Just months ago one of the main topics of concern among Rockland County business owners was the escalating price of oil and its impact on day to day business. While some business owners reported they were continuing to grow, the escalating oil prices were affecting their profit margins and efforts to go ‘green’ were countered by efforts just trying to stay in ‘the black’.
Today, it appears many business owners would agree that they would prefer paying higher prices for oil as to what is happening presently with the economy. Credit is freezing up, if not already frozen, here in the US as well as abroad. The US and many European countries are in a recession. Some of the oldest and most reputable Wall Street firms have either gone out of business or have had ’shotgun’ weddings.
It is not unusual for any business to experience cycles of boom and bust. Yet businesses that have been around for a number of generations are experiencing this downturn in the economy differently, asserting “this is the worst that we have seen, ever.”
And while many business owners can claim their receivables remain on the positive side of the balance sheet, collecting on those receivables within a reasonable timeframe has become more challenging. In part this is due to banks reluctance to lend money as the banks themselves are over-leveraged and struggling to ‘clean up’.
Some experts claim both businesses and consumers are over-leveraged. As a result, signs of “de-leveraging” are now being seen in the market place. Stock markets around the world have been spiraling downward, in part, because large funds are de-leveraging. Real estate prices continue to decline as de-leveraging occurs.
And what was a so-called ‘contained’ real estate market is now affecting the ‘real’ economy. Federal Reserve Chairman Ben Bernanke referenced this ‘containment’ many times before acknowledging that the real estate market does indeed have far reaching tentacles affecting other parts of the economy.
In Rockland County home prices continue to decline but not at the rate as seen in other parts of the nation. This perhaps is because Rockland’s home prices did not increase exponentially as they did elsewhere. And while Rockland did share in some of the building boom its levels of supply are no where near the levels of supply flooding areas like southern Florida, Las Vegas and parts of California. This may be another reason why Rockland has not had the steep decline in home prices.
The commercial side of real estate appears to be holding up in Rockland. Commercial real estate prices have held up better than residential prices although if businesses begin to fail seeing “for lease” signs will become more common. Already, as some banks consolidate not only their branches but as institutions themselves commercial real estate parcels are becoming more abundant.
On the bright side, while there have been layoffs in Rockland County, Rockland is not completely reliant on one or two major corporations as are some communities throughout the nation. Rockland also has a very high percentage of small businesses – defined as fewer than 10 employees – that encompass a large number of diverse industries. Rockland County will no doubt weather this brutal storm with its diversity and resilience.