain of salt. Because who the hell knows what's going to happen! I admit I really like this idea of being prudent and careful and not spending like there's no tomorrow.
The consequences of that are gonna be felt in numerous ways , longer hours, missed deadlines, lack of general knowledge, list could go on forever
Also mistakes, some big, that will be missed by the "experienced" member of the team. Lots of stress on that person. I wouldn't envy them. Liability insurance better be paid up.
Things already slowed down dramatically in 2015 Donna. There is a documented industrial and retail recession in the United States going back to Q1 2015. Services and real estate have softened the blow and kept gdp "technically" positive and out of recession. I simply dont see anyway this wont end spectacularly bad again with some major economy going into full blown crisis and triggering a new global meltdown. My bet is on Japan, Brazil or Italy.
Everyone I know is very very busy right now. Unemployment is low, housing prices are high and steady, construction everywhere
The busts always come fast. CNBC this morning had a piece talking about official government GDP figures that on average have to be later revised by 1.3 percentage points, meaning that a 2.0% GDP growth rate figure could be as low as 0.7% or as high as 3.3%. That's huge variance. Policy makers are flying blind. Always keep your seat belt fastened.
Discussing & some reading about all this is germane for architects of all stripes because R-Day is nearly impossible to predict for the average person….and that is by design. A lot of effort goes into keeping the picture cloudy…keeping things complicated, fudging figures & feeding pabulum to the clueless media….because the “big money” needs us to stay in the economy just long enough for them to get out.
Everybody’s life & exposure is different, just have to go with the preponderance of the evidence around you, which from where I’m sitting says: “caution”.
Rick, NO.
here's my 500 word response to the pessimism. hopefully most of what i typed has some content in it, and isn't too redundant or wordy.
bundy, i'm going to go back to my current theory that the most important thing in the economy is to keep currency moving. everyone has to be somehow be spending money instead of hoarding it. as an individual person it might be best for you to save so you have a backup in an emergency or so you can retire or send kids to college or whatever, but the macro view is, get money moving.
you outline 'services' as an industry ahead of manufacturing or retail. if that's so, it's because that's where people who have money spend money. retail shouldn't be that bad, it's just that if someone needs to replace a refrigerator or light bulb they can go to a box store instead of some hipster boutique. people would rather spend their money on services instead of better refrigerators. if retail at box stores went down, it would also mean manufacturing, warehousing, and distribution would go down, but i don't think that's happening.
a slowdown in manufacturing would mean a slowdown in decent paying jobs for a lot of people who might not have other avenues to find employment. that would suck because it means a bunch of people who need to have money and need to be spending money for us to make money, don't have money and aren't spending money. maybe those people can find jobs in a service industry to keep things going.
at some point residential needs to change so they're building affordable houses. i don't understand that market very well though. it seems to me houses are valued based on their use as an investment rather than their use as a house, so if there is still a bubble there, it needs to be popped so the value of a starter home can get back down to where it needs to be. once that gets sorted out, people will be spending money on houses again, and that will mean we get to design bigger realtor offices and banks and fun stuff like that.
if you're right that the service industry is leading the economy, then they're the bellwether to watch. when people stop spending money on services (sit out front of your local service place and see if people are coming and going), then it's time to start thinking about being concerned. it could change, so if people quit going to your local service establishment and start lining up at your local retail establishment instead, we'll be fine. if people stay home because for whatever reason they aren't spending money (either they don't have money, or they're just afraid to spend it), then i think it's likely slow times will follow.
curtkram, I believe the services industry is broadly weighted by firms servicing fortune 1,000 type corporations with global reach. As the global, interconnected economy grows anyone in their ecosystem will ride their wake. With each recession going back to the late 80s it seems those tapped into the global pipeline do better, get wealthier and their numbers grow. Conversely those left behind get poorer, more marginalized and that population is growing much larger. We are at the point you can look around and say its never been better, if you can get it, and its getting worse each day. I'm losing long time commercial clients by the dozen yet picking up million dollar homes like never before. The neighbors kid of a current client is about 30 , living at home while working full time out of economic necessity. I worry nobody will be able to buy these homes in the future, hell they can barley afford them now. The anecdotal evidence is everywhere, which is why I'll gladly take their commissions but I'm not hiring anytime soon. I'll add I worked with a developer a few years back who wanted to develop low cost starter housing for millennials but the pro forma never worked out even with a lender as partner. The average incomes couldnt support their best mortgage product at the time. Maybe credit profiles have gotten better since then.
