Take Phoenix. Listings have exploded, from 5,000 to almost 40,000 in a year. Homes aren't selling, and everyone at the same time wants to get out "at the high" (which is too late btw).
But what are the builders doing? STILL BUILDING! 60,000 houses a year, popping 'em out like mushrooms in the desert, right when a screeching halt is called for.
Result? They'll have to slash prices, and they'll burn any individual home seller simply by being able to out-price him. And who knows, you may see 100,000 houses for sale in Phoenix soon.
U.S. housing starts fell 7.9% in February from January to a seasonally adjusted rate of 2.12 million starts, which was slightly higher that the 2.04 million starts that economists had been projecting, Barron said.
Although the numbers are higher than economists' had expected, Barron cautioned investors not to assume the data automatically means housing demand is robust.
"They (housing start and permit numbers) represent supply - not demand," Barron. "The data means builders are still building houses, but it doesn't tell us anything really about demand."
"The high level of construction may worsen the supply-demand balance," concurred Banc of America analyst Daniel Oppenheim, in a note.
Oppenheim said recent trends show that traffic and pricing are weakening, cancellations are increasing, and the length of time needed to sell a home is increasing. He said inventories of both new and existing single-family homes for sale reached a record 3.03 million units in January.
"We are cautious on homebuilding stocks due to downside risk, based on deteriorating fundamentals," said Oppenheim.
March 18, 2006
When you find yourself in a hole, stop digging. Right? Not Homebuilders.
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The guys with the deep pockets need longer to slow down because of their contracts and supply chains, but they weather more losses compared to all the cash they've fleeced of the suckers in the past 4 years. Averaged over 5 years, even with houses sold at half price they can come out less bruised than the individual owner or selfish maniac who decided to flip a condo or two at exactly the wrong time...
The really heart wrenching stories will not come until the small guys get nudged back into the market when refinancing time comes on their short mortgages.
I remember meeting someone in 1996, he was working as a night time delivery driver... told me that he'd been a general constractor in the early 1990s with 300 subs working for him. So yes, I'd agree the new and inexperienced builders will take it hard.
The long time established builders, will just keep right on building. Even at a loss. They want to preserve various relationships they've established over the years, and have their business chugging at some kind of capacity so it's ready when the good times come back. (As well as to outlast their competitiion.) People don't run corporations with the intent to run and hide for a few years, and then come charging back.
All that means, lower prices coming. Builder sales led the market up, and they will lead it down too.
I wish I could remember where I read the other day something like "try to find a publicly traded homebuilder that's been in business for 50 years. you can't."
I fully expect that some of the publicly-traded homebuilders will go out of business eventually. It might take ten years, but I'll bet that we see somebody go BK in less than five.
Great story going on here in PA I thought I would alert u to. Apparently Toll Bros. bought a large tract of land here in Bucks county (eastern PA 1 hr north of Philly) that was zoned at 3 acres per house. I'm Guessing that they have been trying for some time to get it rezoned to allow 1 house per acre but have been unable to move the locals.
Now they have proposed to "donate" a large tract of land to be used as a Veterens Cemetery but, of course, only if the remaining property is rezoned. The political pressure has really been turned up with all the Vets and Political Hacks now supporting Toll.
This is how u make $ with ink and paper. Buy under 1 set of laws and then have the laws changed and...
Presto... Instant wealth creation.
40,000 homes 4sale in Phoenix? That seems like a lot for a city of that size are. Are you sure about that? Grandma is gettin' ready to buy a new home...and she won't pay a pretty penny for it!
38,602 in phoenix today and well on our way to 40000, then 50,000, then ...
http://tinyurl.com/g94ut
this market turned from white hot to never been colder
cost are more then 50-75k even in slc. for one thing they add the basement sq ft to the house which is not a true sq ft. it costs at least 100 a sq ft. IF YOU want more than an apt.
cost are more then 50-75k even in slc. for one thing they add the basement sq ft to the house which is not a true sq ft. it costs at least 100 a sq ft. IF YOU want more than an apt.
Homebuilders in Southern Utah are digging like crazy. In three develoments in Washington Fields every home is for sale and they are still building more next to it. If the population is 100,000 in St George and there are around 2,000 listings, that means 1 home for every 50 people.
1 listing per 12.5 households (of 4) sounds more interesting than 1 listing per 50 people.
We are close to a trend where we'll see 10,000 added to Phoenix inventory each month.
Got a 0.5 acre lot in Scottsdale 2 years ago. During the planning process, the originally promised $100/sft changed to $240/sft. The original builder "evaporated" to get quicker buck elsewhere. Now contemplating whether to pull the permit at all. Waiting will be painful for the market adjustment. The 2100 sft rental for $1900/month (good location) is sorely small for family of 8.
D
50 per sq ft your wrong. You have no clue and never have built houses or apt before. I dont care what anyone tells you 50 impossible and if you think you can act as the gc you will be put on the back burner and people will show up to work on their day off s saturday, sunday. 100 per sq ft gets you an average home 0 upgrades. concrete is way from 2,3 years ago, lumber, etc. for a custom home you will pay over 200. you try to deal with an artitect when build one home good luck. You need a lawyer to write your contracts with subs or they will kill you. if you pay your subs to much on a draw good luck trying to get them to fix something or work with you. you cant build apt for 50. people who throw out random #s what do they include. landscape, permits, plans, geo reports, temp power, portable toilet, trash dumpsters,changes because the plans dont actually work in the field ,grading, engineering, all kinds of things change the #s.
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