So we know its a cyclical industry. I don't know about you guys but I'm starting to see the next one coming.
The market I am in has housing problems but no one is building condos (liability issues, conversation for another post) the new construction on the market will soon have apartments saturated, already starting to see rent prices begin to stabilize even drop, even though home prices continue to rise. Foreign investment is hitting the breaks because of high construction prices, rising material costs/tariffs are all taking a bite out of the ROI. Speculative design work that is 2+ years down the road is looking less attractive. Is it time? What are you seeing? Just my market? or are these jitters real?
Non Sequitur
May 11, 18 3:06 pm
Def not in my market... we can't get commercial and residential projects build fast enough for demand. Our concern is the lack of labour (trades to professional) available to deal with the next 10y of construction currently in progress... but then again, I'm not living under Trump.
curtkram
May 11, 18 3:08 pm
we're seeing developers still interested in residential. i assume once apartments get saturated, the people that live in the apartments are going to want to go shopping so retail and entertainment will pick up.
Bench
May 11, 18 3:19 pm
We can't hire fast enough right now, both where I'm at and across our global markets.
mantaray
May 11, 18 3:31 pm
What metro market are you in Jonathan?
I'm in Chicago and we're seeing big cost increases in wood and steel materials that suppliers are telling us is specifically due to tariffs, first on Canadian lumber and then anticipated on foreign steel. I confess to feeling a bit jittery lately although we are definitely seeing plenty of projects continue to roll in.
JonathanLivingston
May 11, 18 4:39 pm
Multiple markets on the West Coast
JonathanLivingston
May 11, 18 4:47 pm
Seattle makes me the most nervous
archi_dude
May 11, 18 4:03 pm
Step out and into what?
thisisnotmyname
May 11, 18 4:33 pm
Indeed. All anyone can really do is try to keep their expenses under control and build up a decent cash
nest egg to get you through the lean times.
JonathanLivingston
May 11, 18 4:38 pm
I don't really know.I feel like working in construction would be viable longer into a recession. Maybe something more focused on infrastructure work. Speculative/design stuff tends to dry up quickly. Facilities management, or in house design for a larger company not as directly tied to the market.
thisisnotmyname
May 12, 18 5:36 pm
You may want to consider in-house positions at government agencies or big non-profit enterprises like hospitals or universities.
Wood Guy
May 13, 18 10:00 am
I just switched from design-only to design/build, in part to be better prepared for a downturn. (And also for more positive reasons.)
wurdan freo
May 11, 18 4:28 pm
something more comfortable perhaps???
JonathanLivingston
May 11, 18 4:32 pm
exactly
Volunteer
May 11, 18 4:56 pm
The definition of a bubble is that no one sees it coming, or, if they do, they rationalize it away.
thisisnotmyname
May 11, 18 5:19 pm
Population growth and employment growth are the surest indicators of how a region is doing in terms of the demand for architecture.
Peter Normand
May 14, 18 10:57 am
If we restrict immigration too much we could trigger a recession.
quizzical
May 11, 18 8:44 pm
Volunteer: The definition of a bubble is that no one sees it coming, or, if they do, they rationalize it away.
Volunteer has it exactly right ... during the 40 years I practiced before retiring I suffered through quite a few recessions and one near-depression. Industry wide it always happened precisely as Volunteer describes.
geezertect
May 11, 18 9:00 pm
Bubbles make everybody look smart. When even the stupidest people are making money, look out.
bowling_ball
May 12, 18 5:53 pm
Maybe it's an American thing (that does tend to affect us Canadians) but we're not seeing it yet. I work exclusively with developers, all of whom are still building at the same pace. We are very affected by the oncoming American tariffs, but buffered because we have more government employment. At least locally, we weren't really affected by the last recession either, though we are now building all apartments and no condos, while even 5 years ago, it was 50/50.
curtkram
May 12, 18 7:29 pm
who lives in these apartments? They cost way more than my house. a lot of them are bigger than my house too. it can't be young professionals, at least not on what my income was as a young professional. is it families? are we going to see a bunch of crying babies and kids running around the swimming pools? retirees or empty nesters maybe?
