The builders got addicted to the speculator cash. The speculators got addicted to new product from the builders. Lenders got addicted to the speculators. Appraisers got addicted to the lenders. And realtors got fat from the builder trough.
Then one day, for whatever reason, it all stopped.
Now, watching the after effects is going to be like watching hungry wolves fighting each other for the entrails...
Home builders figured they'd face cooling demand this year. But they're also facing another challenge: competing against some of their most recent customers.
Speculators, whose robust purchases made 2005 one of the best years for new-home sales, have reined in their buying and started selling amid signs of a housing slowdown. The influx of their almost-new homes is making it harder for builders to sell brand-new ones.
The latest evidence of that came late Monday when Irvine-based Standard Pacific Corp. said new-home orders dropped 13.4% in the first two months of the year and blamed it in part on slowing investor demand. Its announcement matched recent comments from other builders.
"This slowing of sales activity is particularly evident in markets which have experienced significant price increases and investor-driven demand in recent years, such as California and Florida," Standard Pacific said.
March 02, 2006
Oh, this is all going to end so ugly...
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13 comments:
I am by no means a RE expert nor am i anotherfuckedborrower, but One has to say to themselves why keep building when there is enough inventory on the market already? I think it's the inventory that will crash this market, too much, and who the hell has the money to afford thses new homes? Not me mine is paid in full, and get this I am only 39, sold out long ago and bought outright CASH! (thank you, applause) hehe just being a smart ass :)
Great pic keith. Did that wolf just finish eating a realtor?
I am not a wolf, I am a vulture. The smart FBs are the wolves. A smart wolf will knaw off its' own leg if it gets caught in a trap and escape with its' life. Now we vultures know better than to stalk an angry or injured animal. We make sure it is real dead before we even think about feasting but feast we will just not yet.
Moman,
Wolves don't eat realtors out of professional courtesy and dietary concerns.
Bloodshed in the UP-SIDE-DOWN real estate mortgage ???
... housing prices is going down... can`t sell above asking price now !!!
Their glittering Double Diamond MoneyHill ..Is about to Turn into Avalanche Valley and Somebody is About to TAKE More than a Ski ...Up the BUTT! Don't COUNT on the FEDS & FEMA for the Bodybags kiddies!
They can easily undercut the prices that flippers are selling their houses for.
I agree but it must be very hard for a builder to turn a profit these days, I mean i walked into my local home depot the other day, now mind you i have not bought a sheet of 1/2" sheet rock in almost 2-1/2 years and a sheet was $5.99 then now it $8.00, where can one possibly see a profit at that cost.
Oh My Gosh Toto!...Flipping wasn't THIS HARD back in Kansas !
I'm going to Rent, get out the popcorn, open a beer, kickback and Watch " Home Hemorhaging - American Style" while my Landlord gets RICH Snowblowing my driveway!
To amplify re the home builders:
Their fixed costs are generally known as "debt payments".
Some of them are f@cked borrowers too.
Their business model depends on f@cking the retail borrowers first, since the retail ones will be hurt more by gnawing off their own leg.
New construction will decline though of course as new loans to speculative builders evaporate.
@ anon first poster: That is actually a very good question ("One has to say to themselves why keep building when there is enough inventory on the market already?").
The heinous "inventory" data breaks down like this:
536,000 units of new home inventory. Of those, 107,000 were for homes with signed contracts but not yet under construction, 312,000 were under contract and in progress, and the last 118,000 were unsold units.
Knowledge is more fun, and far more profitable, than ignorance.
does this market fall hard or does it do a slow deflate? Or does it fall hard in a few places and slow deflate in the rest?
Now that we're done arguing whether there's a bubble, this seems to me to be the question we all should be asking? Who's got a smart answer, using data? I mean either right here on this thread, or with links to other web pages?
This is now a "normal" market. Homes will continue to go up 6 to 8%, and rates continue to be near historic lows. Lock in now, and get in while homes are still affordable. You don't want to miss out on these great new deals. Zero down, bad credit, just out of prision, or illegal alien ( not yet processed citizen), please, call us soon.
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