Here's some holiday cheer to tide you over to the New Year.

     "A PE cannot offer or provide actual 'home inspections'" without a home inspector license, Kentucky State Board of Licensure for Professional Engineers and Surveyors (PE Board) Executive Director B. David Cox agreed, in a letter to the Kentucky Board of Home Inspectors (KBHI) recently.

      At long last.  We can hope.

     "I have provided this information to our licensees in the past but will do so again in our next quarterly newsletter," Cox added in his letter.

     We're looking forward to that quarterly newsletter.  And wondering exactly which PEs now doing home inspections will stop.  We're all in favor of the Board putting an end to all unlicensed home inspections.  But Cox was not fibbing - he's said it before and he'll say it again.  Which makes you wonder why the KBHI did not follow the statutory process of issuing a "show cause" against an unlicensed wannabe and holding a routine hearing. 

     Cox's letter was disclosed at the December KBHI meeting.  It responded to a Nov. 23 letter to the PE Board from the KBHI.  The KBHI letter followed a quasi-complaint from KBHI Vice-chair Mike Patton about PEs advertising home inspections in northern Kentucky.  Patton is a home inspector in Alexandria, a small town southeast of Covington in northern Kentucky.

     It's no secret that some PEs are doing home inspections without a home inspector license.  Trouble is those engineers don't claim to be "licensed home inspectors" and people often just assume a licensed engineer is just the ticket for a top-notch home inspection.  Home inspectors have been grumbling about it in several areas, like Elizabethtown and northern Kentucky.

     Some critics also complained that stopping PE home inspections would help Patton's business personally.  It probably would.  In fact, it probably would help the home inspection profession statewide and make sure the public gets what it thinks it's getting.  Anyone have a problem with that?

     The KBHI wrote to the PE Board that it had "recently received information" that "several" Kentucky PEs were "advertising home inspection services."  It concluded it "would appreciate your informing your licensees of the board's position."

     If so, all of those unnamed "several" engineers would presumptively be violating Kentucky's home inspection law, though the KBHI contention was not exactly crystal clear.  It was less than clear because, actually, the KBHI letter was more like a bluff.  The Board really did not have facts or evidence on which it could take action. 

      The letter's thrust was plain enough, though.

     Basically, our licensing law prohibits individuals from advertising or claiming to be a licensed home inspector without having a home inspector license.  KRS 198B.712(1).  The law also prohibits a "individual" from advertising or claiming to be or operating "a home inspection business" unless an owner "or an employee" of that business has a home inspector license.  KRS 198B.712(2).

     The letter left room to wonder if any of the "advertising" the KBHI did not cite or enclose in the letter was from an "individual," rather than a business entity.  Because the KBHI named no "individual(s)," and mentioned no specific advertising, they overplayed their hand, gambling for a quick fix.  There was a reason for that.

     Discussion of Patton's "correspondence" concerning professional engineers at the  Board's October meeting painted a different picture.  Mostly, it clearly laid out how cloudy the KBHI's facts were.  Chairman Green told the Board an engineering company's website "says pre-purchase inspection." Of course, that may or may not be an "individual's" website and may or may not be advertising of an "individual" either claiming to be a "licensed home inspector" or a "home inspection business."

     "You don't have all the facts," the Board's attorney advised them.  "It will save you many, many headaches to have all the facts.  If it's just the website, we ... nobody's seen the website."  Small, minor detail.

     "We could create a list of facts that we need," one Board member suggested.  Or, they could "use OIG [the Office of the Inspector General] to come up with a list of facts you'd like to see," a staff member tried to help.  "If you have the wensite and you copy it, if you go a phone book and you find them advertising in that, I don't know that you need to pay to have an investigation," another Board member piped in.  "Make copies of website, bring the phone book."

      "I'm a little concerned with a Bd member doing that," the new KBHI attorney remarked, in a meeting overflowing with attorneys.

     "We have a form that deals with licensed home inspectors.  We have not created a form that deals with unlicensed inspectors," Chairman Green tossed in. 

     "I would suggest bringing in a copy of yellow pages," the new Board attorney said.

     You get the picture.

     The Board simply did not know what to do.  It knew it did not exactly have an ironclad case.  Frustrated with all those devilish details in the law, it punted.

     So it took a flyer.

     Maybe it "worked" for the moment.  Maybe the PE Board really will stop some engineer somewhere from advertising home inspections, or actually doing them.  After all, PEs are not known to do crawls or walk roofs, which kinda shortchanges home inspection customers.

     Still, the problem with playing a bluff when other players get to see you hand is that you quickly run out of bluffs.

     Then the KBHI has to put up or shut up.

     Oh, by the way, did you heard that the PE Board is trying to  to amend its statutes to "remove moral turpitude language" as grounds for disciplinary action?  HB 110 (BR 302) introduced in the House Jan 5, now in Licensing & Occupations.   PEs that advertise home inspections must really make the Board sick.

     Who knows what the future brings?  Without a chance of filling in all the blanks, there still are some recognizable and almost irresistible forces gathering steam last year that will throw their weight around in the years ahead.

     Here are some important ones for your planning.

