REAL ESTATE NEWS FRIDAY APRIL 25TH

I'm glad you hit on my current favorite subject.

I am in the construction business.  I'm owed money by the national companies, but more importantly am having my margins squeezed by residential builders scrambling to find something and now bidding commercial work.

I don't know who's more guilty, the big builders, or the banks.  They both got their heads beyond their skis.  Because you're writting about the builders, I'll throw in my opinion.

The Chicago market used to be dominated by guys named Vinny and Joe that built houses.  When the market was bad, they sat on the farm land their uncle gave them and didn't build.  They still were able to go to Florida in the winter and drive a big car, so it didn't matter if last year they made $250,000 and this year they would only make $60,000.  They had accountants that would find the silver lining.

Now, publically traded companies with huge staffs come in and have to grow.  If they didn't, their investors are upset.  Last year, they build 100 houses.  Next year they need to build 110.  The year after, 125.  They aren't as concerned with profits as sales.  They are so smart, with sales come profits.  So they bid up the land amongst themselves.  They over build and make huge money for 10 years.  Did they save it?  No.  Do they care that they went from 100 houses to 1000 houses?  No.  When we had spec houses, we waited to sell them.  The big guys call them inventory.  They make a better product than their competitors, so people will still buy theirs.  Keep growing.

Ooops, the economy slows (I could even debate that the economy is fine, so long as you don't build houses or cars).  Now they have to sell their jets (jet fuel is expensive), fire the lower priced guys, and buy their competitors (who hired the guys they fired and bid up the land against them).

I'm glad I don' work for a publically traded company.  Florida is nice this time of the year.