Bakersfield's Official Real Estate and Economic Site
July permit report were issued and once again they keep on building. Will they build until they GO BUST?436 new permits for July 2006. Lennar pulled 102 and Pulte pulled 98.
It's funny, the market is already, so flooded that homes are staying listed for months. I expect by mid 07' builders will go BUST!
Source: MSNBC.."This statement, from a broker out of California, says it all: "They've upgraded their houses, put in a pool and bought themselves Hummers and BMWs. Now they can't get it refinanced and they can't sell."Sounds about right to me! They were all under the assumption, "home price never FALL"!
If you've got anything in the pipe you push it out ASAP. Permits like today's NFP showing increase in construction payrolls are absolutely expected. Froth as the wave breaks. The HBs are just screwed, not stupid. As I've been saying for a year, they made great plans for the LAST war. They cannot get out fast enough for this time. A new problem, they never even imagined the speed or the size of the raw land collapse.
I have the PDF file with the details but I am unable to post. It shows the YTD numbers and it looks like LENNAR is going for broke. They are trying to build on every piece of land they own.
Builders are now stuck with hugh amounts of undevloped land. They can't sell it, otherwise the loss would be huge. So they can either build on it, or sit on it. One way or the other there completely fuc*ked))
The builders did learn one thing, a lot of their raw land is "optioned" meaning they can do what is already happening to them; walk away from the earnest money deposit in preconstruction. The downside is they are also carrying this land on their books as assets at the high prices they were planning on paying but since they were only paying option money their asset value is going to crash and their debt will remain unchanged. Get ready for stock declines phase two.
Did the builders buy all the land or do they have it controled by options? I have read that most just have options which they can choose to not exercise. I wonder how much of the land is actually owned by the builders.
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