Stopping construction

[demi]

I have attached a link to an article in today's Sacramento Bee....basically a builder has shut down a development due to slow sales.  I read it earlier today, don't think they are actually bankrupt or anything...just can't reduce the prices anymore.  Its sort of what I was guessing in this area...they can only reduce prices so much, then they will probably just hold out, unless its a development almost finished.  I hope the house I just bought doesn't fall prey, they are about 1/2 done in the development, and have reduced prices substantially.  I hope the link works, I think you may have to join the "Press Club" to be able to read it.

http://www.sacbee.com/142/story/479981.html

[Anonymous]

Hi demi. Thanks for the article. It sent chills down my spine, because it reminded me of the real estate crash of the mid 80's. That's how it started. here in Texas.

[Anonymous]

Hi demi. I am in Florida right now & on the news was a large home builder that filed for bankrup!!!!!

I think that Fl. and Ca. are the first to get hit hard

[Anonymous]

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@Anonymous wrote:
Hi demi. Thanks for the article. It sent chills down my spine, because it reminded me of the real estate crash of the mid 80's. That's how it started. here in Texas.

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I'm kind of glad to see this happening. It's bitter medicine, but the only way this market is going to emerge from the slump is when the write-downs begin in earnest. The bottom line is that housing is not repeat not some sort of magic font of wealth that naturally gains 8 to 12% in value every year forever. Period, end of story. So just because a builder began a project in 2002 when the planned houses were worth $250,000 a pop does not mean the Constitution, God, Jehovah, Allah or Buddha guarantees they are worth $400,000 today. Homebuilders and banks alike are going to have to leave La-La Land and return to reality. This is the first, albeit painful step away from entitlement mentality and back to reality.

[Anonymous]

Oh, N.W.M. I agree. The greed of the developers, and easy money, cause the gross overbuilding, and speculation.

To this day, we still have totally vacant shopping centers because of the overbuilding that went on in the mid 80's.

Looks like the cycle is repeating itself.

I'm not glad to see it happening. A lot of people not associated with it are going to get hurt. What I am disappointed in, is the ease with which bankers throw money at the developers and speculators, and speculative land and building deals that make no sense at all.

I remember The Resolution Trust Corporation, that had to buy entire bad debt portfolios from banks and S&L's to keep the financial institutions afloat.

Are we looking at R.T.C. II in the making?

Message Edited by Sylviatob on 11-11-2007 03:04 PM

[demi]

I don't think we can also leave out the constant search for property taxes and retail sales tax by our local government as a factor as well.  Working on this side of the industry, its amazing to see how much the almighty search of the tax dollar is a factor in the massive amounts of development that have occurred in the Sacramento region.  In California, its pretty much a given that residential does not pay for itself in the long run, so all of the communities are in major competition for retail sales, yet housing developements are also rampent, because, despite what it seems, its a relatively affordable area for California (and getting more so by the day !).