Beware the real estate market

I saw something this morning that I've never seen before.

I was driving across town to visit Walmart, and at the edge of town
I saw a sign that said "New homes 10% off". Over the years, I've
seen a lot of new housing projects advertising but I've never seen one
come out and put up a sign that they would take less.

Curious, I turned around and followed the signs. At the outskirts of
town just beyond an older residential area, there was what looked to
be about 20 acres cleared and maybe 20 houses sitting on small lots of
about 1/4 acre. Less than half the houses seemed occupied and there
was enough cleared land for 30 or 40 more. There was no sign of
construction. At all. No real estate sales force was seen. The
unsold houses almost looked abandoned.

The sign said "New homes $107,000 and up".

The houses were small but very neat. About 1,200 to 1,400 square feet
with wood siding.

10% off a 107K house is $96,300. Building cost in my area (according
to my insurance company) is $82 a square foot. If the cheapest house
is over 1,200 square feet (which they are) then the builder isn't making anything. And is probably losing on the land.

Folks, this is bad news. I live in what we would call "Middle
America". Not rich, but a long way from poor. But whoever owns
the project is in a bad situation. And if he is, more people in my
area will be soon.

I live in Georgia in a town of between 80K and 100K.

Thought I'd pass it along.

construction debt so that all the money he made in the good years will tide him over until the GOP has been out of power for at least a decade, while he does renovation on the side.

That's why he's willing to take less. Don't forget, also, that the $82/square foot price is retail. Chances are he's got considerably less sunk into those finished houses.

This could be a good deal for a family that's looking for shelter, not an investment, who have a significant down payment to make and who have reasonably secure jobs. Yes, they'll lose that down payment as prices slide, but they'll still be building equity as the loan is paid down. Plus, they'll have a roof over their heads.

but they aren't spec houses any more. They are already contracted to someone. The spec house market has dried up. Our pretreat business is way way down, as is our existing construction termite treatment. Only thing keeping things going here in Arkansas is an influx of folks from Nevada and California-they are retirees who see they can get more for their money here than out west. One guy said they moved because they could no longer afford to pay the property taxes where they came from.

It was as if a giant bird came down and swallowed up all the carpenters.

Difficult to get any kind of newly constructed home for less than $100k.

We've not even seen the tip of this shit-storm. If I were looking for a home, I'd be torn between old and solid construction and innovative energy efficient new construction. If I had to work on a modest budget, I'd definitely go for something built before the 70's because I'd be fairly certain it was built with good materials and by craftsmen that were skilled and took pride in their work. For those of you in the trades, please don't consider this as being a negative view of your skills or commitment to doing your best. I've been shoulder to shoulder with you and your brothers my entire working life. Unfortunately, decisions aren't made by the people who do the work, but by those who finance the operations.

If I had the income and assets to build a truly green home, I'd definitely go with that. The way things are today, you'd be hard pressed to get someone to build you something for less than $500K. I expect within the next year those $500K homes will be selling for half that price.

Here is a table that shows the major markets dropping 24 to 40% in the next year.

These are houses valued at more than twice the median.

http://money.cnn.com/magazines/fortune/price_rent_ratios/

Prices may come down, but new construction is evaporating, too. For anyone that wants a newly built houe, it's going to be hard to find many of them coming on the market.

Hell, if the market swings even further towards buyers, you could probably wait until it's in the upper 80K range or even lower.

That was 1977 and in OK. It will be back there soon.

In the mid 1990s on the Mississippi coast where I live, you could've bought a home of comparable size for between 40K to 65K. Now, I think the prices are closer to the 100K range, but I suspect that will be partially reversed as the housing market continues its slow collapse.

my ex got the house. God bless the poor chump who lured her away.

K Hovanian sp? homes is enraging other homeowners who spent 4-5 hundred K , their homes are now worth 100K less, also a town net to me has stopped building the 400K homes and now wants to finish their project with 200K homes, infuriating the new homeowners. Prices are plummeting around here

It all leveled out eventually if you kept your house long enough after demand caught up with supply.

But everyone was upset when the homes similar to theirs in the same neighborhood were being sold at big discounts a year later.

You just have to ride it out.

If people don't have water, this can only be a negative toward real estate appreciation.

the small east Tennessee town which has run out of water, and they interviewed one woman in Georgia who said if it keeps up, they will need to move. I know Georgia hasn't completely run out of water, I've seen reports ranging from 90-180 days of reserves, however I would imagine the psychological impact would be a drag especially for people considering moving there from out of state.

Man, I live in the wrong area. I'm outside Baltimore, MD and we bought a 1950's rancher that needed a LOT of work for $225k back in 2003. But comparable homes are selling in the $350k range now so I guess it's OK.

Difference between city and rural I guess.

At this site, you can browse almost any town-city in the USA -- and most have undated median incomes and median house values. Most are updated through 2005. It's amazing how the median varies throughout the ocuntry.

http://www.city-data.com/

I'd met him a couple of months ago and we exchanged numbers when I told him that I would call him about an estimate for a small job that needs done-NEXT spring.

Well, he's looking for work NOW.

I told him I was sorry, but I would call him as soon as I could in the early spring. I felt really sorry for him when I hung up because it's obvious he needs the work plus he's a really nice guy. :(