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…

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Hank Paulson, the US Treasury Secretary, has just made some alarming comments on the housing crisis. He remarks “Let me be clear, despite strong economic fundamentals, the housing decline is still unfolding, and I view it as the most significant current risk to our economy,” and that “The longer housing prices remain stagnant or fall, the greater the penalty to our future economic growth.” He has made several calls to action, but for now, no concrete plans have been issued by congress or the president. Most blame deceptive mortgage loans and over-zealous builders. Supply is starting to exceed demand.

Consumers have a lot to do with the current situation. After all, we ultimately control the economy. Hasty decisions about mortgages and the urge to build bigger and better have combined to create a foreclosure rate that is currently 50% higher than two years ago. Reported “ghost towns” have begun to develop and values are dropping.

My suggestion… First, don’t depend on the banks to be honest about your mortgage. Read the fine print. Consult a neutral third party if you must. Make sure you are aware of any variable rates and possible rate spikes. Second, don’t build so big. Build smarter. Find a good plan and customize it, or hire a designer. Spend more on planning and less on mistakes. Third, go green. If you want to save money in the long run, and be able to afford those mortgage rates, then start with energy saving products and building techniques. Here is a great resource: www.greenandsave.com (look for the ROI, or Return On Investment, numbers). Another: www.buildinggreen.com (these guys don’t accept advertising, so they’re great).

You may have a dream of owning your own home. Not buying an existing one, but owning one built just for you. The ‘crisis’ doesn’t change that. You still can. Just play it safe and build smarter. You’ll obtain your dream and support the market. After all, you ultimately decide your own economy.

source: The Associated Press used by Fox News – http://www.foxnews.com/story/0,2933,302194,00.html

HousePlans.Info: The latest trends, observations and opinions on all things related to house plans, home design and home building.