Homebuilders Still Struggle

Why is it that with plenty of LEGITIMATE yet creative ideas to move property WHILE HELPING BUYERS, some builders are sitting by watching millions of dollars in losses swirl down the drain?  Business Week reported (as did many other news outlets) that sales of new homes fell 6.6% in June, a drop of more than 3x what was expected and the biggest decrease sine January.  With a supply of 7.8 months and a falling median price point, builders (like DR Horton) are taking a bath (I'd call an $835M loss for DR Horton a blood bath).  See http://www.businessweek.com/investor/content/jul2007/pi20070726_112318.htm?chan=top+news_top+news+index_investing

Why is this industry so frightened of outside the box thinking?  Is it that fraud has become more prevalent, so even legitimate ideas (albeit nontraditional) are not given due consideration?  is it that the pendulum has swung from the once embraced "liar loans" (SISA) to hypersensitive over-analysis of perceived credit risk?  Is it that the overall economy is in turmoil and buyers are even more cautious, even at a time when buying seems like the smartest move?

Experts with answers, move to the front of the line.  ;-)

 
Posted by Jason Romrell on 07/27/2007 10:32 AM   Comments (2)   , , ,  

2 Comments on Homebuilders Still Struggle

I don't get it either.  The builders in our market - for the most part - weren't idiots and didn't have a lot pre-built.  The ones hit the hardest here were the mid-size builders with several homes in the ground.  BAD NEWS for them.  What people aren't understanding here is that 99% of what they see being built has been pre-sold.  A blogger I comment on that's on our local newspaper site didn't believe me when I said such and such sub-division was completely sold.  He said "then you are telling me that all of those for sale signs in those half completed homes are just advertising".  YES!  They are sold.  We sold several of them.  There isn't a single home left in that sub-division.  It was sold out in 2 months, despite the stagnant market. 

People just don't get it and won't believe any REALTORS(R) because after all - we all live in a rose colored world and ignore reality, don't we?! 

07/31/2007 07:58 AM by Coeur d'Alene Idaho Homes - Come Live The Life Style - Christina Ethridge (David Swarat's North Idaho Dream Team (GMAC))

Thanks for the response.  It's a fascinating market...and I'm just a lawyer, so I'm sure from your perspective it's even more interesting.  I love your area of Idaho, by the way...went to law school there.  Such beautiful country!

07/31/2007 10:22 AM by Jason Romrell (ActionCOACH Business Coaching)

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Real Estate Attorney: Jason Romrell (ActionCOACH Business Coaching)
Jason Romrell
Boise, ID
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ActionCOACH Business Coaching

Office Phone: (208) 559-0756
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Business advice and useful information. Not always "on point" with mortgage lending or real estate...but that's BIG business, and knowing how to operate effectively is critical to success.

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