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The article below ran in the Mohave Valley Daily Newspaper. I am glad to see that Larry Adams, association president and owner of Pueblo Construction was voicing his opinion. I agree that a homes value is more than current value of sale.
By NEIL YOUNG/The Daily News
Published: Sunday, September 26, 2010 10:33 PM MDT BULLHEAD CITY — Due to the recession, the membership of the Mohave Valley Contractors Association has fallen off by two-thirds, according to Larry Adams, association president and owner of Pueblo Construction. The organization draws its membership from an area stretching from the Needles Bridge to the Laughlin Bridge, and also from Kingman.
“Our membership’s fallen to about 40. Certainly, we need to get our membership built back up,” Adams said. “It’s been a recession for most industries but in our industry, it’s a depression — make no mistake about it.”

Adams said, “The economy of Arizona is absolutely, totally, 100 percent dependent on residential, and I repeat strongly, residential construction. Without that, there’s no hope of this economy turning around in Arizona.” Construction in the state is down 80 percent and Adams sees no signs of it picking up anytime soon.

He said the number of construction workers in the state has fallen from 250,000 to 100,000. “A third of the unemployed come out of the construction ranks,” Adams said.

During his nearly 50 years as a contractor, on average, residential construction accounted for 75 percent of Adams’ business. Now it’s almost zero, since he hasn’t built a house in at least two years.

But Adams’ cloud has a silver lining. “I’m very fortunate. I’m extremely busy, but it’s all commercial.”

He’s currently working on the new Jo-Ann Fabrics & Crafts store and building a new facility for Cameron Broadcasting, both at Riverview Mall. Pueblo also is doing work for schools, banks and medical facilities.

The recession has hit contractors who specialize in building houses the hardest, since existing houses are currently selling for approximately 30 percent less than new homes.

“There’s good residential contractors here in town (who) hadn’t had a job of any kind in three years,” Adams said. “The sad part of that is, most of these people are in their 50s or early 60s. Whatever help comes along is too little, to late. It’s over for them. They lost their houses. They’ve lost everything. They’ve lost their retirement.”

When the market for new houses does eventually pick up, Adams warns homebuyers will experience sticker shock. Noting that previous increases from 2004 to 2006 were the result of the rising cost of energy, Adams said, “Throughout this recession, our cost has continued to rise. Materials are more expensive today and they’re going up every day, so the costs aren’t coming down like people think they are.”

When homebuilding experiences a revival, it will raise prices for all homes, new and old, he said.

There’s a misconception, Adams said, regarding homeowners who are upside down on their mortgage payments. The phrase “upside down” is defined as owing more on a house than its market value.

“Your house is worth what it costs to replace it (with a newly built house). If that house burns down, you’re sure not going to get it replaced for what they’re selling for,” Adams said.

Homeowners behind on their mortgage are being told: “Your house isn’t worth what you owe on it, so you’re a darned fool to be paying on it and it’s causing a lot of people to abandon their mortgages,” Adams said. “Those false statements are contributing to making this bad situation far worse.”

CNBC Real Estate Market Chart over 30 Year period