Tuesday, April 15, 2008

What Housing Crisis?

I just read an article about how developers in other states are going out of business and leaving homeowners stranded in unfinished communities. This is understandable, considering that there is a major decline in the value of real estate right now. It also makes sense that builders would hold off on starting any new projects in fear that they'll be stuck with massive amounts of inventory.

Well, can someone please tell the developers in the Temecula and surrounding areas? Honestly, if I never read the news, I wouldn't know by driving around that there was a problem with real estate right now. Yes, there are more "for sale" signs on corners, but there is also a lot of construction going on. I'm talking brand-spanking new developments. These builders must have signed on the dotted lines for their financing before last summer, and now are forced to proceed with their projects.

There are housing developments that haven't seemed to be hindered by the economy, except that they've lowered their prices a tad. But the most surprising construction is that of commercial properties, specifically retail and office. As a matter of fact, a new sign for a strip mall just went up in Whine Country--eight miles off the freeway. What?!

Sometimes I want to stop the car and yell over the noise of the tractors, "I know that we're kinda close to the San Diego County line, but this is Riverside County. R . . I . . V . . E . . R . . S . . I . . D . . E COUNTY!! Do you hear me? It's one of the areas with the biggest decline in real estate!" But I think they'd just keep grading.

There also hasn't been an impact on too many businesses lately. Ever since we've moved here, retail establishments come and go, especially restaurants, that seem to have a lifespan of about one year. But most of the strip malls appear to be occupied at the level, or just a little less, than they were two years ago. If the economy is in a tailspin, why are all the retailers still open?

Don't get me wrong. I'm not trying to prove that there's nothing to be worried about. I'm just curious as to why some sectors in this area are moving toward, what seems like, the inevitable train wreck. Surely, they must know more about this than I do. They must have performed their due diligence and market research studies. They must have economists on staff who are pros at predicting where investments of this kind are headed. They must realize that what they're doing seems odd, at best, and disastrous, at worst. Maybe they figure that the economy will be heading up before they have their grand openings.

Adding more inventory to the ever-increasing pool. Yup, that oughta help the housing market recover.