Also, " it seems to me houses are valued based on their use as an investment rather than their use as a house"
A house is derivative of the land beneath it. If the land is desirable, the house value goes up. If the land is undesirable the house could be worth less than it's cost. Location, location, location. Any home near an employment center will be unnaturally high do to there being so few employment centers anymore.
i don't think i would want a small business focused on multi-million dollar hoses right now, but i'm not that close to that market so i'm not going to pretend like i know much about it. regarding the developer you worked with who couldn't make money on normal priced houses, like i said before i think that's because "normal" price is based on a house's value as an investment rather than it's value as a house. until that gets fixed, there's just nothing that can be done. (edited to add, i submitted this comment before i saw your comment where you replied to this statement)
if you owned a big company instead of a small one, it would open up a lot of options for you. all this talk about how people should be "entrepreneurs" is really stupid in my opinion. there's nothing wrong with working for a living. it's not good for everyone to be the boss, and it's not good for anyone to be driven by greed and selfish motives. if you want to run a business, do it because you want to run a business and because you care about your business (which i assume is probably the case for you, but maybe not the case for self-ascribed "entrepreneurs")
Developers in the Bay Area wont talk to people making under $120,000/yr - the pro-forma just doesn't work and they don't like being forced to include over 12% BMR
curtkram, Ive always chased the work from market to market and always had a toe in the residential market because historically it was the one that always had work. But 2015 was like a repeat of 2007 for my firm as far as commercial went. Those big, stable jobs that kept people employed just died on the vine for me. I suspect it's regional. Your right, you have to really want to run a business because it's torture and filled with potential financial dangers. Are you willing to put your life savings at risk to make a few months payroll in hopes a developer will pay in full?
are you by chance in oklahoma or north dakota? i've heard the sky is falling in some of the oil places due to what's happening with that.
somebody is making a lot of money if you're designing multi-million dollar houses. just too bad it isn't trickling down very effectively in your area.
I just returned from a bunch of job interviews in Seattle and Portland, and my general impression is that multifamily housing, which has been booming for the past few years, is probably due for a mild slowdown soon. Barring some major catastrophe, I don't think people will suddenly stop building like they did in 2008 -- people are still moving to the region in droves, and they have to live someplace -- but developers seem to be growing a bit more cautious. My understanding is that rents in Portland are still in bubble mode, while rents in Seattle are starting to level off as new large-scale developments are coming online and pushing up vacancy rates.
It's a different story in the public sector, as all the tax revenue from these new developments is now making its way into public coffers, and construction is still going strong in K-12, higher ed, healthcare, infrastructure, etc.
Here in Cincinnati, it feels like the recovery barely got off the ground. Our biggest project (multifamily housing up in Canada) just went on indefinite hold, and another multifamily client seems to be perpetually short on cash to pay their design fees. I haven't heard of any layoffs at local offices yet, but they certainly don't seem to be in a hiring frenzy like they were a year ago.
curtkram: Your theory is just basic Econ 101.
GDP = M x V, where M is the money supply and V is velocity of money, i.e. the average number of times a dollar changes hands in the course of a year.
If consumers start saving too much, the velocity goes down and GDP starts dropping. If things get into recession territory, the Federal Reserve Bank tries to increase money supply to get the GDP number back up. Usually it works but sometimes they pump too much money into the system and inflation kicks up. Then consumers start overspending (too much velocity) because they want to get rid of dollars which are losing purchasing power. If things go too long, you have hyperinflation like we had in the late '70s as both money supply and velocity increased. Then, the Fed slammed on the brakes and we had the recession/depression of 1980-82.
After the tech bubble, the Fed goosed up money supply because they wanted to forestall a recession. They overdid things and kept interest rates too low for too long. Investors left the stock market and started pushing money into real estate, particularly residential. Since real estate is fairly easy to leverage through borrowed money, the return on investment really got good for a few years which prompted more and more speculation. The speculation made house prices continue to skyrocket and spawned the notion that residential real estate was risk free because prices never go down. The Fed was fat and dumb and happy and didn't react because they bought into the myth that house prices never go down. The banks and their regulators also drank the kool-aid. Eventually things had to crash and they did.
After the most recent crash, the Fed has been standing on the accelerator trying to get things moving again but consumers have been slow to spend because they are frightened about losing their job and are trying to rebuild their balance sheets. In Europe, they are flirting with negative interest rates to force people to spend their free cash or pay a fee on it. So far, we haven't seen that but the Fed has discussed it although they claim it hasn't really been studied yet. Bullshit. You can bet the farm they are studying it.