Peter Normand
May 14, 18 11:02 am
a significant group Young professionals (not true for everyone) tend to not have much savings and they are debt burdened by student loans, they can afford 2-3k a moth for housing but they do not have the cash to make a down payment on a condo or house. They want to live a certain lifestyle but also have the ability to leave a city/job market for another without being tied down by real-estate. Some folks do not look at home ownership as a safe means of building wealth anymore.
geezertect
May 14, 18 2:11 pm
Residential real estate has done very well in most markets since the bottom of the Great Recession. If you could have bought in then, you would have made out like a bandit. A house is still the best way of accumulating wealth for most middle class people. You get tax advantages, deferral of capital gains, and of course shelter. Bonds would scare the shit out of me right now. One big bout of inflation is going to change a lot of millennial minds when it happens.
geezertect
May 15, 18 7:12 am
You don't need to stay in the same house for 50 years. As long as you don't move out of area more often than 8-10 years, you still are better off buying than renting. The inflated equity in one house makes the down payment on the next. You have no hope of retiring if you get to 65 years old and you still don't own the roof over your head. Besides, constantly moving across country to chase the mediocre opportunities of this profession is a fool's errand. JMHO.
Volunteer
May 15, 18 8:05 am
In many parts of the country the tax payments are more that the principal and interest on the loan. A person would be better off in a low tax state at retirement with a small mortgage in many instances. House prices do not always go up, either, as the bust of a few years ago can attest. Another problem is that if you move into an area with very high prices the rent prices will be high also. Still another factor to consider is that if you are working in a high cost of living area and your employer is giving you an adequate allowance for the area your eventual SS payment will be significantly higher. To bounce around in this industry from one miserable paying job to another in one high cost of living area to another is really a poor choice. You would be better off getting a teaching job in a pleasant college town and architeching on the side. Just my opinion.
archi_dude
May 15, 18 8:53 am
I love these arguments about how millennials don’t want to buy a house. We’d love to buy a house but unless your parents were wealthy or you are in medical sales....it ain’t happening. I can’t justify moving out to somewhere near the 1950 atomic tests just for
ownership.
Non Sequitur
May 15, 18 9:04 am
I miss the millennial cut off by just one year... Going on 3 years for house ownership and it ain't some developer box in the suburbs. No plans to move either since I'm well invested in the city's future plans. Certainly helps that I had an active role and inside information on the direction of urban developments and public transit.
archi_dude
May 15, 18 9:11 am
Free school up there right Non?
Non Sequitur
May 15, 18 9:28 am
Almost free, I think undergrad tuition was under $6k (cad) per semester and grad school $3.5k per semester (3 per year) before scholarships for me. Would have been free if I lived in Quebec, but I don't because that would be terrible. We're about to have an election this summer (provincial) and some are proposing literally free tuition. Same school tuition is now $10k per year undergrad and grad is actually less @ $2.5k. All dollar amounts in canadian currency, so that's like what, 0.60can = 1usd?
Volunteer
May 15, 18 9:39 am
Some US schools still have reasonable tuition. Georgia Tech is $10,000 (US) a year, for example. Those who want to get ass-raped by the Ivys for a sub-standard education are the ones that asked for it.
Non Sequitur
May 15, 18 3:24 pm
Ricky, I've looked at the Wiki page following my post and I hit about half of the various age descriptions. I've always just remembered gen X from high school and will stick to that... although I despise labels.
