Fix Housing Later

Unemployment is the chicken. Foreclosures are the egg. Swap their positions all you like. They’re each a self-fulfilling prophecy of the other, a negative feedback loop.

Housing leaders and housing-centric economists want to believe housing always leads the economy. Fix housing, they say, and you’re on your way to fixing the broader economy, because housing is an engine with a multiplier effect. Residential investment dollars–including construction costs for all kinds of housing–redouble and stream into many other markets and cause good things to happen in local, regional, and national economies.

This time though, a consensus is building that housing will not lead the way out of the downturn. Housing is not broken.  Creation of demand is. Look at the latest unemployment data. Now, look at how foreclosures are working, i.e. 54% of new foreclosures are prime fixed and adjustable rate mortgages from among the lowest risk borrowers, per this analysis by Calculated Risk.

How about this for an argument? Housing, not only will not lead an economic recovery, it should not. Business Week economist Mike Mandel makes a case that a housing snapback would drain needed investment from other industry and service sectors that would put a more solid structure–including healthcare, education, and manufacturing–under the economy.

Here’s a few-minute video from Mandel on his Fix Housing Later theory.

 

Clearly, a more normalized level of demand for housing–existing, new, for-sale, and for-rent–would shape itself around less cyclical job growth in non-housing industry arenas. Businesses that got burnt badly as they met hyperbolic, investor-driven demand. In a real sense, housing’s 15 year run before 2006 used up a couple of the wild cards that would have jump started the economy, and pulled forward buyers into homeownership that it would be nice to have in the demand pool right now.

So, even as new residential construction business executives begin to populate their sound bites these days with flashes of wishful thinking, practically the only silver lining in today’s new one-family home sales data is that builders knocked 12 days of inventory off the books, reducing the ready supply of new homes nationally by 13,000 to 297,000.

In some markets, like Phoenix, home builder and developer sentiment has shifted from “you-have-to-fake-it-to-make-it” to that of genuine excitement. “They’ve turned the lights back on” in the land acquisition conference rooms, according to an executive with ties to investor and home builder land transactions.

What’s selling will have to continue to compete with foreclosures, super affordable to migrate renters across into homeownership. No contingencies. No funny business on the mortgage–it’s either FHA qualified, or at least 20% down. Delinquencies and defaults will pile up among prime and Alt-A borrowers for months and months to come, thanks to an unemployment rate expected to grow into the double digits before it starts to ease back by the end of 2010.

Get stocks to start parking in a promise of future growth, and a real economy GDP to inch back from its deep 6 to something around 0 this year, and by golly, consumer sentiment will start a real recovery.

Meanwhile, another year of trying to figure out how to do things with less people than you really need. What we all need though is an economy that can sustainably grow again, not one heated back up by housing. Fix Demand First, housing later.

May 28, 2009 | Filed Under Financial Crisis, Uncategorized | 1 Comment 

The Dash for Cash

We are still on our uncertainty kick, as it’s the only lasting phenomenon we both be certain of and need to plan around.

Consider a comment from investment guru Jeremy Grantham in an analysis The Big Picture blog’s Barry Ritholz is raving about for its keen guidance on “what we should expect over the next few years.”

“The uncertainties of the economy are so great that when the uncertainties of the stock market’s anticipation are laid on top of them, you simply must have big ranges of outcomes and hedge your bets.”

In home building, we see parallels to this principle.

The first quarter of 2009 has now made it clear that, by violently turning the screws on their gross margins, public home builders can at least stir the pot on home sale volumes, especially if it’s the right time of year and there are a couple of “x” factors like a California home buyer tax credit around to help.

Here’s how Citigroup’s home building sector equity analyst Josh Levin puts it.

While most investors entered [the just-concluded] earnings season focused on y-o-y (year-on-year) net orders, we think many were surprised by the q-o-q (quarter-on-quarter) gross margin deterioration reported by most home builders.

In the next three quarters of 2009–especially after there are no more $10,000 tax credits to hand out to Californians who step up to buy now–home building companies will be left even more to their own devices to get the job done moving inventory.

Seasonal forces, rock-bottom prices, record-low interest rates, and money back on income taxes for a home purchase have been working. 

Take away seasonality, and add back the toll of continued economic weakness leading to a weak recovery, big layoff numbers, another wave–maybe two–of credit meltdown shocks in the form of widening credit card defaults and commercial real estate implosions, and one can get a sense of genuine challenges to the kind of consumer confidence it takes to make that largest of consumer purchases.

