Pardee Homes just made a really tough decision. Their Sacramento development has halted. Building crews have been let go and “deals made with only four buyers canceled” reports Jim Wasserman of The Sacramento Bee. The company has invested $200 million in the region and says it’s not shutting down for good. David Ragland, chief of Pardee’s Sacrament division, told Wasserman that “We plan to re-emerge and reopen in a year or a year and a half in a market with less competition.” I want to be the first to congratulate them on the right decision.
Layoffs and closures are never fun. Many people lose their jobs and the good that the company could have done for an area turns into nothing more than a vacant lot. However, Pardee Homes has, so far, stayed committed to the region with plans to develop when the market is healing itself. With a recently reported 8.5 months worth of new homes available for sale on the market, the last thing we need is for builders to keep going, even if they are making some kind of profit. The sooner we fix the over supply problem, the sooner the market can recover.
A large factor in the whole housing crisis has been shifty dealings in selling homes and subprime mortgages. Lenders and builders have put themselves in a desparate situation, and dishonesty is likely to occur when builders keep adding to the over supply and the pressure to sell. This is very bad for the market and will only bring harsh ramifications for the buyers and the sellers. So good job Pardee. You made a tough decision, but a good one.
On a hopeful note, the lending business is under stricter scrutiny and legislature is in the works to force a higher standard of ethics. The credit crisis (lenders inability to lend due to an inability to collect) will still see darker days before any improvements, but positive government influence could very well turn the tide. Now, if only we could get these big publicly owned building companies to slow down a bit more…
