Focusing on the future!

November 25, 2008

After 7 months of challenges and negotiations, we were able to finally get our plan for reorganization confirmed last Monday.  As much of a relief this is to have this behind us,  we also have the reality that much work lies ahead.  What we gain by having our loans on fixed rates provides the ability to quantify our costs and having our creditors agree on arrangements for our work out was much needed.  However, the waters ahead that we will be navigating are still very uncertain.  Will our market here in Portland Real Estate market turn around in the spring of ’09, the fall of ’09 or as late as the spring of ’10?  Will we sell one home a month or 6?  Will rates stay low or will they jump?  The only thing that is certain is the uncertainty we face ahead and that history shows us that our market like all others will rebound.


What this has created for us is a much leaner company that will be able to endure what is ever thrown our way.  We were lean to begin with and now with half the employees on staff, our team is wearing multiple hats.  However, all of us have a common goal to buckle down and get through this.  We will maintain the same level of customer service and provide to our buyers; a buying experience that is enjoyable and exciting. 


The heart warming and over whelming support we have received through all of this, along with our desire to see this through, is the fuel that will help us succeed.


We will keep lower inventories than in the past which will move us to more of a pre-sale oriented company than an inventory stocking company.  Meaning that we will be mostly building homes that are already under contract with a Buyer instead of building large inventories of homes that we will expect to sell as a spec. Not to say that we won’t keep a few homes of each plan available at any given time, but not in the numbers we have in the past.  We are not alone in this as this is what most companies will be doing in an attempt to reduce overhead and costs.  We will expect slower absorption rates in our communities in the near future, but as inventories continue to absorb into the market we will be back on track.  What is good for the Portland Real Estate market is that we are not as far off from a normal market than most people realize.  2002 and 2003, were not to far from normal for us and for new home sales Clackamas and Multnomah counties will end up near 2002 sales numbers by year end.  The recent New Home Trends report showed that the third quarter of this year ended up with new home sales out numbering new homes coming to market by almost 2 to 1 and out paced new units applied for by almost a third.  We have shed over three months of new home inventory in the metro area over the past 12 months which has brought us down to within 6 months of new construction inventory.  With starts being held back, we are positioning ourselves very well for next spring & summer.


From a Lending stand point, Wells Fargo recently upgraded the Portland Metro area real estate market.  Most importantly for us, Clackamas county since this is the county we do the majority of our building.  Clackamas went from a 3, with 4 being the lowest, to a 1.  Just more signs of improvement on the horizon for our market.  Our recovery will be slow, but it will be certain.


With all of the challenges that face us in this industry again more opportunities arise for the consumers.  Home Builders like ourselves are liquidating our 2008 inventory of “Move in Ready” homes.  This helps us by selling off inventory to reduce our debt to our lenders and helps our buyers by providing buying opportunities that probably won’t be seen again.  This strengthens our ability to follow our restructured business plan and enables us to continue building out our existing neighborhood; “Volare”.  It is truly a “Win-Win”.  As I have said before, with interest rates down and prices down at the same time, the next 6 months will probably be the best buying opportunity that we may ever see again.  


My optimism won’t fade nor will my belief in the American people.  I feel that we are a proud people and a very resourceful people.  We will figure out a way to get through this with or without the help of our government.  We will have to be more conservative going forward, but not afraid of our shadow.  Because this isn’t the first down turn and it sure won’t be the last…Guaranteed.  We need to take the time to be informed in order to make informed decisions, not just listen to who is yelling the loudest.  There is never any shortage of negative talk.  The naysayers usually predict far more dire situations than are ever realized.  However, you can’t meander along viewing life only through rose colored glasses either.  Use history as a perspective, not your guide.


We had it pretty good for a while and it had to adjust.  We had prepared for the real estate market to slow down not to virtually stop.  I think in general the American people needed a reality check, just not a beat down like this one.  We have rebounded strong from all of the previous down turns and this will be no different.  We have taken our beatings, but we will go on to fight another day because tomorrow is always a better day.


Coming into this holiday season, I am reminded again of what is truly important.  Health, Family and Friends.  No matter what comes at you, at the end of the day, if you still have these, it was another good day.

One Response to “Focusing on the future!”

  1. great blog. Tons of quality information. Keep up the good work.

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