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The longer this foreclosure process draws out, the longer architects like myself have to fight over the few scraps that are new design projects. And the fee-cutting is breathtaking! Might as well get a blue collar job doing something in any other industry, because you’ll make more money doing that!
Architecture has been particularly hard hit. I worked with engineers doing land planning, so we were the beginning of the development cycle. Engineers have been idle for 4 years now. It isn’t until engineers go back to work that the pipeline gets refilled to provide any work to architects.
I had lunch with an architect recently who told me he bid $49,000 on a project only to find someone bid $18,0000. He said there was no way to produce a decent set of documents for $18,000 even for one guy working out of his garage. Many firms are buying jobs just to help cover some overhead. It is really a tough time out there.
As I watch the entire real estate development industry sit idle, it pains me to watch my friends and acquaintances struggle to get by.
I know real estate agents that are barely surviving. No business, no commissions.
Seller’s not wanting to sell at market prices and a buyer’s strike. Buyers not buying the RE & government’s lies. Add to this banks propped up by the government bailout not foreclosing on homes not being paid for. It’s a mess wrought by only the best of intentions (perhaps).
Best thing for everyone would be for the market to find the natural bottom. I’ve been waiting and renting for years, waiting for what I thought would be the inevitable correction. Alas, I wait some more.
Kelja,
The best thing isn’t going to happen soon. The grasshoppers are with the queen ant to enslave the working ants. Since we are a nation of law, the laws have been made to benefit the grasshopper or locust. They have the congress, courts, police and military to back it up. Just try to do a Jim G and not pay your taxes and see what happens. I guarantee that you will not become the Sec. of T.
Kelja,
One huge difference between real estate agents and architects surviving the recession is the fee cutting. Architects are desperate and cut fees drastically (i.e. bad businesspeople in general) on the few jobs that do exist, whereas the Realtard cartel still manages to hold up the standard 3% commission on the sales that do go through. It’s amazing how RE agents can hold that… unless you realize that most novice and johnny-come-lately real estate agents didn’t have much qualification or credentials to begin with and have migrated to other, more appropriately compensating industries to their skill levels. The real estate agents out there making the sales are likely the more savvy, ruthless ones…
Wow… I believe it, Larry! Your friend’s story is common nationwide today, but my instinct tells me it’s even more common in California because there are more existing, established A/E/C firms just looking to survive. At a (albeit low for OC) standard billable rate of $100/hr for an architect, bidding $18,000 on a job means the only way for it to be profitable is to be able to produce all the work in approximately 180-200 man hours. Even the smallest home build projects or renovations take 400-500 man hours for an architects if they’re being done properly and a full scope of an architect’s services. Sounds like the $18,000 bid architect is essentially giving his services away at about a $10/hour salary after you factor in the overhead costs on that job!
One other aspect of the bubble phenomenon we’re going to see is a generation gap of architects/building engineers. Anyone who graduated college between about 2003-present is going to have a hard time establishing themselves in the building industry with credible experience and many will eventually give up and go do other work that can pay the bills adequately. So in about 15-20 years, we’re going to see a knowledge gap when those who currently are the more experienced A/E are retiring/dying off, and there’s about a 10-15 year lull in senior staff in firms. That means lesser experienced A/E doing the work during the next building boom. And the cycle continues…
Two great points above.
We’re seeing the same thing in civil engineering construction. Contractors are taking jobs at way under cost, just to keep their company from dismantling altogether. They’re bleeding money, but figure they’ll have fresher resumes and retain critical staff for “when it gets better”.
The only upside is many public agencies are getting infrastructure built for very cheap.
“The only upside is many public agencies are getting infrastructure built for very cheap.”
Could be even cheaper for the tax payer if there weren’t Davis Bacon prevailing wage requirements.
architectdave: Good point, this is also true in Manufacturing.. Like we always say “You can’t teach experience”
You can complain but I bet you don’t have it as bad as this guy…
http://www.fastcodesign.com/1662870/chinese-architect-builds-egg-house-on-sidewalk-to-escape-insane-rents
I agree with the one comment on that story
Actually, this won’t be a problem. It just won’t be American archetects and engineers on the job in the United States. Brazil is doing great things in archetecture, and we all know about india’s tech schools. Many teach infrastructure professions as well. They’ll just H1-B visa in and nobody will have to train an inexperienced American, all with the lie we don’t have anough skilled applicants coming from the American population. Many Americans will still get the degrees, just not the experience.
GSE’s, the feds, and the Fed are all complicit in this housing fiasco, and now they are doing everything in their central planning arsenal to alleviate pain that they enabled. The problem with central planning is that it’s always a blunt tool focused on a handful of objectives, ignoring myriad unintended consequences.
In this case, we’re seeing banks supported by Fed giveaways taking their time (because they are subsidized) liquidating homes, pricing above what market would otherwise absorb.
Then there are other plans like the push for GSE’s to rent out foreclosed inventory, rather than put REO’s up for sale. Consequence: If this goes forward, it could destroy rental markets by driving rents down (more supply of rentals + rents being set by subsidized institutions), and hence investment values.
There’s never a free ride in economics, so the sooner markets return to stability via real equilibrium, the better!
...it could destroy rental markets…
Then there is Section 8 subsidies which distort
rental markets in the *opposite* direction, in
that they set a floor under rents.
The government simply needs to keep it paws out
of all aspects of the Real Estate markets.
That’s exactly right! The law of unintended consequences…
Give it a REST already! The entire purpose of your blog has been rendered NULL & VOID. You keep blindly focusing on “when will houses become more affordable” when the BIGGER PICTURE indicates that the United States of America is C-O-L-L-A-P-S-I-N-G. It is I-N-S-O-L-V-E-N-T. There are NO MORE JOBS. There is NO MORE RULE OF LAW. Crime is EXPLODING. Corruption is RAMPANT. Who in their f@cking right mind would want to TIE THEMSELVES to a SINKING SHIP, which is EXACTLY what buying a house represents in present circumstances?
It’s time for you to start a NEW BLOG: the ARGENTINA, BRAZIL (or similar) HOUSING BLOG. After all, THAT’S where most Americans will be buying their next homes.
Mike Mish Shedlock reports that the Foreclosure Pipeline in New York is 693 months (over 57 years) and 621 Months (over 51 years) in New Jersey. This reflects the power of the Banking Cartel and strategic defaulting loan holders living payment free in bank owned homes.