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Signs Of A Downturn

 
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Old 06-02-2019, 09:05 AM   #1
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Signs Of A Downturn


Any carpenter/GC-types who have been through an econ cycle/downturn in the past have strong opinions about whether evidence or "a bad feeling" about an economy headed for the crapper appears first in residential (new builds/remods) or commercial? I realize that experiences vary tremendously across geography, markets, etc. I'm just trying to get a general sense.
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Old 06-02-2019, 12:59 PM   #2
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Re: Signs Of A Downturn


If you have a "feeling" there's going to be a downturn, operate under the auspices that it will happen and prepare for it... get rid of debt (both personal and business), build Capital Reserves/Emergency/Equipment Fund(s)... if your feeling doesn't translate into actual conditions, you'll be in a better position than if you hadn't prepared, and if it does, you'll be prepared for any downturn and be able to weather it better...

Downturns eventually happen no matter how good any economy is... but when you start seeing less jobs available than there are those to be employed (the opposite of today's conditions) that's one flag...

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Old 06-02-2019, 01:04 PM   #3
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Re: Signs Of A Downturn


Thanks, KAP, and I agree with you say. I'm just wondering where downturns typically hit first--residential or commercial.
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Old 06-02-2019, 01:09 PM   #4
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Re: Signs Of A Downturn


The widest market... residential... commercial can sometimes be misleading because it tends to think through downturns strategically...


Residential growth supports commercial growth from an economic standpoint...



But a bigger question is which part of the country does it originate because it catches hold...

Last edited by KAP; 06-02-2019 at 01:12 PM.
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Old 06-02-2019, 02:30 PM   #5
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Re: Signs Of A Downturn


Quote:
Originally Posted by KAP View Post
But a bigger question is which part of the country does it originate because it catches hold...

More often than not, the last big boom area, typically takes a very hard or hardest hit in a true down turn.

Residential vs commercial, have to watch for where the greatest speculation building is. Spec ventures ALWAYS end up using borrowed or others money to fund. Almost guaranteed, when those levels hit highs and sustain for a bit. A often bubble arises. One where there is not enough demand for all the units the speculators built and continue to build. And they can not repay the debt to the creditors or screw the investors, becasue the units are selling (or renting) for them to pay the creditors. People freak out and the bottoms drops out. Because the too easy-cheap money from credit disappears... to cover the lenders or investors losses.

No way to tell for sure, but when everything is going gangbusters, that's a good time to get your chit in order, pay off debt, bank profit (or raise your rates to make profit) and invest very carefully for the long term. No get rich schemes and don't do anything with money you can't afford to lose.
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Old 06-02-2019, 10:02 PM   #6
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Re: Signs Of A Downturn


Booms dying of old age is a misnomer. Historically booms last much longer than a downturn.


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Old 06-02-2019, 10:05 PM   #7
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Re: Signs Of A Downturn


If I could survive the last recession unscathed, not sure how another will take me out. I actually believe I picked up market share from the last downturn, due culling of the herd.


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Old 06-03-2019, 03:01 AM   #8
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Re: Signs Of A Downturn


Downturns can be great times to pick up market share.
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Old 06-03-2019, 06:36 AM   #9
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Re: Signs Of A Downturn


Quote:
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Downturns can be great times to pick up market share.
IF you're prepared to weather it...
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Old 06-03-2019, 07:02 AM   #10
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Re: Signs Of A Downturn


And more so if your clientele is unaffected.
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Old 06-03-2019, 11:21 AM   #11
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Re: Signs Of A Downturn


Quote:
Originally Posted by Calidecks View Post
If I could survive the last recession unscathed, not sure how another will take me out. I actually believe I picked up market share from the last downturn, due culling of the herd.


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Yep. Size helps a lot with that too besides working for wealthy people.

The bigger you are the bigger the hit you take gennerally from what I have seen in the last 20 years. It was a short slow down right after I got out of high school and a pretty good one between 2010 and 2012. Running one crew I stayed working everyday from 2008 through the recession. Running three superintendents and some office staff I will probably have to be prepared to lose big chunk of capital during that time. Or give up personnel which I basically would have to start over again afterwards if I did that.

My old boss was about twice the size I am now before the recession, didn't make any money for 4 years during the recession but kept his staff and took over double the market share when it came back. You got to be willing to spend quarters to pick up dollars in the custom home business

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Last edited by Jaws; 06-03-2019 at 11:25 AM.
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Old 06-03-2019, 11:24 AM   #12
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Re: Signs Of A Downturn


Quote:
Originally Posted by KAP View Post
IF you're prepared to weather it...
Yep. I'm taking some risks right now, if a legit downturn hits in the next 25 months it will suck, if a perfect storm hits in the next two years I will lose some assets..... Lol. If it doesn't hit within two years than I should make it no matter what, 9 years from now I won't give a **** if there's a downturn not if I get passed the two years. I'll just sit at the house or go fishing/hubting. Or I'll be working at Home Depot maybe. Who knows LOL

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Last edited by Jaws; 06-03-2019 at 11:30 AM.
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Old 06-03-2019, 11:40 AM   #13
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Re: Signs Of A Downturn


Quote:
Originally Posted by Jaws View Post
Yep. Size helps a lot with that too besides working for wealthy people.

The bigger you are the bigger the hit you take gennerally from what I have seen in the last 20 years. .........
yup
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Old 06-03-2019, 11:50 AM   #14
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Re: Signs Of A Downturn


Definitely Home Depot.
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Old 06-03-2019, 04:18 PM   #15
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Re: Signs Of A Downturn


Something I would say that you should look for as indicators, that I didn't think to mention earlier, bankers and Lumberyard managers. I talk to the lumber yard manager pretty regular pricing out materials Etc. I eat lunch with my bank president at least once a month. I eat lunch with the president of the other major Bank in town once every other month or quarter or so, used to be my loan officer at my bank. I opened a savings account there just so I can say I'm a customer. LOL. Sometimes more.

They know before anyone else except Architects if it's slowing down. Architects is too volatile, it could just be local Architects are slow but you're still getting stuff in from Houston and Dallas cetera. The lumber yard and the bank will know before everybody else if it is slowing down.

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Old 06-03-2019, 04:37 PM   #16
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Re: Signs Of A Downturn


Quote:
Originally Posted by Calidecks View Post
Booms dying of old age is a misnomer. Historically booms last much longer than a downturn.


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We talking short term or long term debt cycle here?
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Old 06-03-2019, 06:27 PM   #17
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Re: Signs Of A Downturn


What ‘Expansions Don’t Die of Old Age’ Really Means

https://www.google.com/amp/s/www.wsj...responsive%3Dy

Age has nothing to do with what causes a recession or an economic boom. In other words There's no logical reason to believe just because we've been booming for x amount of time we are likely to have a recession soon. Age isn't a factor.


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Old 06-03-2019, 06:41 PM   #18
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Re: Signs Of A Downturn


Quote:
Originally Posted by Calidecks View Post
What ‘Expansions Don’t Die of Old Age’ Really Means

https://www.google.com/amp/s/www.wsj...responsive%3Dy

Age has nothing to do with what causes a recession or an economic boom. In other words There's no logical reason to believe just because we've been booming for x amount of time we are likely to have a recession soon. Age isn't a factor.


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Oh, yeah, I get what you mean now. It has nothing to do with the time, everything to do with the underlying factors of the cycle. Time is just arbitrary in the case.

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