Cranky Ape and Winnebago: Thermometers for Real Life
If you want to know how things are, ask someone who’s been there. I once was in Target buying a microwave oven and some lady, unsolicited and out of the blue, began to tell me how awful my choice was. She had already purchased the model I was picking out and it burned her pizza on the outside while the middle was still frozen. Don’t we all like to ask our friends’ opinions about new movies before we invest $10 and two hours of valued time just to be utterly disappointed?
Well, if you want to know how the economy is really doing, ask people in cyclical industries that typically get squeezed first by the emergence of a recession. That means luxury goods. High priced motor homes, adult play things and vacations definitely fall in that category and the sector is both hurting and thriving depending on which side you are viewing.
So what is a cyclical business? It’s one that grows and retracts based on market conditions. When businesses that thrive on poor economic conditions are doing well you can pretty well bet we’re in a downtown. Similarly, when businesses that flourish in strong economies begin to fail, it’s a sure sign of troubled waters.
Cranky Ape is a company that specializes in high end repossessions like recreational vehicles, boats, snowmobiles, motorcycles and more. Business is good for the repo industry and if you look at their inventory you’ll understand what I mean.
Winnebago is the polar opposite. This is a company that specializes in high end luxury goods, namely vacation travel homes (I think I just coined a new phrase). I consider mobile homes much in the same way as vacation rentals or timeshares because both are payment based and for the most part people buying expensive RVs are not using them as their primary residence. At any rate, Winnebago is having a tough time right now and they have scaled back their operations significantly.
Projections for travel and tourism in 2008 are way down. So are new home sales. People always need a place to live so homes will sell regardless and are not quite as volatile as plain old wants, however, fewer people will upgrade in an economy like this and more may choose to rent. There is also the fact that we are a mobile society and there are those who will need to move and sell their homes, even at a loss. That goes for those who must sell for financial reasons related to the condition of the economy as well. All in all, there is no question that we have seen brighter pastures. The question is how bad will it get before things start to turn around?
Recent San Diego Sweet Digs Posts:
Knowledge in Numbers – A Glimpse at Real Estate Happenings in Hillcrest
Palatial Pad – This Aint Your Momma’s Condo