Home building companies that have made it to this point with a truck load of cash need a plan to try to expand their “range of outcomes,” even as they hedge their bets.

A truck load of cash, a delevered balance sheet, a skeleton-crew cost structure, a few tax-carryback induced inventory turns, and few if any false moves, serve as Part I of the plan–the part that has gotten the stronger companies to where they feel they still have cards left to play.

Part II is where a broader ”range of outcomes” comes clear, because even the stronger companies can’t sit around for the next three quarters waiting for the home buyer market to suddenly tilt their way. Both public and private companies with cash will in the next several months begin to try to slide in unobserved to pick of lots that pencil to new hurdle rates. Those lots, and the business plan around them, and the product on them, will all have one mission. Generate cash from sales.

Whatever goes on by virtue of “the visible hand” of government, home building operators need just one more critical part of the downturn’s plot line to kick into effect. Capitulation. “Ask” prices need to succumb finally to new, uncertain, sustainedly weak realities. And they will, but first only discreetly.

So, what we’ll be observing, even as clouds of uncertainty continue to sit over residential construction’s landscape, is the beginning of chapter that will see home buyers pop in and buy land, hoping finally that it’s cheap enough that they can put a home on it with one of their existing or new products that will get them inventory turns at a greater than one-or-two-a-month pace by the end of 2009.

We invite you now to jam our comment box with questions and challenges for leading home building executives, either about their companies, about the markets they operate in, or about the business environment ahead. who’ll gather in Chicago over the next several days for the 2009 Builder 100 Conference.

We hope to see you there, but if not there, then let us know here what you want to have these folks address in the days ahead.

May 11, 2009 | Filed Under Financial Crisis, Home Builders | 3 Comments 

Bottom Fishy

Are you the glass-is-half-full type, or a life-stinks-then-you-die kind?

A whiff of less-bad news here and there has bred with it a subtle change of expectations on the part of some economists, if not the eventualities themselves.

Clearly, though, economists are best at using two words to begin talking about even their strongest convicitons. Those two words? “It depends.”

Here’s a roll-up of economists’ opinions from the Orange Country Register’s “Lansner on Real Estate” that limbs out the Silver Liners from the Doom and Gloomers as to when that most-coveted of pieces of bottom might be in view.

Optimists

Fed Chair Bernanke:

  • The worst of the recession has passed: “We continue to expect economic activity to bottom out, then to turn up later this year.”

Mark Zandi, chief economist, Moody’s Ecomomy.com:

  • U.S. home prices will reach bottom by the end of 2009.
  • “Notwithstanding the intensifying economic gloom, the bottom of the housing downturn is within sight.”
  • U.S. home prices will fall another 11 percent on average before stabilizing.
  • The Case- Shiller home price index will fall 36 percent from its 2006 peak to the bottom this year.

UCLA Anderson Forecast:

  • Housing market to stabilize in late 2009, and “when it does, the contraction in residential construction will, finally, after more than three years, cease to be a drag on the California economy.”
  • “As the housing market has completed most of its required adjustment prior to the downturn in general economic activity, it will not be as much of a drag on the recovery as experienced in previous recessions.”
  • Orange County: Home prices stabilizing in 2009 and starting to rise in 2010. But appreciation rates remain in the single digits and prices will still be at 2004 levels in 2013.
  • “This could well be the worst post-WWII downturn yet.”
  • “If there is any good news in the picture it is that the correction in the housing market is almost complete.”
  • “We are due for significant increases in unemployment through the 2nd quarter of 2010.”
  • “Continued job loss in California is going to lead to more foreclosures and more uncertainty about the ultimate bottom in housing prices.”

California Association of Realtors:

  • Recessionary conditions through the first half of 2009, “before we begin to see a turnaround in the second half of next year.”
  • Prices down 28.4%. That’s revised from an earlier projection that prices would drop just 6% this year.
  • Sales up 25%. CAR forecasts that 550,000 homes will sell in 2009, pretty good considering that the state was down to 347,000 sales a year in 2007. That’s revised from an earlier projection of 445,000 home sales.

Pessimists

Michael Carney, director, Real Estate Research Council of Southern California, Cal Poly Pomona:

  • “I don’t see home prices leveling off in 2010. … The real reason we’re not going to see a recovery: The financing is not coming back for at least 5 years.”

Richard Green, director, USC Lusk Center for Real Estate:

  • “I’d say we’re at bottom if it weren’t for the fact that the jobs picture is so dim.” … (Thinks market will turn around in 2010.)