We are in a real bad box long term. The demographic trends are terrible, with an aging population taxing our social safety net while simultaneously spending less money (with the exception of health care which is going through the roof). At the same time, ordinary middle class and working class jobs are going away through technology and outsourcing, and the jobs that remain are seeing reduced wages. Since the consumer bee and worker bee is the same bee, falling wages mean falling consumer spending. Business had a great time squeezing its workers but now is facing fewer customers. Business investment has stagnated through this entire cycle. And the Fed is terrified of deflation, so they have kept interest rates near zero, which leaves them no room to drop rates if some exogenous event like a terrorist attack occurs.
It doesn't mean the end is near, but it sure looks like things are increasingly complicated, and there is no evidence that the powers that be really have an understanding of what their options are.
boomer retirement is in the stock market too, so a lot of that money is going to be divested as more people retire.
aside from QE and printing money, the right way for money to be circulated in the economy is to pay people for work. wages didn't rebound as well as the stock market. the government doesn't really have very good tools to manage the economy. if the free market worked, we wouldn't have wage stagnation and growing wealth inequality. concentrating wealth among few people is the opposite of circulating money.
government does what it feels like it has to do to protect the governed. it's kind of a problem that we elected idiots that don't want to keep government running, but there isn't much we can do about that. i believe the only workable solution is for private industry to change it's focus from greed and quick self-gratification to something where people care about what they're doing, care about their business, care about their communities. maybe the government should invest in some sort of marketing campaign that says having pride in your accomplishments is worth more than showing your neighbor you can buy your mistress bigger boobs.
aside from that though, QE did kind of work. it was filtered through the banks that caused most of the problem to begin with, which is a pretty inefficient way to fix the problem, but some of the money did get where it needed to get, and people are circulating currency, so things aren't that bad. you should be able to see people out spending money instead of people staying home because they're afraid.
econ 101 is about as far as i can go, because i'm an architect and not an economist. someone else will have to work out econ 201.
i bet that universal basic income idea would be a better vehicle to lift the economy in a way that would get currency circulating between the highest number of people possible. that's kind of what bush jr. was going for when he sent everyone a refund check, right?
i really just kind of repeated a lot of what you said geezer. sorry about the redundancy. still can be a fun conversation.
curtkram,
More or less an add to what you are saying. In Geography, they used terms to define economic sectors. Just for a loose sense of definition: (Yes, there are better sources but most of the ones I personally seen is in books so here it is)
http://geography.about.com/od/urbaneconomicgeography/a/sectorseconomy.htm
Don't hang up on the details but the main points. There lists five sectors.
Primary, Secondary, Tertiary, Quarternary, Quinary (The last two are sometimes categorized with Tertiary as they are two specialized categories within Tertiary. The first three terms are most universal and the Quarternary and Quinary are special categories of activities within Tertiary).
Do note that countries or country-level political states and their political subdivisions are dynamic.
Primary Sector industries are about the core essential of life. In a large degree, this is still truly a primary sector as this is essential.
The Secondary sector of the economy is about manufacturing, processing, construction. As we know, our country is decreasing on this sector but is growing in the Tertiary sector.
When we look at ALL other countries the history of the world, when a country, kingdom, empire grows, its Secondary sector tends to be strong. However, growth plateaus, the need changes. However, in some ways, this is whats happening on some aspects of the Secondary Sector, but that doesn't account for the rust belt.
However, what happened in that area is certainly a factor of push and pull factors.
When it comes to housing:
We are facing issues such as building more houses than there are families or households. Another dynamic is the changes of our society. The nuclear household (the traditional household) and the traditions of multi-generational living is largely diminished by culture of broken households, dysfunction of family relationships, basically our run away from home and make up our own home. While that has to some extent driven increased demands in housing, it's also not sustainable if we are building houses for a family for just a person or two. However, we eventually catch up to the over building. Now with new housing demands for the third time for the babyboomers (first for when they were born, second for when they were adults raising children of their own, and now their retirement homes).... the retirement housing to housing the growing population of retirees of the baby boomer generation. So now, we have these retirement houses to build but we would have a housing supply pre-existing houses impacting demand.
Obviously, I am simplifying if not oversimplifying but there is a lot of mechanics to economy.
However, I do differ from curtkram's statement or I would more add a line of caution. You just can't sit in front of a service establishment and necessarily get a good prediction. Some service establishments are kind of insulated from the wild swings. We need to look at what ones are going to be informative indicators. Watching a lawyer's office and just sitting there might find yourself spending the night in jail for loitering when the law office calls the local PD to collect you. Joking aside, they just won't necessarily give any indicators. I would argue that there are certain sources of indicators that will be more noticeable. In some cases, by the time you see them having real problems, you should already be neck deep.
