HousingPanic Stupid Question of the Day

July 18, 2006

HousingPanic Stupid Question of the Day

Why are they still building houses?

26 comments:

Anonymous said...: because their profit margin was so big, that even on $100,000 off sales they're still making money

also, they can't stop now - they've gotta finish what they started, sell for what they can, then get out; July 18, 2006 11:54 AM
Anonymous said...: Thats what builders do.......build. Period.

They wil not simply retire early, voluntarily.; July 18, 2006 12:31 PM
Anonymous said...: Because there a still buyers, here in Norfolk Va, houses are still selling. For sale signs go up and then there is under contact sign on it in a few weeks. There are people who still have money and they are still buying for good or bad. My bother in law is a contractor in Nothern California and none of his projects 1mil plus are bank money, its all cash. I'm not saying things are not going to slow down and hit hard, it just hasn't got there yet. So keep buying its the "American way", oh also throw a Hummer in there so I have someone I can flip off in traffic.; July 18, 2006 1:01 PM
Rob Dawg said...: Q: Why are they still building houses?

Ans: "Fat Tuesday."; July 18, 2006 1:03 PM
Anonymous said...: The total build process including financing, planning (environmental and community), design, and construction is a long process. Stuff in construction now may have been started 5-10 years ago. It is very difficult to stop once you have put the shovel in the ground.

Keeping that fact in mind, when the project was financed years ago it was based on a certain selling price point, we are way beyond the anticipated price point. Most builders can significantly reduce the selling price and still walk away with a reasonable profit.
Even in light of the huge run-up in construction cost due to china’s grab on cement and steel.; July 18, 2006 1:05 PM
Anonymous said...: 3 smaller builders have gone bankrupt with unfinished houses in the Tampa area. The small fall first as you can see. The big will just slow to a crawl.; July 18, 2006 1:16 PM
Anonymous said...: The money is in the bank, or safe, the permits approved, builders have mouths to feed, and there is still an obscene amount of profit in homebuilding. One anon said that with $100,000 off they make money. I think that with a 50% reduction they can still make money. It’s noticeably slowing here because it was never high to begin with. I talked to one local contractor that I have known for years. He is working up the road a ways, does good quality work. He told me that he usually builds 5-7 homes a year on average. His currant job is #2 and there is NO #3 lined up! And this in the middle of July. The little guy gets killed first, all the time!; July 18, 2006 1:56 PM
Anonymous said...: The market in the mid-south is still very active. Another record year, but things do appear to be slowing in the upper bracket. Upper bracket here is a 5000 sq. ft. home for $500k.

You sheeple in crazy town USA with 20% annual appreciation are going to loose big money. An 80% drop in perceived vaule will vanish in the next 12 months.; July 18, 2006 1:56 PM
Anonymous said...: keith:
they will keep building ..remember, it could be just a rental building.
SO keith don't cuss the builders, they are your friends.; July 18, 2006 2:02 PM
Anonymous said...: Momemtum

There is momemtum in any system. It could be a run up in gas prices and or a turn down in the housing market. There is a lot of momemtum in the system. The momemtum in the system makes a downturn seem like "just a leveling off" or "a return to a normal housing market" as real estate agents would say (or hope for).

Momemtum in the system makes it seem like higher gas and oil prices are having no effect on the economy. Now that the wheels are slowing the effect is becoming clear.; July 18, 2006 2:47 PM
Anonymous said...: Can you say 40% profit margin.

$600,000.00 house = $240,000.00 profit margin.

Corporate home builders say - $100,000.00 off, no problemo.; July 18, 2006 2:50 PM
Anonymous said...: Builders Build ... right into bankruptcy!

Half of them won't be publicy listed co's when this thing is over.; July 18, 2006 3:00 PM
Anonymous said...: The profit margins have been obscene.

It's the builders riding the still-high profit wave that will eventually restore house prices to their correct levels. They will keep building as long as it's profitable meaning, they'll keep building until perhaps the prices are 10% above the costs. As sales lag, construction companies will get more and more desperate, lowering their prices, thus lowering the cost of the houses which means prices will also come down. It will be the exact reverse of the bubble rise and will overshoot on the downside proportionally to its overshoot on the upside.

Nice. I can't wait to tear the eviction notice off the McMansion I look forward to purchasing for pennies on the dollar.; July 18, 2006 3:17 PM
Anonymous said...: "He told me that he usually builds 5-7 homes a year on average. His currant job is #2 and there is NO #3 lined up! And this in the middle of July. The little guy gets killed first, all the time!"

That is what people like me are waiting for. The slowdown in demand will reduce materials and labor costs. There will be builders / subs who want the jobs. Last year I wanted some concrete work done and had a very hard time getting anyone out to talk about the price of doing the jobs, much less actually doing them.

Accumulating cash and waiting for the prices of building to lower... then maybe I build my house on my land. Maybe.; July 18, 2006 3:41 PM
Anonymous said...: The problem with all these "I've got cash and will wait for the bottom" scenarios is that nobody can call the bottom! I remember the late '80s when builders in my area went bankrupt, literally walking away from half-finished houses. Those properties sat vacant for years because people didn't want to chance getting burned if things got even worse.