Stan Humphries, VP of data and analytics, Zillow:

  • “I’m doubtful that we’ll see the bottom until 2010, and thereafter it’s increasingly clear that we’re likely to have a long bottom before we see meaningful recovery in home values.”

Construction Industry Research Board:

  • 2009 is expected to be the worst year on record for new residential building permits.
  • Just 63,400 units will be produced in 2009, down 3% from the 2008 record-low of 65,380 units.
  • 2008 construction was 20% lower than the lowest point during either the 1980s or 1990s housing downturns.
  • The low in the early ’90s recession was 84,656 units in ’93. The worst year during the early ’80s recession was 85,656 in 1982.
May 10, 2009 | Filed Under Financial Crisis | Leave a Comment 

Home Building’s Stress Test

Ask just about anybody in real estate, construction, and design how they feel their business is going to go in the next 12 months, and our bet is that almost every one of them would say something like, ”who knows?” Unpredictability looms much more importantly as part of every market and every business, and will probably need to be baked into every kind of  plan for the forseeable future.

But business plans and unpredictability don’t go together somehow. So what do you do?

Bet as Pulte CEO Richard Dugas did, on entry level and first-time home buyers. The big question is, will Centex’s kind of entry level and first-time home buyer product fit the near-term urgency bill or not. The race now is for real cash generation. At the end of the day, when they’ve taken all the cost of people, competitive cost and systems redundancy out, will Pulte-Centex be able to meet the biggest challenge of the moment, which is to get people a new-home offering that they can’t resist.

We think the philosophy’s right. But, we’d question the ability to execute. As a matter of fact, just as the government is looking under the hood of the banks, and in some cases is not liking what it sees, we’d say that most home builders who’re planning to stick around had better figure out how to get first-time buyers into their stable soon.

First a few dots that may seem random. Then, how they connect.

Let us know if this litany makes any sense to you in the next 300 words or so. Stress Test. Under water homeowners. Recovery. Walkable urbanism. High volume home builder strategy.

This afternoon at 5 pm EDT, the Federal Reserve Board will release the results of its Stress Test of the nation’s 19 largest banks. The Stress Test is called the Supervisory Capital Assessment Program, and it’s the government’s attempt to learn whether banks–and, more broadly, the private sector financial system–have enough capital to cover their losses if things go as wrong as government theorists and their trusted advisors assume they can go.

The arguable issue is whether the Stress Test tests the real life stress that could occur or not. New York University economist Nouriel Roubini asserts the stress test is not a valid reflection of real risk and real exposure of bank capital to further dramatic dislocation.

Here’s a CNBC clip of Roubini on the topic.

Whether or not you agree with Roubini may reflect how confident you are about the one-in-five home mortgage borrowers who are now said to be under water on their loans. The facts of negative equity and the theories about negative equity’s direct impact on loan defaults are roiling beneath federal bank supervisors’ assumptions at work in the Stress Test.

We can guess that people who are far under water on their home loan and undergo new challenges to their ability to make monthly payments will be most likely to default. Those who can continue to pay, but who realize they’re paying into the vat of home value deflation, we can only guess.

What we do know is that home prices are still falling and that the job and income baselines that they may need to correct to are challenged. This means that home equity, in more cases than usual, won’t be able to serve as viable currency in near term future purchases of homes. Hard cash, 20% or more in most cases, will be what it takes to buy a home, period.

This observation on residential “demand” from Todd Sullivan’s Value Plays blog:

Here is the dilemma. Falling home prices are making homes more affordable, of that there is no argument. The problem is that falling home prices also sap equity from those sellers looking to use it to afford the next purchase. When you add tighter lending and higher down payment requirements you further restrict demand as you eliminate more marginal buyers from the pool.

Contingency sales are highly challenged. Stated income purchase loans, even for professionals, are also highly challenged. The mid-to high end for production homes, and the 55+ category of active adult communities will also be highly challenged.

Why? If you can’t roll your home’s equity into that dream home, an American economic juggernaut in cars, appliances, furnishings, service companies, landscaping, etc. makes a screeching sound.

That’s the kind of Stress Test Roubini’s talking about.

The Stress Test for home builders, we think, is can they leverage their current capital structure to make new homes available to people approved under FHA, and to some with 20% down who can make monthly payments of $850 to $1300? But here’s the twist.

This can not rely entirely on swapping out land they overpaid for for land they’ll get on the cheap out in the exurbs. They have to be able to crack the code of bringing their skills of construction, engineering, financial management, community relations, and marketing into the urban core.