Right Sizing.  Size matters.  Big time, for 2010.  As the first decade of the 21^st Century wore on, sliding into the meltdown, everything was pumped up.  Housing prices?  "Inflated."  Roofs?  "On Viagra."  Malls?  "Overblown."  Stocks?  "Bubbled."  Americans?  "Obese."  From political posturing to car bodies, from dresses to breasts, everything was pumped up.

     The balloon burst.  Home prices took a scary 32% nosedive, from their April, 2006 peak, and still are sliding downward into 2010.  Look for another 10% drop in 2010.  After all the hyperventilation about Weapons of Mass Destruction in Iran, there weren't any. 

     Now, expect serious down-sizing, as shapes bracket closer to "right sizing."  All at lower end user prices.  Big retail store footprints will shrink.  More smaller and local stores will fill shopping center vacancies and mall ghost towns.  Best of all, government will shrink, starting at the local and state levels in 2010.

     New home construction will shrink on all sides.  Builders will whittle down square feet, floors, and pumped up roofs.  Fewer new homes will be built in 2010.  Many of them will be smaller.  Prices will be smaller too, for all homes, in 2010.

     Home inspectors who charge by the square foot might want to think it over.  Category pricing (like 2 BR, 2.5 BA for $x, etc.) will see better margins.  Percentage pricing (like "1% of list price," etc.) will do better than square-foot pricing, but less well than category pricing.  Prices that do not include risk factors will suffer, no matter what the format. 

     Car sizes and choices will shrink.  Car dealers will be fewer and farther between.  Sky-high car prices will come to ground. 

     Credit cards, along with debt, will shrink in our lives.  There be fewer credit cards in the mail and less borrowing on our books.  Store credit cards will fade.  Credit limits will be cut.  And we will use them less.  Start-up businesses especially will see credit options shrink in 2010.  What won't shrink anytime soon are credit card losses at the top bank card issuers, J. P. Morgan Chase and Bank of America.

     Home inspectors need to read that fine print credit card/bank mail we used to throw away.  Card issuers are scrambling to best new federal credit card rules that kick in this February.  To beat the deadline, right now they're sending out new interest rates and charges that can wallop users.  The worst we heard about was a card that switched from a 9.9% rate to a 79.9% rate!  In the fine print.  Sorry, but for the next few months, you've got to read that stuff.

     Lots of the shrinkage is pretty healthy and overdue.  But some things will be growing noticeably in 2010, like health care and education.  Much of all this is driven by the one sure-fire growth area - unemployment.  Government jobless numbers are the huge 10%+ benchmark, in Kentucky and nationally (Kentucky is a little higher).  But those numbers come from claims for unemployment benefits.  Unemployment claims peaked months ago but stayed high all year, hovering around 5.2 million people drawing claims.  But extended and emergency benefit claims peaked at 4.7 million in December, from 2.8 million in June.  And the "exhaustion rate," people who gave up looking for work, hit an all-time high around Christmas at 5.6 million.  That's 5.6  million reasons to expect the jobless rate to rise when those disheartened workers get back to competing for jobs with the 9.9 million folks drawing benefits.

     The other growth area will be happy talk.

     But none of this, from stores to homes to credit cards, will be cut down as much here in Kentucky as in formerly frothy bubble spots, like Florida and California.

The Wrong Stuff:  Crash Victims.  We're just leveling off from the second crash of the decade and the worst since the Depression.

     The first was the "dot com bubble" that burst in late 2000.  Back then, Pet.com, for example, was going to have a bigger market capitalization than Exxon Mobil.  The web site cratered in Nov., 2000, just nine months after raising $82.5 million from investors.  How soon we forget!  But that blew by partly because the damage was pretty much confined to Wall Street.

     This time, our piggy banks burst.  The two main reservoirs of accumulated wealth for most Americans were their homes and their retirement plans/investments.  Both tanked.  The safety net was credit.  It became a has-been.  Overnight, getting spare cash "borrowing" from home equity or retirement plans was out  - and one in five Americans was under water, owing more on their house than it was worth.  The root of the disaster was corruption, a lethal cocktail of Wall Greet greed and Washington politicians selling out voters, but we don't have to go there to get a grip on the trends ahead.

     Lots of bad things happened, but one of the most troubling for us was corner cutting in home building and remodeling.  Over the last 2 - 3 years, builders slipping in bankruptcy tried desperately to finish houses any way they could.  Today, most of them are land mines, waiting to blow up on buyers - and the home inspectors who check them.

     Meanwhile, more houses stood empty, froze up with no utilities, and got vandalized as foreclosures and short sales dominated housing for the last two years.

     These homes aren't going away and they don't have to wear salvage titles, like cars swamped in floods.  Heads up.

Creative Destruction & Extinctions Go Into Overdrive.  Economists label it "creative destruction" to describe a reallocation of capital to more productive use.  Lots of folks call it "extinction" or the "Way of the Widget." 

     2010 will open a drama of creative destruction and broad extinction like we have not seen in our lifetimes.  It does not take crisis or drama, though.

     Mobile phones, for instance, devoured PDAs ("personal digital assistants," the palm sized mini-computer we used on site for reports) and now they're gobbling up landline phones, digital cameras, MP3 players, GPS devices, and wristwatches, Pac-Man style.