If the housing crash is even half as bad as some here believe, it will be an ugly, ugly, time, and few will find much glee in buying.; July 18, 2006 4:13 PM
Anonymous said...: As housing crashes, building materials will fall in price. This will allow builders to sell for less and make the same profit margin.

Believe me you will see 2x4's on sale at Home Depot again. You'll also see someone in a Malibu hatchback with 30 2x4s instead of the Tahoe with 2 concrete blocks. This will be ugly.

I LOVE flipping off Hummers. If it wasn't illegal, I'd love to slash their tires.; July 18, 2006 4:41 PM
Anonymous said...: I'm finally having a home built on one of the acres I bought a few years ago. Builders are slowing down in my local area. There are good deals on appliances and materials, and subs are ready to work in a timely fashion.

Building this home with cash reserves to live in for a long time. This is not an investment home by any stretch. It's really more home than I need but I'm taking this shot now rather than later. One acre lots in my town are a thing of the past so I feel very secure in doing this deal at this time.

Good builders (and smart ones) have been slowing down their new projects until more of their inventory is sold out. Not all builders are doing this though, and those who are still going at it pretty good I guess will feel the pinch. 40% of the homes listed on the local MLS are new/never occupied homes. I'm hoping for reduced asking prices, but haven't really seen it yet. Builders can put pressure on sellers of existing homes by slashing prices and I wish they'd do it already.; July 18, 2006 5:16 PM
Anonymous said...: Inertia. By this time next year, builders will be in a MUCH slower phase than now as the market adjusts. The obvious ones that over did it, will be bankrupt which we are already seeing around the US.; July 18, 2006 9:04 PM
Anonymous said...: As a capitalist, I don't think there's such a thing as an obscene profit margin.

Obscene profit margins to most of you sheeple is when OTHER people make lots of money. If YOU made lots of money from a shrewd trade or investment, you'd want someone to congratulate you for it.; July 18, 2006 10:02 PM
InfidelSix said...: + 1 foobeca's comments; July 18, 2006 10:16 PM
Anonymous said...: "Anonymous said...
As a capitalist, I don't think there's such a thing as an obscene profit margin.........."

Right you are! Wrong choice of words on my part. A widget is only worth $49.95 if someone is willing to pay $49.95. No one is holding a gun to the consumer's head and ordering them to buy.; July 19, 2006 12:39 AM
Anonymous said...: But who says they are going to finish what they started -- From mt home state, here is how we handle this problem.

'Suspicious' Kearny fire
Tuesday, July 18, 2006
By JACK HERMAN
JOURNAL STAFF WRITER

KEARNY - Fire officials are investigating the cause of a suspicious blaze sparked Saturday night at a "McMansion" under construction on Davis Avenue, Kearny Fire Chief Joe Lapsanski said.

The fire started just before 9 p.m. at the construction site, which consisted only of frames, studs and a foundation, Lapsanski said.

"There was no source for the fire to start," the chief said. "There was no electricity, no gas to the building."

The intense blaze had flames shooting 150 feet in the air, Lapsanski said, and the heat shattered windows on nearby buildings and melted aluminum siding on houses 250 feet away.

Kearny firefighters, with the help of Harrison, Jersey City and North Arlington fire departments, were able to get the blaze under control within an hour, Lapsanski said. Only the foundation remained of the building, he said.

Their quick efforts prevented the fire from spreading to the nearby Our Lady of Sorrows Church, Lapsanski said.

One firefighter was injured and treated for an injury after hitting his head while passing a ladder, Lapsanski said.

Jersey City Arson Investigators, state fire marshals and officials from the federal Department of Alcohol, Tobacco and Firearms were all investigating, Lapsanski said.; July 19, 2006 1:05 AM
Anonymous said...: hehehe ....

1 McMansion down....15,000,000 to go.

I wonder if the insurance payout is worth more than the building? Hmmmm....; July 19, 2006 1:19 AM
Anonymous said...: I say briefly: Best! Useful information. Good job guys.
»; July 22, 2006 2:27 AM
Wendy said...: Spontaneous combustion.

A builder down the street just spent a year putting up 10 big new homes in a subdivision near where homes go for about $200K.

Now there's a cheap sign that say's "Homes for sale by builder: $149,900" (Two for $250K ...?)

Someone wants out in a hurry. And since 9/11,. there's still a bubble here.; July 24, 2006 1:06 AM
Anonymous said...: Wow what a cool blog you have here! I am impressed. You really put a lot of time and effort into this. I wish I had your creative writing skills, progressive talent and self- discipline to produce a blog like you did. Your blog really does deserve an honest compliment. If you have some time, stop by my site. It deals with stuff like, click here: partners and then feel free to e-mail me with your words of wisdom.

P.S. I'll sure put the word out about your site and I would appreciate any business you may send my. way... Later, Scott.; July 28, 2006 8:25 AM

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July 18, 2006

HousingPanic Stupid Question of the Day

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