Here’s Nobel prize-winning economist Paul Krugman in the New York Times:

He’s in “the kind of neighborhood in which people don’t have to drive a lot, but it’s also a kind of neighborhood that barely exists in America, even in big metropolitan areas. Greater Atlanta has roughly the same population as Greater Berlin — but Berlin is a city of trains, buses and bikes, while Atlanta is a city of cars, cars and cars.

And in the face of rising oil prices, which have left many Americans stranded in suburbia — utterly dependent on their cars, yet having a hard time affording gas — it’s starting to look as if Berlin had the better idea. “

Cheap energy is gone. The fossil fuel based economy is winding down. Communities that rely excessively on car travel are a limited opportunity, even for home builders that made a living building the surburbs.

Where there is excess capacity in home building is in the suburbs and exurbs. Where there is a need for what production home builders could do is downtown and near downtown. Right now, it’s more expensive, more risky, more time-consuming, more capital intensive, and more technically difficult to do it.

Brookings Institution’s Christopher Leinberger has written:

  • Real estate and infrastructure, including government buildings, accounts for 35% of wealth in the US and is the largest asset class in the economy.
  • There are only two options for real estate development and the built environment (drivable sub-urbanism and walkable urbanism).
  • Drivable sub-urbanism has been the defacto domestic policy of the country since the 1950s.
  • Growing demand for walkable urbanism has resulted in a large gap between the current limited supply and much larger pent-up demand, boosting per square foot premiums for walkable urban residential, office and retail space from 40 to 200 percent.
  • More than 80 percent of recent residents in downtown Philadelphia and Detroit are college educated.
  • Recent research in selected metropolitan areas shows that 30 to 40 percent of households want to live in walkable urban communities, but only 5 to 20 percent of the housing supply is in that category.

But over time, it’s more valuable and can sustain a more predictable future. Who wouldn’t want that right now?

May 7, 2009 | Filed Under Financial Crisis, Home Builders | Leave a Comment 

Dr. Shiller’s Animal Spirits

Yale economist Robert Shiller will keynote the proceedings of the Builder 100 conference for home building’s leading executives next Wednesday, May 13, in Chicago.

In this past Sunday’s New York Times, Shiller accentuates the positive as he takes on the question of whether the current economic crisis has begun slowly to subside, or whether we’re due for even heavier weather.

In his Depression Scares are Hardly New essay, it’s as if Dr. Shiller is giving a patient news that he’s very sick and the prognosis could go either way, but there’s plenty of cases that don’t wind up going to hell in a handbasket.

Shiller, these days, is preoccupied by psychological factors that impact human behavior in the financial and other markets–”Animal Spirits,” he calls them. He’s surprised, in fact, that people at large seem to be less daunted by economic conditions than experts with specific technical insight into what is so woefully wrong with things right now.

He writes in the Times:

This time, the reasons to fret about a possible depression may seem less concrete. For most people, the worries that consume economists and accountants, about things like bank stress-test results or the “OIS-Libor spread,” are rather hard to comprehend.

As Franklin D. Roosevelt famously said during the Great Depression, “the only thing we have to fear is fear itself.” Let’s hope that is true, and that the relative complacency in the general population is good news for the economy.

In a sense, the term “complacency” may serve as a kind of methadone treatment for an economy that seems bent on fixing its balance sheet cold turkey, from the household to the global economic complex.

In “Animal Spirits,” a book Dr. Shiller has written with George A. Akerlof, we get a take on economics and an explanation of what is going on now, in down to earth terms that anybody can grasp.

Dr. Shiller introduces us to his theory and where it applies in this video from The McKinsey Quarterly, taped last month.

May 4, 2009 | Filed Under Financial Crisis | 1 Comment 

Signs of Recovery Raise Old Questions Anew

The economy might be getting better, or the economy might be doing a head fake. It’s clearly an arguable issue. But, it doesn’t matter. Your next home sale–which may be your ticket to sticking around alive for the merry, merry month of May 2009, or not–is going to come out of somebody else’s hide.

The shoots may be green. The signs may be less worse. The upticks may be cropping up here and there. Fact is, most brutally realistic people–whether or not they have economics degrees–say that historically, trends revisit and retest their low points at least once before they get done forcing most players into capitulation. And most players need to descend into wrist-slitting capitulation before a business environment can restore willing buyers and sellers to the game of making a market.

Your next 100 or 1,000 home sales will each be at the expense of competition from used homes, from foreclosure sales, or from new-home competitors. Whatever the condition of your balance sheet today, you’re not going to make it if you can’t get some sales; and you’re only going to get sales if you beat somebody else to them.