Non Sequitur
May 15, 18 4:00 pm
Ricky, NES generation it is!
urbanity
May 12, 18 9:04 pm
i am in socal and i work with apartment developers. there was a slow down in the market from fall 2016 until after the tax deal was inked. it has since perked up some.
there are areas that are overbuilt, property costs are high, labor is high and the cost of materials are high. it's taking a lot longer for developers to raise $ for soft costs. interest rates are rising. top banks are starting to divest their multifamily assets to reduce their exposure.
rents are high, luxury properties are having to comp 1 or 2 months of free rent to entice renters. rent in los angeles is stabilizing, only 2% annual rental increase nowadays.
demand for apartments is still relatively strong with a need for housing for regular working class folks. luxury apartments and subsidized affordable housing is about all that's been built around here for the last few years.
i have two large scale apartment projects currently under construction, and a couple more starting construction in the fall as long as the construction funding comes through. doing quite a bit of value analysis at the moment...
randomised
May 13, 18 4:42 am
It's always good to step out of architecture, recession looming or not...that Make Architecture Great Again didn't really work out then?
null pointer
May 14, 18 2:58 pm
Bullshit. I'm turning down jobs left and right and have my pick of the crop.
If I could split myself into three clones (2 slaves) with the same brain I'd be a millionaire.
zonker
May 14, 18 4:26 pm
in a year or two, there might be a recession, and this will result in another culling - I'm preparing for that, so that I wont get pushed out
archi_dude
May 14, 18 9:12 pm
My experience leads me to believe it’s more a game of musical chairs in production. Whose project is still active has more bearing than who stays the latest.
joseffischer
May 16, 18 2:39 pm
That definitely seems true at my office. We don't feel close to a recession, but if the client puts a job on hold, it seems to take forever (2-ish weeks) for the higher ups to figure out where to put you. Part of it is they're hoping the project starts back up, another part is mid-tier people not being able or at least not willing to divide tasks and share a project with you. If you're able to handle 3-5 projects at a time, losing one doesn't hurt, but if you're on 1 big project and it stops for some odd reason, things seem to go sideways for you for a month. I'd imagine that this same process (or lack there-of) during a recession would result in multiple months of mid-tier people looking for something to do each week, and the lay-offs would not be far behind.
thisisnotmyname
May 16, 18 3:53 pm
Yes, and the management people picking who gets laid off may or may not know what the hell is going on in terms of who is actually doing the work. Productive and knowledgeable people often get laid off and the office politicians and ass-kissers get to keep their jobs.
( o Y o )
May 14, 18 9:54 pm
Pot, meet kettle.
whistler
May 15, 18 12:18 pm
When the recession hits either head for a government job or a work with a firm who has government work. Governments typically spend their way out of a recession and government projects have in my experience always been quite plentiful when the private sector starts to tank.
thisisnotmyname
May 15, 18 1:07 pm
Always be wary of firms that only do one kind of private sector work, places that only do car dealerships, or only hotels. In good times they prosper and the firm leaders think they've caught lighting in a bottle, right up until the economy tanks. The work dries up and it's too late to diversify into other project types. Recessions hit practices like that really hard.
OneLostArchitect
May 18, 18 12:37 pm
Rarely th
OneLostArchitect
May 18, 18 12:38 pm
Education sector seems to bypass this
zonker
May 18, 18 2:30 pm
what if all your office does is multifamily in the Bay Area?
randomised
May 18, 18 3:50 pm
Run Forrest, Run!
zonker
May 18, 18 4:17 pm
Rick
That's were I came from - Rockstar Games
Scent_of_a_woman
May 18, 18 5:04 pm
Did you go to architecture school after having a career in the Games industry?
So we know its a cyclical industry. I don't know about you guys but I'm starting to see the next one coming.
The market I am in has housing problems but no one is building condos (liability issues, conversation for another post) the new construction on the market will soon have apartments saturated, already starting to see rent prices begin to stabilize even drop, even though home prices continue to rise. Foreign investment is hitting the breaks because of high construction prices, rising material costs/tariffs are all taking a bite out of the ROI. Speculative design work that is 2+ years down the road is looking less attractive. Is it time? What are you seeing? Just my market? or are these jitters real?
Def not in my market... we can't get commercial and residential projects build fast enough for demand. Our concern is the lack of labour (trades to professional) available to deal with the next 10y of construction currently in progress... but then again, I'm not living under Trump.
we're seeing developers still interested in residential. i assume once apartments get saturated, the people that live in the apartments are going to want to go shopping so retail and entertainment will pick up.