(pause)
(EDIT: As I was writing this: Some more sources to the above definition............
http://www.westga.edu/~awalter/teaching/world/worldecongeog.pdf
http://www.clearias.com/sectors-of-economy-primary-secondary-tertiary-quaternary-quinary/
http://www.geography.learnontheinternet.co.uk/topics/empstruct.html --- Something worth reading and you'll see the pattern happening already in the U.S.
Employment Structures
Employment structure means how the workforce is divided up between the three main employment sectors - primary, secondary and tertiary. Employment structures change over time.
Countries in the early stage of development usually have a high percentage of the population in primary employment. This is because most people are engaged in agricultural activities.
As a country begins to develop an industrial base there is an increase in the secondary sector. An increase in machinery on farms means fewer people are needed. People tend to migrate to urban areas to get jobs in factories.
When a country becomes more economically developed there is a greater demand for services such as education, health care and tourism. Therefore the tertiary sector undergoes growth. By this time computers, machinery and robots replace people in the secondary sector hence the decrease in secondary jobs. )
Our country began its phase in the Primary sector. Then it had with the Industrial age some 150 or so years ago has moved into the Secondary Sector. While from an economics chart, our primary industry is substantial but we are much like the UK in that we have less need for jobs in the Primary sector because of mechanization. The Secondary sector which is largely about manufacturing goods. Virtually all of the manufacturing had been outsourced to countries that are developing from rice patty farming to economic power houses like China and other countries. They positioned their investment at a time when we began introducing and having invented the robotics with our partners in Japan and China like other countries not having to invest in the original R&D were able to bring about robotics production and replacing human work force demand... in the level of demand aside from their huge population.
As you know, with the rust belt, we are a country moving away from manufacturing to one of service oriented.
The tricky part of the business of tertiary sector it is easily outsourceable. Even Architecture could be outsourced.
The Secondary activities, weren't easily outsourced but in the case we had experienced, many aspects of the secondary sector activities had been outsourced into other countries willing to work for less money.
The Labor unions in some ways had been part of people losing their jobs in this sector. Constantly going on strike for pay raises was the downfall on many aspects of the Secondary sector in the U.S. Ultimately, artificially inflating the costs but all it does is raises the cost of things we buy. The more a company spends on labor, the more the product prices are going to go up. There is an economy factor where direct labor does not exceed a certain percentage level of the income from sales. So when you manufacture X number of automobiles or computers or whatever, there is only a certain percentage of each unit sold that goes to paying labor.
Higher wages or salaries for a particular job position does not mean an elevation in life style. We don't elevate ourselves by demanding more money unless we generate more revenue for each our of labor. If you can double production with the same labor rate, then maybe you can command more money. However, once we reach the limit, it plateaus yet we kept demanding more money.
All these factors lead to companies sending jobs into other countries because human laborers are replaceable as even the machines. They can cut their losses with the U.S. and go overseas and in 10 years be making more money for their shareholders. This is exactly the job the paid executives and business people of a company is to do. Business 101. If you are the CEO or other business executives/managers/etc. it is your job to generate income to the company owners. In other words, it is your job to make them richer and more money. That's their #1 purpose and job to do.
You might think, why don't they just charge more money for the automobiles or computers. The market is competitive and when you go above the optimal point in the market you lose sales and lose revenue. At any given day, there is an optimal price point to sell goods or services. That is the point where you can get the most money per sale of good(s) or service(s). If you go under that, you may generate more sales but you are losing still because the profits are to small. What's the point of investing if you only get what you put in. In a way, you can often lose out because the money lost value over time.
that was close to 1,400 words. i did not read it. cut it down to 500 or less. read through a couple paragraphs and think about whether you're making a point that you've already made. if so, it only has to be made once with perhaps a couple supportive sentences. you don't need to support your claim with copy/paste or links unless there's a reason. also, try to have a point to the post. if you want to talk about how the economy has changed from agriculture to manufacturing to retail to service, then try to keep following words consistent with that point. if you want to talk about demographic changes, that's a good topic. if you want to talk about housing costs, that can be relevant. it seems you mish-mashed too many topics into a long stream of consciousness.
for example, this:
----------
More or less an add to what you are saying. In Geography, they used terms to define economic sectors. Just for a loose sense of definition: (Yes, there are better sources but most of the ones I personally seen is in books so here it is)
http://geography.about.com/od/urbaneconomicgeography/a/sectorseconomy.htm
Don't hang up on the details but the main points. There lists five sectors.