No two ways around that. Consolidation in industries is not fair and balanced. Whose company survives to tell the tale of 2007 through 2010 will have nothing to do with having been better or more compassionate home builders. It will have everything to do with simply being a survivor. Suffice to say, it will take luck, but, too, you’ve got to be good to be lucky.

A threat to be lost amid the furor of the global credit and economic crisis are some simple levels of accountability that production home builders share in what led to housing’s Waterloo. Although those who endure the challenges of a 100-year storm battering the system may have grown comfortable with “taking a haircut” on their holdings, you still don’t hear of a lot of people talking about radical changes to their system.

Tad Leithead, a senior VP for Cousins Property Development in Atlanta, talked two weeks ago at the Urban Land Institute spring meeting about dramatic structural changes that would have come due whether or not the economy fell off a cliff two years ago.

To describe the changes, the raw material of his metaphor came from fast cars and faster jets. Leithead says, “we’ve gotten to be very good at a couple of things, like NASCAR drivers. They drive straight and then turn left at an average speed of 190 miles an hour. That’s what we’ve been like in housing. ”

The moment calls for something else. Careering at 200 mph on a straight and turning left is nothing compared to the complexity of dealing with today’s environment, Leithead says. “Today, it’s more like landing an SST with no control tower, and thirty other SSTs either landing or taking off at the same time in the same airspace.”

That’s complicated.

Here are some structural questions the moment begs to be addressed and resolved sooner than later while the ills of the broader economy still provide home builders a modicum of camouflage:

May 4, 2009 | Filed Under Financial Crisis, Home Builders | Leave a Comment 

Multi Talented: News About Us

We’re proud of our colleagues this week.

They’ve toiled long and burnt the midnight oil to bring audiences something bright and new–a sign of their redoubled intent to be the first, best source of insight on the multifamily housing management, economics, and leadership.

Here’s the topline thought on the new multifamilyexecutive.com Web site from the brand’s primary steward, editor-in-chief Shabnam Mogharabi.

But first a look at the fresh new design of mfe.com. Have a visit.

Click image for access to Multifamilyexecutive.com

Click image for access to Multifamilyexecutive.com

Here’s how Mogharabi describes the new features and functions.

>> Real-Time Data and Research As mentioned above, our senior editor Les Shaver leveraged MFE’s strong relationships with the industry’s leading research firms to provide something no other multifamily industry publication can offer: Up-to-the-minute, real-time national and regional market research. Throughout the site, you’ll find built-in widgets from Real Capital Analytics, M/PF Yieldstar, and others that provide customizable, searchable data on occupancy and vacancy levels, transaction volumes, rent trends, and more. In addition, the new site features a live stock ticker with continuously updating information on publicly traded multifamily real estate companies.

>> Multimedia-Rich Experience With the re-launch, we are now able to offer enhanced multimedia offerings and interactive features such as slideshows, polls, and Webinars. We also have, through our newly launched MFETV platform, four new videos up on the site, including a 20-minute sit-down interview with Henry Cisneros conducted at the AFT Conference last month.

>> Local and Regional Coverage Since multifamily real estate is very much a local game, it was important for us to be able to have some locally focused content. We were able to modify a Flash-based map created for Remodeling’s Web site and modify it to link to lists of MFE articles about specific markets, both at the local and state level. This was a temporary solution that I think works well for us until we are able to build more targeted local markets pages.

 >> MFE Top 50 Rankings Our annual industry benchmark—the list of MFE’s Top 50 Owners, Managers, and Developers—is now viewable in a user-friendly table format that allows for a quick scan to find the company or information needed from any year in which the survey was conducted. And the data can be downloaded into an Excel spreadsheet for easy reference.

 >> Daily Exclusive News / Content Aggregation Our vision for MFE.com was to be news-heavy and a destination site for the industry. To do so, we needed to be able to offer folks in the multifamily industry everything they would need in one place. The site is rich with daily Web-exclusive news, features, and stories from MFE, each with its own RSS feed. But in addition to that, we have made a point of offering more aggregated news coverage from around the Web and article feeds than any other publication in the industry. Stories from every industry resource on the Web—including our competitors, national trade associations, and commercial news vehicles such as the Wall Street Journal—can be found on MFE.com. In addition, we offer links to industry blogs, calculators, resource centers, lists, and more.

