‘Land As A Liability’
The Arizona Republic reports on land sales. “A year ago, builders couldn’t buy land fast enough, no matter how much it cost. Now, Valley land has lost some of its luster with home builders in the rapidly slowing housing industry, even when the property is in one of the northeast Valley’s most desirable areas.”
“The Arizona State Land Department is calling off this week’s auctions of two prime pieces of residential land. The auctions weren’t worth the agency’s time because no builders or investors are willing to pay the appraised prices of $150 million for a parcel of more than 325 acres in Desert Ridge and $130 million for 1,276 acres in Fountain Hills.”
“Potential bidders made it clear they can’t pay what the properties are currently appraised for because they would have to charge more for houses than buyers are willing to pay.”
“When the current Desert Ridge site first went on the auction block in August, it didn’t draw a single bid. The state is in the process of having the sites reappraised. It could be next year before either site goes back on the market.”
“So far this year, home building in metro Phoenix is down 24 percent from last year’s record pace. Housing analyst RL Brown recently said new home permits could fall as low as 38,000 Valley-wide this year, down 40 percent from last year.”
“Last year’s investor-buying frenzy prompted builders to stockpile huge parcels for future growth. But this year, many of those speculators walked away from deals as the housing market slowed. Valley home builders are now offering tens of thousands of dollars in incentives to try to sell those houses, as well as others built for people who can’t sell their existing homes.”
“‘There’s a correction going on in the Valley’s housing market now, and I don’t think these parcels or many others should be auctioned this year,’ said land broker Nate Nathan.”
“‘It’s probably about as poor a time to bring a parcel of residential land as anyone could pick,’ said RL Brown. The beneficiaries of the downturn are buyers, Brown said.”
“‘It’ll give regular people an opportunity to buy houses for less money than they have seen in the last two years,’ he said.”
The Las Vegas Business Press. “Softening home sales are causing some publicly traded builders to divest land holdings to better improve their balance sheets and quarterly earnings. The consequences could be significant for the Las Vegas real estate market.”
“Nearly all of the valley’s top 20 home builders are now listed on the New York Stock Exchange. As such, many critical decisions for the Las Vegas market are being made out of state by corporate officers eager to appease shareholders. ‘National builders are walking away from land deposits,’ said Guyan Long, vice president of commercial marketing with TitleOne.”
“Builders have been under mounting pressure from analysts and investors to better their financial outlook in response to fewer home orders, rising mortgage rates and growing inventory.”
“It could be troublesome for the Las Vegas housing market. ‘Nationally, we have heard of some home builders divesting land holdings in response to softening market conditions,’ said Brian Gordon, principal with a Las Vegas-based economic research firm. ‘They’re now focusing more on homebuilding profitability as opposed to land values.’”
“Developers have had trouble finding affordable dirt in recent years due to the premium prices paid by Wall Street-backed builders. However, a flood of land deluging the market could also dilute property values.”
“‘Home builders are divesting their holdings or walking away from deposits because they recognize the land is not going to be able to put into production as soon as expected,’ said Daniel Doherty, president of the Society of Industrial & Office Realtors’ Nevada chapter. ‘Wall Street has been beating these guys up, prompting them to take it off their balance sheet.’”
“‘Wall Street sees [land] as a liability,’ said Long. ‘The question is how long are they going to carry it on the books until they build on it or sell it?’”
I remember telling reporters last summer (2005) that land is costly to hold through a slump. They listened but it was clear they couldn’t imagine it.
‘Scottsdale-based Meritage Homes’ chief executive, Steve Hilton, warned that the company couldn’t maintain its momentum. Last week he said home builders continue to offer bigger incentives trying to clear out existing inventory.’
‘Once 30-story condo towers loom over Tempe, will visitors see the place for its history or for its modern glass and steel buildings? And what if these massive condo towers open their doors to a public that decides Arizona living should be characterized by big yards and a pool — not a high-rise?’
are the Tempe towers still in development? The Chandler “Elevation Chandler” hi-rise hotel/condo construction has stopped since last May. Supposedly the developer has to file required paperwork this week w/the city of Chandler … am waiting to hear what happens.
Since construction stopped, the site has a chain link fence around it but no activity … the crane is even gone. For now, it’s a dinosaur-skeleton eyesore on the Chandler horizon that serves as a reminder of the peak of the housing bubble.
LOL Just wait and watch the drops of 50%.
Maybe the HBs can buy enough votes to get land declared a depreciable asset.
“The auctions weren’t worth the agency’s time because no builders or investors are willing to pay the appraised prices of $150 million for a parcel of more than 325 acres in Desert Ridge and $130 million for 1,276 acres in Fountain Hills.”
Could this be due to fraudulent land appraisals — similar to the reluctance of prospective homebuyers to purchase homes at fraudulently appraised asking prices?
Not “fraudulent”, just “subjective”
Or in the CPA industry - “creative”
There’s a whole lot less room for fraudulence in commercial transactions because the buyer must make it pencil out and doesn’t rely on third party appraisals to “get the loan”. Appraisal fraud would be better termed principle agent problems because a SFH appraiser has no interest in getting a fair price (which isn’t that hard) the buyer loves the home and wants’ to buy it and the lender believes that the buyer will continue to pay for the home regardless of circumstances (else they would drastically change the compensation structure of either brokers or appraisers).
