“It seems like the builders don’t think they’ll have to lower prices any more. I’ve definitely noticed that foot traffic has increased since 2007 started (due to the price cuts). The quote above makes it sound like there are a lot of people looking but not necessarily buying. But then it says that things have picked up. So… what is the dealio?”
I attended the Orange County BIA Outlook Breakfast Thursday. The builders are trying to put on a happy face, and they all hope (key word, hope) that things will turn around in 2007; however, their actions do not show any confidence in a rebound. They are not hiring; in fact, the employees of these builders are worried about more layoffs, and the assembled company presidents did not offer any comforting words. They are not buying more property; in fact, they are still actively disposing of property assets when and where they can. They are squeezing their sub-contractors. If they were going to expand, they would be cultivating these relationships, not hurting them.
Basically, the builders are not taking any actions to gear up for a rebound, and if sales do not pick up, more price reductions will happen.
The dealio is that sane lending standards are going to stop many of these people from falling onto their sword.
The rest will be the ones who post real estate horror stories to the 2025 version of what we call a “blog” today.
——-
Posted by lunatic fringe on 02/17/07 at 12:31 AM
I work in the OC homebuilding industry, and the future isn’t looking rosy. Projects are getting squashed and subs are feeling the pinch. Any happy talk by the builders is just that, happy talk.
Posted by bulwark on 02/17/07 at 10:24 AM
Welcome mat my eye! More like a trap door!
Posted by Bill Jones on 02/17/07 at 10:44 PM
The confusing thing is if you look at the new home sales data the prices actually show an overall increase, but the prices of existing homes are getting hammered. If you look at Lansner’s blog you’ll see what I mean. If you subtract out the new home sales from total home sales the market shows much more of a drop. It is NOT treading water. It’s dropping.
Posted by SDrenter on 02/18/07 at 12:51 PM
You need to remember the difference between a two month pick up and a five year decline. Builder, realtors, and mortgage people jumo at any positive information. I bet you will see the same comment next February.
Posted by David on 02/18/07 at 04:07 PM
I have visited Portola Springs and there has been a lot of foot traffic the two separate days I visited. I just can’t see the builders getting the asking prices with such high Mello-Roos and HOA fees. I calculated a $628K model fees and taxes to be roughly 12K a year - ouch! I still see some price correction to come!
Posted by RayNLA on 02/18/07 at 08:37 PM
I wonder what kind of “mortgage help” the builders are giving since lending requirments has tightened?
Posted by EvaLSeraphim on 02/19/07 at 07:42 AM
Ray,
I’ve seen the builders kick in some money for interest rate buy-downs. For awhile Shea had a buy down of 3 percentage points for the first year of the loan, 2 points for the second and 1 year for the third. Some “help;” it sounds more like a “boiling frog” situation to me. If they’d offer me a 3 point buy-down on a fixed product for 15 years, I might consider it.
Posted by IrvineRenter on 02/16/07 at 09:01 PM
“It seems like the builders don’t think they’ll have to lower prices any more. I’ve definitely noticed that foot traffic has increased since 2007 started (due to the price cuts). The quote above makes it sound like there are a lot of people looking but not necessarily buying. But then it says that things have picked up. So… what is the dealio?”
I attended the Orange County BIA Outlook Breakfast Thursday. The builders are trying to put on a happy face, and they all hope (key word, hope) that things will turn around in 2007; however, their actions do not show any confidence in a rebound. They are not hiring; in fact, the employees of these builders are worried about more layoffs, and the assembled company presidents did not offer any comforting words. They are not buying more property; in fact, they are still actively disposing of property assets when and where they can. They are squeezing their sub-contractors. If they were going to expand, they would be cultivating these relationships, not hurting them.
Basically, the builders are not taking any actions to gear up for a rebound, and if sales do not pick up, more price reductions will happen.
Posted by oc_fliptrack on 02/16/07 at 04:26 PM
The dealio is that sane lending standards are going to stop many of these people from falling onto their sword.
The rest will be the ones who post real estate horror stories to the 2025 version of what we call a “blog” today.
——-
Posted by lunatic fringe on 02/17/07 at 12:31 AM
I work in the OC homebuilding industry, and the future isn’t looking rosy. Projects are getting squashed and subs are feeling the pinch. Any happy talk by the builders is just that, happy talk.
Posted by bulwark on 02/17/07 at 10:24 AM
Welcome mat my eye! More like a trap door!
Posted by Bill Jones on 02/17/07 at 10:44 PM
The confusing thing is if you look at the new home sales data the prices actually show an overall increase, but the prices of existing homes are getting hammered. If you look at Lansner’s blog you’ll see what I mean. If you subtract out the new home sales from total home sales the market shows much more of a drop. It is NOT treading water. It’s dropping.
Posted by SDrenter on 02/18/07 at 12:51 PM
You need to remember the difference between a two month pick up and a five year decline. Builder, realtors, and mortgage people jumo at any positive information. I bet you will see the same comment next February.
Posted by David on 02/18/07 at 04:07 PM
I have visited Portola Springs and there has been a lot of foot traffic the two separate days I visited. I just can’t see the builders getting the asking prices with such high Mello-Roos and HOA fees. I calculated a $628K model fees and taxes to be roughly 12K a year - ouch! I still see some price correction to come!
Posted by RayNLA on 02/18/07 at 08:37 PM
I wonder what kind of “mortgage help” the builders are giving since lending requirments has tightened?
Posted by EvaLSeraphim on 02/19/07 at 07:42 AM
Ray,
I’ve seen the builders kick in some money for interest rate buy-downs. For awhile Shea had a buy down of 3 percentage points for the first year of the loan, 2 points for the second and 1 year for the third. Some “help;” it sounds more like a “boiling frog” situation to me. If they’d offer me a 3 point buy-down on a fixed product for 15 years, I might consider it.