Ring in the New
Happy New Year! This time of year often brings reflection on what has transpired throughout the year and hope for what can be in the new year. We wish you and your family all the best in the coming year.
Ring out the old, ring in the new,
Ring, happy bells, across the snow:
The year is going, let him go;
Ring out the false, ring in the true.
~Alfred, Lord Tennyson, 1850
The full effects of the global financial crisis of 2008 are yet to be seen. While the credit-crunch caused by the burst of the sub-prime mortgage bubble is considered the primary cause, other factors propelled the crisis to global proportions. Speculation in the commodities market spurred energy to its highest prices ever. In the period leading up to the collapse, unemployment and bankruptcy were rampant. In fact, during that time, two of our customers, both long term (15+) year employees of local high-tech companies, lost their jobs in the middle of large remodeling projects. The declining value of the dollar abroad and inflation at home further weakened the economy and by late summer, the number of home foreclosures and housing loan defaults forewarned that the United States’ economy was about to collapse.
The federal government’s buyout of lenders Fannie Mae and Freddie Mac failed to rectify the situation and within weeks, Wall Street investment banks were on the brink of collapse. Congress approved a massive, $700 billion economic package to rescue the failing banks, hoping to avoid a nationwide depression. While it brought some stability to the market and avoided a nationwide depression, at least temporarily, it has not yet reversed the negative economic trends and the remodeling industry has been especially hard-hit. Let’s face it; remodeling is, in most cases, a nice-to-have luxury and not a necessity. Unless your home is damaged in a fire or natural disaster, or your roof is leaking, remodeling is not imperative. That being the case, remodeling has come to a screeching dribble. We have it from a reliable (though not official) source, that in 2010, approximately 200 building permits were issued in Los Altos – down from the 2,000+ issued in recent prior years.
And, while we are receiving the same number of leads, whether it is the realistic fear of a job loss, the inability to obtain financing, or apprehension about the shaky state of the economy, most would-be remodelers are watching from the sidelines to see where the market will settle. Or worse yet, they are choosing to proceed with a low-ball bidder who gave them a price that is 50% less than it will actually cost to build their project – a game we have chosen not to play – but that’s another story. Underpinning all of these fears, whether conscious or not, is the awareness that something profoundly wrong was at work in the highest levels of power in our nation and there is no evidence that it has been exorcized. To the contrary, we think “it” was given a slap on the hand and big bonuses.
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