Primary, Secondary, Tertiary, Quarternary, Quinary (The last two are sometimes categorized with Tertiary as they are two specialized categories within Tertiary. The first three terms are most universal and the Quarternary and Quinary are special categories of activities within Tertiary).
Do note that countries or country-level political states and their political subdivisions are dynamic.
----------------------
could be effectively reduced to "there are 5 economic sectors, Primary, Secondary, Tertiary, Quarternary, Quinary "
since tertiary, quarternary, and quinary were excluded from following statements (i think), those could have also been left off, further reducing your statement into a nice concise opinion that would be reasonable to read.
Can't imagine that this would help with residential starts-single or multifamily.
It's probably because this country is built up. We are obsolete and not needed until there is either a major disaster wiping out a lot of what is built or a population demand. It's not like the U. S. is having a major population growth.
There are still need for housing as we have housing homeless people but there are people with lots of underutilized homes such as vacation houses or weekend houses that are empty of occupants so they aren't addressing population needs. However, if those were tapped into, it would solve a lot of housing needs.
So new construction is being built in many places to address housing of homeless. While, currently some solutions that are only partial and part-time are these places where homeless can get out of the cold, it doesn't actually solve the housing.
Part of the problem is that most of these people have psychological issues that makes them unwanted. There is definitely a social problem. Some people just can't live with other people and they can't really work with other people at all. They became engrained into this predicament and they can't see themselves out of it.
As for Astoria, we are seeing this problem because for one, we are just one of those places that Portland kind of pushes them out of their cities and they migrated down the road to here. We are seeing these issues these days and so many were never from Astoria. They just got kicked out those cities and got pushed along effectively, we get them. A dirty secret in some of the homeless population reduction in many cities is they got kicked out of those cities. Even physically transported out of the city onto the state highways and pointed a direction and told if they were to return, they be arrested or something.
This is how some portion of them literally got here.
When they have poor history with the police and substance abuse history as well as violence and other bad rep, no body wants them in their private owned property. This is the biggest hurdle with homeless population because a large number of them are homeless because of their own doings and they got themselves there.
Historically, the solution to these problems were that we had various kinds of institutions to send them to. For reasons or another, these places were shut down or discontinued and limited down quite a bit.
Some of these people would have been sent out to a land claim site where they can claim a parcel away from other people and build themselves their own home. Build a simple cabin and an orchard.
Then we create a bureaucracy that is so much about telling people what they can't do in an every growing list that there is no freedom. So we marginalized people who don't want to follow a societal path of bureaucratic socialism/communism/fascism. The idea of policing people over political correctness/incorrectness which is basically censorship in the most veiled yet bane manner. When we get to a point of thought control, what do we have?
We want to create affordable housing but how do we address the other issues that comes with homeless people? I think we have a societal issue there. I am not sure I even have an answer for that.
gruen - hopefully that makes it easier for young people to buy homes. I would like to own and I also want all these young people to hire me for their renovations and additions.
What is affordable? That's a slippery slope.
These days a modest single family house of 2000 sq.ft. would have a project cost as much four of the piers of the MacArthur bridge aka municipal bridge of St. Louis around 1909-1910. Of course the rest of the bridge took many more years to build costing around $470,000*. * - Source: "The Design of Masonry Structures and Foundations" by Clement C. Williams, C.E. 1922. Pg. 312 (printed page number)
Calculation assumes a very paltry $125/sq.ft. construction cost x 2000 sq.ft. times 1.5 for contractor O&P and design services plus $95000 for purchasing lot, and misc. other expenses. Pretty modest.
Modest average size homes for a family of 3-4 costing as much as 4 bridge piers is amazing how much things blown up in costs in just about a hundred years.
Bright side is, labor wage is substantially higher than back then. However, with student loans about 1/4 of such a new constructed house. It's hard to build such. You are talking about the cost of buying an existing house at a steal or building a 500 sq.ft. lot on a piece of crap low cost property with nothing on it for next to nill.
At such point, MFR work would be appropriate and on vacant lots, it's difficult at time to just build a 500 sq.ft. mini-house due to minimum size development requirements of zoning laws often already there. So a little shanty hut isn't often permitted unless as an accessory structure to a primary structure.
Having trouble following this thread, but just saw this article that seems on target.....
http://www.fastcoexist.com/3056129/this-house-costs-just-20000-but-its-nicer-than-yours?cid=ps002ros&utm_source=facebook&utm_medium=newsfeed&utm_term=changegeneration&utm_campaign=ps002ros
From what I can see - the Bay Area is pretty much maxed out - so
http://www.spur.org/news/2016-03-09/are-we-headed-economic-correction-bay-area-experts-weigh
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