How Bad? How Long?

Whenever I talk with someone in the housing industry, it invariably boils down to two questions: How bad will this downturn get? How long will it last?

There is part of me that doesn't want to know how bad it will get. I heard one reliable report that predicted we would have a couple of months in 2009 when we'll build houses at an annualized rate of 300,000 starts. I heard another reliable report that says this will last well into 2010. Those are the worst I've heard, but the best I've heard isn't a whole lot better than that.

Here's the only thing I know for certain. The new home building industry is going to get worse before it gets better, and I fervently hope that it gets as bad as it's going to get fast. Confused? In short, let's rip off the Band-Aid and get past the pain as quickly as we can.

This is a sentiment that was expressed in June at PCBC by Richard Dugas, CEO of Pulte Homes, and Bert Selva, CEO of Shea Homes. During a discussion with Housing Giants columnist and real-estate consultant John Burns, they both hoped that our industry would make a rapid deep dive to the bottom. That was in June. Five months later, we're still slipping downward, but the descent has not been as quick as hoped.

During the Professional Builder Benchmark and Avid Leadership Conference in October, a variety of experts in real-estate, mortgage financing, housing and capital markets, at different points and in different words, all supported the supposition that our recovery will have a much shallower slope than our downturn.

Perhaps I'm naïve or overly optimistic to look forward to those days, but I believe having a vision of the future is essential to our success (survival) today. But I am also impatient. I want to get there immediately, so let's hope for one final yank on the Band-Aid and begin our recovery.

paul.deffenbaugh@reedbusiness.com