Posted by Sand E. Ago on March 18, 2006 at 23:24:58:
Put down the bong. Living in SWFL you get blown away enough. Here’s an idea, actualy READ Roberts post.
And by the way, Pookie is spelled with a ‘K’. At least it was last year.
Builders Lose Confidence In Housing Market - Posted by Equity Hunter
Posted by Equity Hunter on March 18, 2006 at 15:30:58:
(March 16, 2006) – Home builders? confidence in business conditions fell to the lowest level in three years this month because of rising mortgage rates and a drop in buyer demand.
The National Association of Home Builders/Wells Fargo Housing Market index hit 55, down from 56 in February. It was at its lowest since April 2003.
“Rising interest rates and high rates of home-price appreciation have raised the bar for homeownership to beyond what some families can reach,” says NAHB Chief Economist David Seiders.
Seiders predicts that cooling will continue as borrowing costs rise further.
Source: Reuters News, (03/15/2006)
Again? - Posted by Wayne-NC
Posted by Wayne-NC on March 18, 2006 at 16:47:57:
Why don’t you respond to your old posts before you open a new can of worms. Convention? I believe that was asked before.
Re: Builders Lose Confidence In Housing Market - Posted by Robert Campbell
Posted by Robert Campbell on March 18, 2006 at 15:46:28:
I’m not sure what the Wells Fargo Housing Market index is measuring, but U.S. homebuilders are still pulling permits and going forward at a strong to steady pace.
Is there a lot of discounting going on now for new homes?
There sure is. But these guys aren’t stupid. They have big profit margins built into the land and they can still build, cut prices, and make a good profit.
The new home builders are under-cutting the market for existing home sellers.
If this trend continues, and I expect it will, the huge inventory of existing home sellers will have no choice but to start dropping their price if they really want to sell.
Robert Campbell
Re: Builders Lose Confidence In Housing Market - Posted by Sean
Posted by Sean on March 20, 2006 at 15:19:21:
DING DING DING!!! We have a winner…
Builders have enjoyed insane margins over the last few years as easy financing and no money needed has let them charge astronomical prices for new construction.
Now, that’s pretty much done, so other than those markets that saw astronomical appreciation, and some local markets that are still going up… so now they are cutting the prices on new construction, and those who bought in the last 5 years (at least in my area) are finding often they can’t sell their homes for what they owe on them…
Not overly suprising when you figure existing (>10 year old) home prices are far far below new construction (
Re: Builders Lose Confidence In Housing Market - Posted by Bill H
Posted by Bill H on March 18, 2006 at 16:22:14:
Hi Robert;
What I hear, read and see on TV, etc says the same thing. The bubble has not burst but the boom may have peaked…now the astute, tried and true builders are continuing as you say…still making $$$.
Good Luck,
Bill H
Re: Builders Lose Confidence In Housing Market - Posted by Robert Campbell
Posted by Robert Campbell on March 18, 2006 at 17:14:07:
Bill,
The next stage of the correction in the housing market will determined by the huge number of speculators who came late to the party in 2004 and 2005.
Most are horribly undercapitalized, using funny money loans that will be re-setting soon.
When housing prices start to fall, how they react will determine the speed at which the correction proceeds.
Based on the inventory that is being dumped on the market already, it seems to me that this slow walk for the exit doors could turning into a sprint if the new homebuilders keep cutting prices. And I expect them to do just that. Centex is leading the pack in that regard.
What’s interesting is this. Six months ago, nobody would admit to a housing bubble. Today, everybody admits that housing has peaked, but it’s going to be a soft landing. Six months from today, I think market psychology will go to the “hard landing” opinion. By then, of course, it will be too late to get out at a descent price.
Welcome to the world of real estate cycles. For those who haven’t read history books, I suspect it’s going to be quite an first-hand education.
Robert Campbell
Couple of questions about this post? - Posted by Mike
Posted by Mike on March 20, 2006 at 11:27:35:
Robert,
Let me first say, I appreciate your insight and theories on housing cycles.
