Not Housing Bubble, But Junk Housing Bubble

I am reproducing this article in its entirety in case the Detroit Free Press chooses to dump it. This is some background on the future ramifications of the housing bubble: construction that is and has been crap. --------------------- http://www.freep.com/apps/pbcs.dll/article?AID=2008805160393 Pulte critics, unions rally at meeting Protest doesn't interfere with event BY GRETA GUEST • FREE PRESS BUSINESS WRITER • May 16, 2008 A group of protesters pierced the usually peaceful Birmingham morning air with chants attacking Pulte Homes on Thursday. The rally, staged by the AFL-CIO group and unions including sheet metal workers and painters, was timed to greet Pulte Homes Inc.'s board of directors as they assembled at the Community House for their annual shareholders meeting. Chants of "Pulte Homes is falling down," got curious looks from passing motorists, but the protest did not interfere with the meeting. Pulte shareholders elected five directors, approved a senior management incentive plan and a shareholder proposal to elect board members annually. Shareholders returned current directors William Smith, Brian Anderson and Patrick O'Leary to 3-year terms and added Cheryl Grise for a 3-year term and Richard G. Wolford for a 1-year term. Richard J. Dugas Jr., Pulte president and CEO, gave shareholders a recap of the previously reported 2007 performance. The year marked the first annual loss in the homebuilder's 58-year history. Pulte lost $2.25 billion and watched revenue fall 35% to $9.3 billion in 2007. Its shares rose to $14.45 Thursday, up 4.9% from Wednesday's close of $13.77 on the New York Stock Exchange. The combination of record foreclosures, falling home prices, weakening consumer confidence, tightening credit and large numbers of unsold homes on the market have hurt sales of new homes. Firm defends quality Despite complaints from homeowners who traveled from Arizona and Kansas, the Bloomfield Hills-based company defended its record of quality and said it was doing all it could to address complaints. "Pulte quality speaks for itself," said Dugas. "There is no such thing as a perfect house. In some cases, the homeowner will not let us in to do repairs. It is unfortunate that because of Pulte's size, we are a target." Pulte and its Del Webb brand ranked highest in 11 out of 34 markets in the 2007 J.D. Power and Associates New Home Builder Customer Satisfaction Study. It took first place in Phoenix, Tucson and Las Vegas. Paula Sonkin, vice president of the real estate industries practice for J.D. Power, said Pulte scores high in customer service and satisfaction by reacting quickly to problems. "All builders have construction problems. Pulte tends to do a really good job addressing those problems," Sonkin said. Pulte spokesman Mark Marymee said the goal of the unions is to organize the company's workforce in Arizona. The AFL-CIO said Thursday that workers in Nevada and Arizona already have begun organizing to raise labor standards and working conditions. One homeowner, Terry Templeton of Tucson, Ariz., who wore a lemon suit, said she had a host of problems ranging from plumbing to mold in her Pulte home. "I came to ask them if this is what they call quality," Templeton said before the meeting. Marymee said repairs were made to her home and that a judge dismissed other complaints by Templeton in May 2007. Another homeowner, Susan Sabin from Lenexa, Kan., said the problems in her home are so severe that she has lost her homeowner's insurance. She wants Pulte to buy back her house, because shifting soil beneath her home has caused structural damage all the way to the attic trusses. Marymee said the company has made a standing offer to spend $100,000 to repair her home, but she will not let company contractors in to make repairs. Pulte also faces a lawsuit in Arizona by homeowners in one of its retirement communities alleging defective construction. Pulte is a new home builder and land developer with operations in 26 states, and is the nation's largest builder of communities for people age 55 and older under its Del Webb brand. It is the nation's fourth-largest homebuilder in unit sales with 27,540 sold in 2007. Contact GRETA GUEST at 313-223-4192 or gguest@freepress.com. ------------------------------ As time goes on and as housing prices start to stabilize, people will still have junk houses. How about a massive class action suit? I predict: at least 1/3 of construction that was done between 2000 and 2008 will have to be bulldozed into the dust as part of long term recovery, not only to get rid of the surplus, but also because these buildings are not fit for man nor beast by that future time.