We can't hire fast enough right now, both where I'm at and across our global markets.
What metro market are you in Jonathan?
I'm in Chicago and we're seeing big cost increases in wood and steel materials that suppliers are telling us is specifically due to tariffs, first on Canadian lumber and then anticipated on foreign steel. I confess to feeling a bit jittery lately although we are definitely seeing plenty of projects continue to roll in.
Multiple markets on the West Coast
Seattle makes me the most nervous
Step out and into what?
Indeed. All anyone can really do is try to keep their expenses under control and build up a decent cash nest egg to get you through the lean times.
I don't really know.I feel like working in construction would be viable longer into a recession. Maybe something more focused on infrastructure work. Speculative/design stuff tends to dry up quickly. Facilities management, or in house design for a larger company not as directly tied to the market.
You may want to consider in-house positions at government agencies or big non-profit enterprises like hospitals or universities.
I just switched from design-only to design/build, in part to be better prepared for a downturn. (And also for more positive reasons.)
something more comfortable perhaps???
exactly
The definition of a bubble is that no one sees it coming, or, if they do, they rationalize it away.
Population growth and employment growth are the surest indicators of how a region is doing in terms of the demand for architecture.
If we restrict immigration too much we could trigger a recession.
Volunteer has it exactly right ... during the 40 years I practiced before retiring I suffered through quite a few recessions and one near-depression. Industry wide it always happened precisely as Volunteer describes.
Bubbles make everybody look smart. When even the stupidest people are making money, look out.
Maybe it's an American thing (that does tend to affect us Canadians) but we're not seeing it yet. I work exclusively with developers, all of whom are still building at the same pace. We are very affected by the oncoming American tariffs, but buffered because we have more government employment. At least locally, we weren't really affected by the last recession either, though we are now building all apartments and no condos, while even 5 years ago, it was 50/50.
who lives in these apartments? They cost way more than my house. a lot of them are bigger than my house too. it can't be young professionals, at least not on what my income was as a young professional. is it families? are we going to see a bunch of crying babies and kids running around the swimming pools? retirees or empty nesters maybe?
a significant group Young professionals (not true for everyone) tend to not have much savings and they are debt burdened by student loans, they can afford 2-3k a moth for housing but they do not have the cash to make a down payment on a condo or house. They want to live a certain lifestyle but also have the ability to leave a city/job market for another without being tied down by real-estate. Some folks do not look at home ownership as a safe means of building wealth anymore.
Residential real estate has done very well in most markets since the bottom of the Great Recession. If you could have bought in then, you would have made out like a bandit. A house is still the best way of accumulating wealth for most middle class people. You get tax advantages, deferral of capital gains, and of course shelter. Bonds would scare the shit out of me right now. One big bout of inflation is going to change a lot of millennial minds when it happens.
You don't need to stay in the same house for 50 years. As long as you don't move out of area more often than 8-10 years, you still are better off buying than renting. The inflated equity in one house makes the down payment on the next. You have no hope of retiring if you get to 65 years old and you still don't own the roof over your head. Besides, constantly moving across country to chase the mediocre opportunities of this profession is a fool's errand. JMHO.
In many parts of the country the tax payments are more that the principal and interest on the loan. A person would be better off in a low tax state at retirement with a small mortgage in many instances. House prices do not always go up, either, as the bust of a few years ago can attest. Another problem is that if you move into an area with very high prices the rent prices will be high also. Still another factor to consider is that if you are working in a high cost of living area and your employer is giving you an adequate allowance for the area your eventual SS payment will be significantly higher. To bounce around in this industry from one miserable paying job to another in one high cost of living area to another is really a poor choice. You would be better off getting a teaching job in a pleasant college town and architeching on the side. Just my opinion.
