Homebuilders looking for government help, too

September 30, 2008 by Dan  
Filed under Investing

Seems that everyone is looking for help from the U.S. government these days. Add homebuilders to the list of those seeking a little financial pick-me-up.

According to a Sept. 29 story by Bloomberg News, which you can read here,  officials with the National Association of Home Builders are asking members of Congress to pass a $15,000 tax credit for all homebuyers. This, officials with the trade association hope, will entice consumers to purchase homes.

The builders association says that homebuilders have seen at least $19 billion in losses since 2006.

Now, that is a lot of losses. But I don’t remember the homebuilders association proposing that their members give any of their profits back during the housing boom that ran from about 2001 through 2006.  And last time I checked, most homebuilders were advocates of the free market when their profits were soaring as home prices skyrocketed during the boom times. But now that their profits have fallen, they want the government to step in.

I feel the same way about the proposed federal bailout. Where have the rabid free-market fans gone?

Sales of new homes continue to plummet

September 29, 2008 by Dan  
Filed under Investing

The housing slump has hurt a lot of people, everyone from real estate agents and mortgage loan officers to homesellers, investors and, of course, the boards of directors of several large financial institutions that have gone under since the slump’s start.

But no one has been hurt more than have been homebuilders. And things aren’t getting any better for them. The National Association of  Home Builders recently reported — citing statistics from the Commerce Department — that the sales of newly built single-family homes fell 11.5 percent in August. Officials with the department are now predicting that the country will see the sale of about 460,000 new homes this year.

That sales rate is a whopping 34.5 percent drop from the rate of August one year ago, and represents the lowest level of new-home sales activity since the first month of 1991.

The federal government’s huge proposed financial bailout is at least some good news for those suffering through the housing industry’s slump. But it’s hard to believe that the government will be able to pull us out of the housing slump. The only thing that will do that is time, lots of it, apparently. And while most economists are predicting that the housing market won’t begin its recovery until late 2009 or early 2010, the nation’s homebuilders are struggling to stay in business.

A second straight good-news post: New home sales rise, too

August 27, 2008 by Dan  
Filed under Investing

It’s hard not to be negative when you’re writing about residential real estate. But yesterday I posted about an increase in the sales of existing homes. Today, I’m spreading a bit more sunshine: The sales of new homes increased in July, too.

According to the National Association of Home Builders,  the sales of newly built homes rose 2.4 percent in July.

To the home builders association’s credit, its officials aren’t pointing at the sales figures at signs that the problems of new home builders are over. The group’s chief economist, David Seiders, pointed out that the July figures came on the heels of two consecutive months of significant sales drops.

Still, builders have to be thrilled to get any bit of good news these days. The housing slump has devastated the home-building industry, with builders across the country going out of business.

We can only hope that the sales increases, in both existing and newly built homes, are a sign of more good news to come. We’ve certainly all had our fill of bad news.

 

Good news or bad? For new home sales, depends on how you spin

August 20, 2008 by Dan  
Filed under Investing

I’ve criticized the major real estate associations in the past for spinning bad real estate news. The associations have blamed the media for making the housing crisis seem worse than it is. They’ve claimed that the current real estate slump is just a natural correction. And they’ve spent months predicting that we’ve finally reached the bottom of the market.

To me, that’s all spin. The real truth? The housing market is awful. And there’s little hope of a quick recovery.

The National Associaton of Home Builders in a recent press release took this game of spinning negative news into positive to absurd levels.

A recent association release’s headline claimed that home buyers are finally responding to lower housing prices in metro areas. Reading this headline, you’d assume that buyers are snatching up newly built homes, with their lower price tags, in growing numbers.

Now, here’s the actual statistical information cited in the release: Existing-home sales rose from the first quarter in 13 states. Now, if my math is correct, that means existing-home sales didn’t rise in 37 states. To me, this doesn’t seem like buyers responding positively to lower-priced homes.

I know everyone in the real estate industry is tired of the bad news. But let’s not look silly in trying to find that glimmer of hope.

Another bit of bad housing news

July 28, 2008 by Dan  
Filed under Investing

It’s not the best way to start off a new week, but here we go: The sales of newly built homes continued to drop last month.

The good news? The drop wasn’t that big. The National Assocation of Home Builders reported last week that sales of newly built single-family homes dropped 0.6 percent last month.

Problem is, even though it’s a small drop, it’s another one. The sales of existing single-family homes also dropped in June, by 2.6 percent.

The homebuilding industry may be suffering the most right now from the real estae slump. Sure, real estate agents and mortgage loan officers are undoubtedly struggling, too. But we’ve seen a wave of homebuilders declare bankruptcy during the housing slowdown. (And, yes, we’ve seen a wave of mortgage lending companies close their doors, too. But many of these lenders brought their troubles on themselves with shady lending practices.)

When will things get better for homebuilders? Unfortunately, many real estate experts are saying the housing industry won’t really bounce back again until 2010. That’s a long wait if your company is teetering on bankruptcy.

