Housing crisis hits real estate pros' psyches
Monday, April 14, 2008
Joe Rauch - Atlanta Business Chronicle
Last fall, the Greater Atlanta Home Builders Association for the first time brought a psychologist to its October membership meeting, to discuss how to mentally cope with stress of the housing collapse.
"The builders laughed at it at first," said Kim Jones, director of the association's Housing Institute. Today psychologists attend regularly.
"They're not laughing now," she says.
The housing collapse has pushed mental health issues to the forefront for companies, trade groups and individuals closely tied to an industry that, for years, only knew good times.
Builders, brokers, bankers and lenders are just beginning to deal with the mental fallout from the city's first prolonged real estate slowdown in two decades.
Jones, educational director for the second-largest home builder association in the nation, said her organization's mental health concern is increasing.
"We haven't had any members commit suicide this year," she said. "But we have had members touched by it. We're trying to ensure our members are dealing with this in a healthy way."
The stress of the seemingly overnight housing collapse is felt in a host of ways, lenders and builders said.
Mortgage lenders who made loans are now out of work, out of the industry or struggling to make ends meet.
Bankers are seeing clients they've worked with for decades going bust, adding to their own businesses' woes.
Builders are struggling to stay afloat, doing whatever they can to keep their doors open. That means layoffs, along with pay and job cuts.
Atlanta has been particularly hard hit, ranking as one of the worst markets in the Southeast for home foreclosures and loan defaults.
For executives running businesses most directly hit by the housing collapse, hard decisions are being made for the first time in years.
"We have members who are down to either choosing to keep their child's college fund intact, or keeping their business open," said Jones.
While the impact of such additional stress can't be fully calculated, mental health professionals said the impact is real, and will only increase as the market continues to drag.
"Stress is cumulative," said psychiatrist Ray Kotwicki, medical director at Atlanta's Skyland Trail treatment facility and an Emory University assistant professor. "Changes like this are destabilizing for people."
During times of extreme stress, Kotwicki said, people search for support that's familiar.
For some, that means seeking solace with family, religion or in their hobbies.
For others, the pressure could drive substance abuse, depression, domestic strife and suicide.
But beyond anecdotal evidence, mental health statistics are lagging.
Recent national statistics from the Centers for Disease Control and Prevention, for example, don't account for the U.S. housing market's woes in the last year. A 2007 survey by the American Psychological Association found half of all Americans cited rent or mortgage costs as a key stress.
Data are sparse for mental health during Georgia's last real estate downturn in the late 1980s and early 1990s.
But the limited data available indicate how some deal with added pressure.
Atlanta was one of the four-highest-ranked U.S. cities for alcohol abuse from 1991-1993, a CDC report found.
Mental health experts said instances of substance abuse, depression, even suicide are expected to increase during this latest collapse.
Sean Doughtie, president of Mayfield Homes LLC, has seen the collapse's impact firsthand.
Doughtie, 36, began working as an Atlanta home builder at the beginning of the recent boom in the early 1990s.
The son of a builder, he said his lowest point was last October. After paring his 22-person office staff down to five, and nearly a year after stopping his own paycheck, Doughtie let his remaining staff go, including the chief financial officer.
"He sat in my office and I just broke down and cried," Doughtie said. "I told him I was sorry to do it, but I had to, and that I was truly scared about what would happen to my business. It was my lowest moment."
Doughtie now runs bi-weekly support group meetings at the Greater Atlanta Home Builders Association focusing on builders' survival.
Mental health professionals said the stress of an industry's collapse may be affecting a group ill-prepared for it.
Financial and home industry executives are predominantly male, and older. That group is more likely, according to CDC data, to abuse substances, commit suicide and suffer depression.
The banking and home-building industries are dotted with entrepreneurs who closely identify themselves with their work and are closely linked to their business. Those are more likely to view any business failure as a personal one, experts said.
"There's the perception that you can just work your way out of it," said Kotwicki. "Their identity is inextricably tied to the business, so there's a sense that if it fails, you've failed."
Bill Blanton, current director at three Atlanta banks, started his career as a builder in the 1970s, during one of the worst U.S. real estate markets.
"You think that you're just the biggest failure in the world," he said.
But organizational behavior experts said organizations can ameliorate employees' stress levels.
"Organizations need to be candid and transparent with their employees," said Frank Merritt, CEO of consultant TalentQuest LLC. "Sometimes they just need to offer employees hope." Unable to cope
Percent reporting depression within the last year, by industry
National average 7 percent Financial 6.7 percent Construction 4.8 percent
Percent reporting heavy alcohol use within the past month
National average 8.3 percent Construction 15.9 percent Financial 6.9 percent
Source: National Survey on Drug Use and Health, 2007 reports on 2002 to 2006 data.