I’m curious though. You mentioned six months ago nobody admitted to a housing bubble. Yet, I recall reading about a potential real estate bubble since right before 9/11. The bubble articles have grown in frequency each and every year since then. I’m definitly not saying we’re not in a slowdown. I don’t think there’s any question the market is slowing. But is it bubble popping pace, I don’t see it, yet.
The other thing I’m curious about. You mention that the speed of the correction will greatly be determined by how the speculators using funny money will react. I’m a rehabber, so, I get in, add value, and get out. For the last couple of years, I’ve sold a pretty fair number of properties to investors looking for no-down cash-flow properties. Is it reasonable to assume these investors are the speculators your referring that will drag down the market? It’s a legit question. I really don’t know. While I don’t think I would have bought most of the deals these investors bought from me, they will still have the staying power since the deal cash-flowed from day one. I assume the speculators your referring to are those that are buying higher end homes with the intent of holding for 6-months to a year and then selling.
Anyhow, if my thinking is correct, I guess it just means that areas that are saturated with investor (read speculator) activity probably have a higher chance of falling quickly. And, perhaps, the bubble theorists are simply echoing the same sentiments that have been echoed for the last several years. I still think buying low, adding value and selling at market or just below market is a strategy that can survive a downturn. Right or wrong???
As always, thanks for your commentary Robert.
Re: Builders Lose Confidence In Housing Market - Posted by SKI
Posted by SKI on March 18, 2006 at 19:10:15:
WHERE IS pOOHIE WHEN WE REALLY NEED HIM?
Re: Couple of questions about this post? - Posted by Robert Campbell
Posted by Robert Campbell on March 20, 2006 at 11:48:47:
Mike,
>>> Let me first say, I appreciate your insight and theories on housing cycles.
RC replies: Thank you. It’s been in my blood for 30 years, both personally and academically.
>>> I’m definitly not saying we’re not in a slowdown. I don’t think there’s any question the market is slowing. But is it bubble popping pace, I don’t see it, yet.
RC replies: Driven by cheap interest and easy-money financing, the housing bubble grew and grew in the last 3 years. Think NASDAQ from 1998 to 2000. Same thing.
In most U.S. cities, housing prices have definitely flattened out in the last 6 months. Massachusett home prices are now down on a YOY basis. Source: MASS Board of Realtors.
>>> The other thing I’m curious about. You mention that the speed of the correction will greatly be determined by how the speculators using funny money will react. I’m a rehabber, so, I get in, add value, and get out. For the last couple of years, I’ve sold a pretty fair number of properties to investors looking for no-down cash-flow properties. Is it reasonable to assume these investors are the speculators your referring that will drag down the market? It’s a legit question. I really don’t know. While I don’t think I would have bought most of the deals these investors bought from me, they will still have the staying power since the deal cash-flowed from day one. I assume the speculators your referring to are those that are buying higher end homes with the intent of holding for 6-months to a year and then selling.
RC replied: Aggregage demand for housing will slow across the board in the U.S. Emerging markets, however, will be the excpetion.
Creating value by re-habbing, subdividing land, or raising rents is the safe way to go during the coming downcycle. Just be very, very careful doing any of the above in bubble markets because you are playing with fire.
>>>> Anyhow, if my thinking is correct, I guess it just means that areas that are saturated with investor (read speculator) activity probably have a higher chance of falling quickly. And, perhaps, the bubble theorists are simply echoing the same sentiments that have been echoed for the last several years. I still think buying low, adding value and selling at market or just below market is a strategy that can survive a downturn. Right or wrong???
RC replies: Yes, you are right. See comment above.
>>> As always, thanks for your commentary Robert.
RC replies: You’re welcome. The world is always a place where what is safe today may not be safe tomorrow. For those who don’t believe me, read history books.
Best wishes,
Robert Campbell