A message from HousingPANIC to out of control homebuilders and Desperate Homedebtors

Homebuilders: Keep building. Keep adding inventory to the fire. Keep pumping out houses nobody wants, nobody can afford and nobody can get financing for anymore.

Desperate Homedebtors: Keep asking for prices that no sane person would pay. Keep holding out for that price you "deserve". Keep hoping against hope. Keep reading realtor blogs.

Why, you ask, would HP ask such a thing?

Because unsold and unwanted housing inventory will continue to build and build and build and build and build and build and build and build and build and build some more...

And then home prices will crash back to the level where the fundamentals will make sense again.

Toxic buildup in slumping housing market - Home builders are fighting the shrinking demand ... by adding more supply

CENTRAL VALLEY, Calif. - How do you deal with excessive supply? Add more supply!

Sounds like a head scratcher, but that’s exactly what home builders are doing.

The housing market hasn’t seen any light at the end of the tunnel: Home builders have built too many homes and they've had too many cancellations. There are too many existing homes on the market competing with them, and now here come the foreclosures adding to supply.

Though homes don’t sell, home builders are building fast in some places.

You might wonder why home builders would dig larger holes for themselves.

Standard Pacific won't comment for the story, saying the company is in the quiet period before posting earnings. But Ara Hovnanian, CEO of home builder Hovnanian Enterprise said recently that building Spec homes is about the only way to liquidate land these days.

"It's easier to sell land by popping a house on it than it is to just sell land because there are just not many buyers out there," he said.

HousingPANIC Stupid Question of the Day

What will America do with all its unwanted and unneeded houses and condos now?

Empty houses and condos at record levels

The number that got all the attention this week was 2.7 percent. That's the percentage of homes that are sitting empty across the United States. And it's certainly noteworthy, because in the four decades since the Census Bureau began tracking that number, it's never gone higher than 2 percent.

Put another way, there are 2.1 million empty homes out there, and the people who own them are taking a vicious beating.

But the really nasty number almost got lost in the shuffle. It's 11 percent. That's the number of buildings with five or more units (read: condominiums) that were unoccupied during the fourth quarter.

These and other numbers are being bandied about this week at the National Association of Home Builders' International Business Show. If you recall, this is the same show at which economists last year announced what developers were already figuring out - that the speculators feeding the condo boom had packed up and gone home.

Yee-HA!!!! Adding fuel to the housing crash fire, housing starts supposedly jump 9% in February (vs. January)

When you find yourself in a hole, quit digging.

Right?

Not if you're the barge-like US homebuilders. When they should be laying off and shutting down, they do the opposite. We already have record inventory sitting around gathering dust, we have over a million potential buyers unable to buy with the lending tightening, and we have a massive dropoff in demand. Yup, that's a great time for more inventory!

Everyone remember Cisco and Global Crossing in 2000? Well, now it's Toll Brothers and KB Home. Massive oversupply combined with a crippling drop in demand equals an upcoming fire sale unlike anything ever seen in US housing history.

Got popcorn?

WASHINGTON (Reuters) - The pace of U.S. home construction rose 9 percent in February, beating analysts' predictions and running against dismal news in the subprime home financing sector, a government report showed on Tuesday.

The report turned U.S. stock futures positive and was expected to firm the Federal Reserve Board's resolve to hold interest rates in place when policy-makers meet Tuesday and Wednesday.

"I don't think it changes things for the Fed at all, they are most likely going to leave rates unchanged and to maintain their bias toward tightening," said Mark Vitner, senior economist at Wachovia Securities

"The market will ultimately find demand data more interesting," said Alan Ruskin, chief international strategist, Greenwich Capital Markets in Greenwich, Connecticut, referring to Friday's existing home sales data.

"The home sales data will also be heavily distorted this month, and we will probably have to wait another month for a clear sign of demand trends and the beginnings of the fall-out from tighter lending standards. All in all, too many distortions here to get the market excited," Ruskin said.