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JohnVosilla

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Reply with quote  #1 

Stock of the largest homebuilder in the country is down 10% today to a new low.  More discounting, more cancellations and more inventory.   Be careful competing against these large builders for this next cycle. 

 

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BB9264E12%2DEB3C%2D4572%2DB46A%2DDAECCED62EC2%7D&source=blq%2Fyhoo&dist=yhoo&siteid=yhoo


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Suzanne

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Reply with quote  #2 

John, Hi.

 

Could you explain what you mean by "be careful competing with these guys in the next cycle"?  How would a single investor get into a competition with large builders during a long term down real estate market?  Thanks!

 

Suzanne

BenJones

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Reply with quote  #3 

If you buy from one and then become a seller, you are "competing" with them, and they can discount deeper than you.

Kang

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Reply with quote  #4 

Hi Ben. Do you know these people? CRASH, Kurtis, Imlosingmyshirt and txchick? Inqiring minds want to know.

BenJones

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Reply with quote  #5 
Quote:
Originally Posted by Kang

Hi Ben. Do you know these people? CRASH, Kurtis, Imlosingmyshirt and txchick? Inqiring minds want to know.

 

I'll just say that I would not post in such a tone.  There is no useful reason for it.  Thehousingbubbleblog.com provides a romper-room, food-fighting type of atmosphere for certain personality types and age groups that doesn't transfer and is not appropriate here.  Consuming nothing but cherry picked, negative housing snippets from alien-abduction-level "news sources" can sometimes warp one's sense of reality and propriety.  

Kang

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Reply with quote  #6 

JohnVosilla

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Reply with quote  #7 

Welcome aboard Ben.  I look at this from many vantage points too. You are doing a great service in educating many as to what is going on but unfortunately many groupies over there seem to take this thing as some personal obsession.  It does seem there has been a lot of pain from those who have been reminded on a daily basis of missing this housing boom for the ages.  Now this is will be their payback and so many will probably feel pain on the other side.  Certainly what is going on with the builders will filter down and squeeze so many people over the next couple of years and it is obvious few even realize it yet.  A new set of opportunities and aventures for the astute investor.  A chance for someone just starting out to finally afford a home.  Always good and bad.  A different set of winners and losers. Only the best to you.


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John Vosilla
JohnVosilla

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Reply with quote  #8 

'Could you explain what you mean by "be careful competing with these guys in the next cycle"?  How would a single investor get into a competition with large builders during a long term down real estate market? '

 

The national builders are public companies.  They have basically turned into a Walmart type of operation in recent years on large parcels of land that they control.  Economies of scale and volume discounts on materials, lowest bids from subcontractors, allows them to build a home for so much less per sf than most people realize even with the huge rise in commodities of late.  They seem to have run into the problem lately of taking on and committing to way too many projects as in the most incredible screw up for the ages they didn't quite realize that 40% of purchasers last yr were not end users.  Thus they extrapolated that into the future and now have a big problem with projects that will flood supply in coming quarters and probably lasting a couple of years at the least.   Builders must continue building especially if they are a public company and have spend huge amounts of money on the raw land and infrastucture in creating building lots.  Meanwhile we already have a record level of vacant new homes in MLS for sale and rent in many of these fast growing overbuilt markets. The biggest problem I see is in order to move the newest product the builders will be discounting way below what folks bought new homes for in the same community or nearby comparable community 6-12 months earlier.  The ripple effect on owners looking to sell or refinance as well as the flippers/investors could be enormous.  Banks freak out when they get declines in value and lending standards tighten up.  Anyone who remembers the early 1990's knows how much it can also impact a market in a negative way.


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John Vosilla
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Reply with quote  #9 
>>It does seem there has been a lot of pain from those who have been reminded on a daily basis of missing this housing boom for the ages.

That may be the case for some people there. But many of us bubble-believers shared the happy ride up in RE with you, and just recently decided to step off the escalator. I sold in October 2005. Any large group of people (and Ben's blog is LARGE) has its share of jerks.

I find that the people on this board are pretty "with it." They know that the gravy train has parked. Some found out the hard way and had one too many flip, but that's really not so surprising. Tops and bottoms alike are both hard to call.

The trick now is to figure out when to get back in.
hessj

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Reply with quote  #10 

I saw the shirt in Tuson dude from a blog and came over.  I liked this board and enjoyed a lot of Robert's and Mike's post, thought about moving in for a while.

livinineurope

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Reply with quote  #11 

 

 

  I've been reading both boards for well over a year now.. Started with Ben Jones then heard about this one because I wanted to see how/why people were still buying and the cause of driving prices up 40% in one year in 2dnry markets.

 

Remove the vitriolic posts from either blog and you have what I think are two blogs that will save or allow people to make a lot of money in the coming years.  In the meantime I think there will be  a,lot of slow grinding RE pain for quite a while.

 

thanks to both that set up these sites.

 

PS - No one ever talks about RE in Germany.  Plenty of places to buy and rent out and more than cover your mtg..  Plus their houses usually last 3 to 4 hundred years, with much less maintenance than ours.

 

 I'm too paranoid about tax laws that i know nothing about or moving $ overseas, but I know some folks are buying over here.

 

 

JohnVosilla

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Reply with quote  #12 

'I find that the people on this board are pretty "with it." They know that the gravy train has parked. Some found out the hard way and had one too many flip, but that's really not so surprising. Tops and bottoms alike are both hard to call.'

