Bonita Springs-based WCI Communities said Wednesday that orders for its condominium towers have screeched almost to a halt — and businessmen across Lee County said the residential construction industry as a whole is slowing dramatically.
We are backing down on the tower business, we can't offer the incentives or financially motivate people" to buy, said Jerry Starkey, president and CEO, in a conference call Wednesday on the publicly traded luxury home builder's second-quarter earnings.
For the three months ending June 30, WCI reported a 69.9 percent decrease in net income from the same period last year. Revenues were down 21.1 percent to $529.4 million. Total new orders were down 62.4 percent to $238.4 million, but towers were down 82.6 percent to $57 million — and the number of units ordered fell 88.8 percent to 36.
"The sellers of property are in denial right now that they're not going to lose money on their deals, and they will. The main thrust is the speculators: They have completely disappeared off the face of the Earth."
Condominiums will be the worst hit, as they were in the last downturn in the early '90s, Bonkowski predicted.
Isn't a US slowdown part of the playbook for a soft landing in Ireland? Doesn't it go something like this. The US slows down(not a recession mind): US rates have peaked and are now set to decline; This leads to a decline in the dollar: Softening US demand leads to a decline in oil and other commodities: Previous two lead to a decline in euro inflation rates:
Result euro rate rises slow and top out around 4 to 4.5% next year.
result much fabled "soft landing" happens in late 07!
I'm not saying I think it will happen that way, but isn't that the idea?
With all that floating rate debt around THE SINGLE MOST IMPORTANT NUMBER for the Irish economy is the shorterm rate set by the ECB. If W2W's prediction of 8% by 08 were to occur? Jeez!
From an Irish standpoint the worst thing that could happen would be that the Fed is wrong and US growth continues strong! Then, in the face of rising oil and inflation, the Fed would be forced to acknowledge it's mistake and raise rates much higher. Then ECB rates could go much higher.
regards
The article says theres only a small chance of soft landing as soft landings are rare and monetary control is needed to achieve one, oh wait, we dont have monetary control anymore!Very Good Article in the New Yotk times today on the topic of the economys future direction and the Feds choices:
http://www.nytimes.com/2006/08/11/business/11econ.html?pagewanted=1&th&emc=th
Note-Don't reproduce entire articles
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