To me, the business of building houses should be managed like any other manufacturing business. When business is slow, you retrench and layoff while trying to maintain profitability. Good management will anticipate the rainy days.
In the 1990s we didn’t have the large national builders in San Diego we have today. Pardee and Fieldstone were major builders. They continued building, lowered prices and built smaller houses. McMillan and Standard Pacific retrenched. Many small local builders went out of business.
Today, lumber costs are already way down, labor cost are coming down. We now need builders, land speculators and lenders to go bankrupt so land gets recycled at a lower price points. Only when that happens will we see meaningful price drop in new developments.