 >> Expert Opinions We have begun to cultivate a blogroll that includes perspectives and opinions from the editors of Multifamily Executive as well as multifamily real estate experts. Over the course of the next few months, we will be bringing together more than a dozen multifamily experts, architects, and consultants to share their insights on the site. 

  >> Streamlined Design and Navigation With the re-launch of the site, we have updated our color scheme and style. The sleeker, streamlined design allows users to easily locate the right content. And we developed a topic-driven navigation structure that focuses on vital areas of the multifamily real estate business with less of a focus on the magazine product itself.

We congratulate the team that brings you this Site, and we wish them all good luck as they work to bring you the smartest, best, and first intelligence on multifamily housing business and management!

May 1, 2009 | Filed Under MultiFamily, Uncategorized | 1 Comment 

About all that Hollerin’

If you’re wondering why so many people have got their two hands cupped to their mouths, letting out rebel yells at the top of their lungs, you might blame former Salamon Brothers chairman Lewis Ranieri .

The investment guru, who is now chairman of Hyperion Partners LP, addressed the Milken Institute Global Conference in Beverly Hills, CA, this week, and was quoted by Bloomberg.

“I’m actually very enthusiastic about housing, and I haven’t said that in five years,” said Ranieri, who spoke on a panel at the Milken Institute Global Conference in Beverly Hills, California. “As housing prices continue to inch down within shouting distance of a bottom, affordability will simply get greater.”

Sweet! Only, not so fast, cautions Calculated Risk, who is rightfully a stickler for semantics when it comes to calling a bottom, or even saying we’re in shouting distance of it. CR’s reminder: there are bottoms and there are bottoms.

The article says Ranieri was talking about prices, but that isn’t clear from the quote. He might be talking about residential investment. Prices will fall further …

To review: There’s a bottom in stock prices, a bottom in home sales, and a bottom in home prices, each of which represents an important trough in “actual economic activity,” which has largely been on pause since about October of 2008. Willing buyers and sellers a market make. There are few of either these days, so there’s a lot that is or might be for sale, and not a lot of trading going on.

We too have assumed the position of shouting into the distance, and we’re getting a sense that some of the gears of value destruction are beginning to grind to a halt before grinding back into value creation mode.

May 1, 2009 | Filed Under Financial Crisis | Leave a Comment 

A Call We’ve been Waiting for: Recession’s Nearing an End

You just have to hand it to the resilience of the U.S. consumer. We’re 6% of the world’s population, but acccount for 40% of the world’s consumption. And, right now, that’s a good thing.

Personal consumer expenditures in the first quarter swung 6.5% from fourth quarter 2008 to first quarter 2009, to a 2.2% increase.

With all that is fouled up in business investment right now, the consumer is the X Factor of recovery. Will the 80% of the nation’s workforce that will manage to steer well clear of the sinkhole of income loss manage to bouy the economy?

To listen to one housing player working the trenches in heartland, rustbelt markets, the answer may be a louder and louder affirmative. “You couldn’t even get through Lowe’s the other Saturday,” said this residential construction executive. “People want to put up their fences around their yards, and they want to get going with projects. And if the wife says she wants to move now on that new house, then now’s the time it’s going to happen. These are Americans. Lots of them don’t want to wait to get through the anxiety and delays of a foreclosure purchase. They want it now.”

Questions about the strength of the recovery and the persistence of after-effects of the downturn will continue to arise, but per the Economic Cycle Research Institute’s Lakshman Achuthan, the steeper the economic decline, the faster and stronger the snap-back. Achuthan’s correctly called the last several recessions and recoveries based on his basket of long and short-term indexes, and he’s saying now that early Summer 2009 will wind up marking the end of this recession.

Here’s his call this a.m. on CNBC.

April 30, 2009 | Filed Under Financial Crisis | Leave a Comment 

Home Builders Sell Against Angst

Part of selling is an inevitable appeal to the magical thinking of a potential buyer. When it comes to selling a home — the MaGilla of purchase decisions — what more magical thinking to appeal to right now than shelter from the economic maelstrom.

The expression “recession-proof” conjures the image of protection from all that is a mess with money, income, and one’s livelihood.

Home builders are getting creative at doing everything in the book to get people who can buy a home in these worst of times to do so, and Chicago-area builder Bigelow Homes struck a note that caused both buzz and deals.

Big Builder editor Sarah Yaussi has this analysis of Bigelow’s effective sales promotion around the recession-proof theme.

The builder has this newsclip posted on its own Web site to support the push.

April 29, 2009 | Filed Under Financial Crisis | Leave a Comment 

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