 

I agree which is why I read the postings here a lot more closely than over there. Look at the people who have done well at RE over the years not folks who never were in the game. I too see a lot of long time RE investors that stayed in this game a little too long.  Too much of this demographic trends and 'just the cost of living in paradise' stuff was bing pumped by industry insiders a bit too much in 2005 to attempt to justify what was going on. Perhaps some will be taking a small loss on recent deals after building an empire the past 15 years. Many late to the game without the equity and capital sources probably lose it all.  Others who expanded and took on huge development deals at the wrong time and envisioned themselves as the next Trump get wiped out too just like Mr Trump did in 1991. A ton of new opportunities will develop from this as well as proven old school ways of RE investing coming back in vogue again.


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John Vosilla
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Reply with quote  #13 
>>Look at the people who have done well at RE over the years not folks who never were in the game.

I repeat myself, but a lot of us WERE in the game until the game got silly last year. That's why we became bubbleheads--we witnessed an untenable situation.
JohnVosilla

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Reply with quote  #14 

'For Sale' signs pepper Stoneybrook

Investors want out of the once red-hot Venice neighborhood.

VENICE -- US Home's master-planned community Stoneybrook at Venice was red hot when it was unveiled in late 2004.

The 900-home, family-friendly development, nestled among approximately 35 small lakes and large tracts of trees, was trying to offer a refreshing change from over-55, no kids-allowed retirement communities.

In November 2004, when the first Stoneybrook homes were sold to "lucky" lottery-winning buyers, it was standing-room-only, recalled Re/Max Realtor Greg Sheller.

Getting a Stoneybrook homesite then felt "like winning the Lotto," he said.

No more.

The day the music stopped was about eight months ago, and now some investor/owners are scrambling for a chair.

The "For Sale" and "For Rent" signs are out in force on Dancing River Drive, in the Oak Manor subdivision of Stoneybrook.

The completed neighborhoods sit amid acres and acres of upturned dirt awaiting construction of newer neighborhoods.

Many homes appear uninhabited, few cars are evident and the traffic is light.

The investors, now would-be flippers, are expressing their confidence and staying power with a blizzard of for sale signs at home after home.

Flippers are increasingly being forced into becoming reluctant landlords.

The rental market is where the action is now, says Re/Max Realtor Chris Tritschler. So many flippers got pinched in a situation where they could not sell profitably, or at all, for the time being.

Meanwhile the mortgage payments come due month after month.

A half dozen for-sale-by-owner signs are visible in a short stretch of Dancing River Drive, as are another half dozen or so offered by several Re/Max and Coldwell Banker agents.

There are issues with Stoneybrook, Realtors say.

One is that Miami-based Lennar/US Home has been aggressively discounting sales prices in many of its developments, including Stoneybrook.

A property that US Home sold last year for $440,000 or substantially more can now be bought for about $390,000.

The discounting is the worst thing that the developer can do, homeowners and Realtors maintain, because it creates a lack of confidence in the project.

The development has taken longer than envisioned, and as a result, it has put people on the wrong side of the market, some say.

Rob Allegra, US Home division president in the Southwest Florida market, denies there has been any delay.

Only about 250 of the planned 900 homes are built so far, and on a recent weekday afternoon, the Lennar and US Home welcome centers were quiet.

A visitor to a Lennar sales center on Puma Path was greeted by a note on the unlocked model door "back in 15 minutes, make yourself comfortable."

During the wait, visitors are greeted with tomb-like silence -- no phones ringing, no foot traffic, no buzz at all.

Across Puma Path in the US Home sales center, things were a bit more lively.

A saleswoman, Lisa Van Dillen, was in the model home, but referred inquiries to area sales manager Paul Brunette.

"US Home will keep the sales pace, keep the start pace and keep construction going," Allegra said, adding that he thinks that is the best thing for homeowners.

The "10-20 percent price cuts" are simply an intelligent and timely reaction to market predictions, he said.

Sales have been chugging along at about 13 each month, and US Home continues to add as many as 16 new homes each month, Allegra said.

If Lennar's results are added in, the picture looks even better because the sister companies operate as separate profit centers.

Homeowners who would like to sell are upset to have to compete with US Home, but Allegra counters that US Homes discouraged flippers by requesting that all owners sign agreements "indicating their willingness" not to sell for at least one year.

Jennifer Roemer, a Re/Max Properties agent who has two homes listed on Dancing River Drive, says her sellers would be happy to get out at $359,000 for homes they bought for about $315,000 in the first auction in 2004.

Roemer remembers the initial auction for Stoneybrook sites, saying that US Home "knew they were jam-packed with investors."

"My people are extremely upset," says Roemer, noting that "nothing has turned over" other than what US Home is selling.

"I have not had anything else like Stoneybrook."

Kim and Chris Tritschler, husband-and-wife Re/Max Effort agents, represent two Stoneybrook homeowners who are looking to rent so they can pay their mortgages.

"A homeowner is in no position to compete with a developer" with hundreds of properties to sell, Chris Tritschler said.

http://www.heraldtribune.com/apps/pbcs.dll/article?AID=/20060529/BUSINESS/605290473/-1/GOOGLE01

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John Vosilla
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