I love these arguments about how millennials don’t want to buy a house. We’d love to buy a house but unless your parents were wealthy or you are in medical sales....it ain’t happening. I can’t justify moving out to somewhere near the 1950 atomic tests just for
ownership.
I miss the millennial cut off by just one year... Going on 3 years for house ownership and it ain't some developer box in the suburbs. No plans to move either since I'm well invested in the city's future plans. Certainly helps that I had an active role and inside information on the direction of urban developments and public transit.
Free school up there right Non?
Almost free, I think undergrad tuition was under $6k (cad) per semester and grad school $3.5k per semester (3 per year) before scholarships for me. Would have been free if I lived in Quebec, but I don't because that would be terrible. We're about to have an election this summer (provincial) and some are proposing literally free tuition. Same school tuition is now $10k per year undergrad and grad is actually less @ $2.5k. All dollar amounts in canadian currency, so that's like what, 0.60can = 1usd?
Some US schools still have reasonable tuition. Georgia Tech is $10,000 (US) a year, for example. Those who want to get ass-raped by the Ivys for a sub-standard education are the ones that asked for it.
Ricky, I've looked at the Wiki page following my post and I hit about half of the various age descriptions. I've always just remembered gen X from high school and will stick to that... although I despise labels.
Ricky, NES generation it is!
i am in socal and i work with apartment developers. there was a slow down in the market from fall 2016 until after the tax deal was inked. it has since perked up some.
there are areas that are overbuilt, property costs are high, labor is high and the cost of materials are high. it's taking a lot longer for developers to raise $ for soft costs. interest rates are rising. top banks are starting to divest their multifamily assets to reduce their exposure.
rents are high, luxury properties are having to comp 1 or 2 months of free rent to entice renters. rent in los angeles is stabilizing, only 2% annual rental increase nowadays.
demand for apartments is still relatively strong with a need for housing for regular working class folks. luxury apartments and subsidized affordable housing is about all that's been built around here for the last few years.
i have two large scale apartment projects currently under construction, and a couple more starting construction in the fall as long as the construction funding comes through. doing quite a bit of value analysis at the moment...
It's always good to step out of architecture, recession looming or not...that Make Architecture Great Again didn't really work out then?
Bullshit. I'm turning down jobs left and right and have my pick of the crop.
If I could split myself into three clones (2 slaves) with the same brain I'd be a millionaire.
in a year or two, there might be a recession, and this will result in another culling - I'm preparing for that, so that I wont get pushed out
My experience leads me to believe it’s more a game of musical chairs in production. Whose project is still active has more bearing than who stays the latest.
That definitely seems true at my office. We don't feel close to a recession, but if the client puts a job on hold, it seems to take forever (2-ish weeks) for the higher ups to figure out where to put you. Part of it is they're hoping the project starts back up, another part is mid-tier people not being able or at least not willing to divide tasks and share a project with you. If you're able to handle 3-5 projects at a time, losing one doesn't hurt, but if you're on 1 big project and it stops for some odd reason, things seem to go sideways for you for a month. I'd imagine that this same process (or lack there-of) during a recession would result in multiple months of mid-tier people looking for something to do each week, and the lay-offs would not be far behind.
Yes, and the management people picking who gets laid off may or may not know what the hell is going on in terms of who is actually doing the work. Productive and knowledgeable people often get laid off and the office politicians and ass-kissers get to keep their jobs.
Pot, meet kettle.
When the recession hits either head for a government job or a work with a firm who has government work. Governments typically spend their way out of a recession and government projects have in my experience always been quite plentiful when the private sector starts to tank.
Always be wary of firms that only do one kind of private sector work, places that only do car dealerships, or only hotels. In good times they prosper and the firm leaders think they've caught lighting in a bottle, right up until the economy tanks. The work dries up and it's too late to diversify into other project types. Recessions hit practices like that really hard.
Rarely th
Education sector seems to bypass this
what if all your office does is multifamily in the Bay Area?
Run Forrest, Run!
Rick
That's were I came from - Rockstar Games
Did you go to architecture school after having a career in the Games industry?