Sales of new homes drop again

July 9, 2008 by Dan  
Filed under Investing

In what should come as a surprise to no one, the sales of new homes dropped once again this May.

The sales of newly built single-family homes dropped 2.5 percent in May. You can read the bad news here at the online home of the National Association of Home Builders.

Officials with the Home Builders Association used the news to again encourage Congress to pass housing-stimulus legislation.

Personally, I’m not so sure about that recommendation. Any stimulus package would be a short-term fix. The slowdown in home sales of all kind is the natural result of an industry that grew too fast, too quickly. We are now in the middle of a correction. It’s painful, but inevitable. Legislation would just muddy up the natural course of this correction.

A glimmer of good news: Remodeling holding steady

May 12, 2008 by Dan  
Filed under Investing

We’ve all been inundated with the bad news from the housing industry: Home sales are down. Foreclosures are up. Housing prices are dropping or are stagnant. Home builders are going out of business.

It’s depressing. I know.

So how about a small piece of good news? Here it is: According to the National Association of Home Builders, home remodeling work remained steady in the first quarter of this year.

Of course, this news isn’t all stellar. The amount of remodeling work is still down from the days of the real estate boom. And economists with the home builders’ association say they don’t expect remodeling to begin bouncing back to pre-slump days until a gradual recovery begins in 2009.

Still, the remodeling industry is providing some boost to a very weak home building business. For that, at least, we should be grateful … at least a little bit.

Real estate slump not nearing an end

May 6, 2008 by Dan  
Filed under Investing

If there’s one question I’m asked as a real estate writer more than any other, it’s the obvious one: When is the housing slump going to end?

Unfortunately, I don’t have a good answer. No one does.

There are predictions, though. And, unfortunately, they’re not happy ones.

Take a look at this story in the Wall Street Journal’s online edition. Written by June Fletcher, it says that, according to economists gathered at the spring construction forecast held by the National Association of Home Builders, the housing market won’t show signs of improvement until early next spring, at the earliest.

The statistics aren’t good. Homebuilders have slowed new construction to a crawl. Existing homes for sale are sitting on the market for months and months. Housing prices in several parts of the country are either stagnant or dropping.

This is all depressing, I know. But if you aren’t planning to sell in the next five to eight years, you can relax. The residential market is a deep slump now, for sure. But real estate markets change. If you don’t have to sell any time soon, you’ll be fine. You’ll still make money on your house sale.

And if you do have to sell now? Be prepared to break even or, unfortunately, lose a bit of money. It’s unfortunate, but it is a reality. This market is a terrible one in which to sell.

Condo market continues to struggle

March 16, 2008 by Dan  
Filed under Investing

Builders today have little confidence that the market for residential condominiums will improve any time soon.

This information comes from the people who should know, the National Association of Home Builders.

The association measures builder confidence in various markets throughout the year. It’s a complicated formula, but the gist of the formula at the present time is this: Builders have little hope that the slumping condo market is going to improve significantly in the next six months. You can read about the survey here.

David Seiders, chief economist with the National Association of Home Builders, says the condo market become too “overheated” during the housing boom. Now that the housing market continues to slump, the market for condominiums has gone flat. Basically,  there are too many condominiums up for sale at the same time.

It’s even harder for sellers to move condos than it is for them to sell single-family homes. Older condos are constantly competing against the many newer units built during the housing boom. And even the newer units face intense competition from similarly newer units that are almost identical. It all comes down to price and location. Buyers are off in either category may find themselves sitting for a long time on a condo they can’t sell.

The New American Home: This is green?

February 29, 2008 by Dan  
Filed under Investing

The New American Home celebrated its 25th anniversary at the International Builders Show in Orlando earlier this month. The home, for the last 25 years, has acted as a showcase for the latest homebuilding innovations. Think of it as a test kitchen, for builders: Developers are supposed to study the New American Home and then incorporate its innovations in their own homebuilding plans.

This year, the National Association of Home Builders is making a big deal out of the fact that this year’s New American Home has been built to the standards of the association’s National Green Building Program. This means that the home uses environmentally friendly building materials, energy-efficient appliances, highly effective insulation and other energy-saving innovations.

But … the home is 6,725 square feet. Maybe I’m missing something here, but how can any house that large really be called green? The home even contains a club room with theater-quality entertainment. That’s green?

I don’t mean to pick on the New American Home. It’s designed as a show house, so it’s not necessarily a realistic residence. But I’ve seen many instances where builders proudly declare the home they’re building to be green, even though these residences include a whopping 5,000 or 6,000 square feet of living space. Maybe I’m old-fashioned, or maybe I expect too much out of green building, but to me, green doesn’t mean you can build the largest house possible as long as it has Energy Star-rated windows.

And don’t try to tell me that today’s homebuyers need that space to accommodate their busy lives. Today’s spoiled homeowners might think they need it. But who really needs 6,000-square-feet of living space?

What’s greener: A modest 1,800-square-foot house that doesn’t have a geothermal heat pump or a 6,000-square-foot one that does?

For me, it’s the 2,000-square-foot house any day.

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