I thought fraudulence was what you took Beano for.
Almost $500,000 per acre for desert? You can buy land in many states which have trees, grass and even waterfront for far less then this. At least if you buy swampland in Florida you get water and things that grow.
Watch out here! The government doesn’t let you build on “wetland” (remember when we used to call these things “swamps” and they were a bad thing.)
No, I don’t. The wetlands/marshes (which is what we call them) of NC are not only beautiful, they keep my family’s house from being damaged by hurricane related tidal-surge.
A wetland is not a bad thing. It is necessary to protect inland areas and higher ground from flood or hurricane. What I remember was a time where ignorance was held up as wisdom. Seems we’re right back there these days.
Yes I do remember them being called swamps. No matter how you spin it, they are still swamps and some are “ugly”.
I didn’t run the math to get this number, but if you’re talking $500K per acre, you can buy direct waterfront property in many, many places in the country and direct oceanfront in some.
Hey wait a god dam minute here..Appraisers look @ the past and can not predict the future.. Appraising is more of an art form then an exact science. I would bet dollars to donuts that builders were purchasing those parcels for $500,000 thus creating the comparable land sale. The question now is what builder will create the new comp… I would hate to get this assignment (as a matter of fact I would turn it down) because it is likley to perform the appraisal correctly you should depreciate the old comparables.
Once you put depreciation on an appraisal would might as well wait for the phone to ring because you will be getting a call from someone…
This assignment is very difficult an I would suspect that a trainee (other wise known as Skippy or Vic) is not doing it.. I would think that an experienced well seasoned professional completed it but the market is in free fall so appraisals are good for a short time.. maybe a month or two tops….
Another issue for AZ is that the land they’re selling is state trust land. The money goes to the state and like all governments I’m sure they’ve already spent the money that they assumed they would get for the land. Having no bidders is going to put a big hole in the AZ state budget me thinks.
Has anyone seen any reporting on people who bought land lots during this boom with the intention to flip? I know of a few people who have bought land in Florida and the Carolinas with no intention of ever building upon the land. To make matters worse, they financed their purchases. How the banks could lend the money for this is beyond me, but they did. That’s awfully risky as you can’t exactly rent that land out if you are unable to find a buyer, and in a downturn it would seem especially hard to find a buyer for an empty lot of land when there is an exploding inventory of existing homes for sale as well as new homes that come laden with incentives. Somebody who financed a land lot with the intention of flipping, now there is a true example of an FB which I think would make for some very interesting reporting.
Banks generally don’t finance small investors for lots outside of developments for anything other than very short-term interest only loans, with payment-in-full due in 2 years typically.
However, in central florida, there are a number of dealers selling lots that they themselves fincance to suckers found on eBay and other places.
It works like this:
You buy 50 acres of swampland for 2000/acre (or less). You name it something like “Cyprus Hill Higlands” and sell it off, an acre at a time, for $10K, and you handle the financing.
It doesn’t matter if the buyers never pay off the loan! If they stop paying, they default, lose all their money and you take your land back and keep the money.
I know several people in Central florida who bought land like this–land you can’t possibly build on–hoping to get-rich-quick.
Yes, banks generally don’t finance single land lots that are not part of a development. But for lots within developments such as golf course developments the banks have been providing financing and many of these golf course lots in areas like So Florida have been sold to flippers. Even though it’s within an existing development, it is still a land lot that when purchased by a flipper isn’t having anything built on it and is just sitting vacant waiting to be sold.
One of the girls I play golf with bought a lot in Phoenix with an I/O only loan and plans to sell it in two years before the load adjusts. I don’t know what she paid but, it was pretty close to the top of the market here.
That’s going to leave a mark
How low will the 10 year note go? Is there any chance that with declinging interest rates the punch bowl will get spiked again or spiked enough to keep home prices from declining as much as we all think?
It didn’t work out that way in Japan during the 1990s slump, but I realize this is the USA…
I think the huge ocean liner that is the housing market has turned. It would take an awful lot for it to turn again at this point. I don’t think declining rates could turn this thing. They could ease the blow somewhat on the people with loan resets, allowing them to refi to a decent fixed rate. But the momentum will be too strong for lower rates to be able to create any renewed demand.
LIBOR based rates and other shorter duration rates are still near their highs. These low rates are what drove the market up. No “spike” for the punchbowl until these rates start to drop. IMO
Observer,
I don’t know and I certainly don’t think there is much the FED or anyone else can do at this point. Even raising the cap gains exemption or making it tax free after just 12 months would help?
New cars, vacations and cash haven’t helped. We just had our hands on all the free money you could shake a stick at! The consumer needs to heal. There is no one left that isn’t already so over extended it isn’t funny. Even lowering prices hasn’t helped much if at all. Even if every one that’s already listed lowered their asking prices to 2000 levels I really don’t feel it would re-ignite sales let alone re-inflate the bubble. We’re all just so tapped out. The banks might be able to extend more credit to us but for most we’re already carrying more debt than we can handle now. IMHO.
DinOR, I couldn’t agree more. This country is tapped out. How can anyone say things are running smooth when the average savings is negative and the economy is 67% consumer driven. The reality is that even those who do own their outright are probably older and may be suffering from a cash shortage, “land rich, cash poor.” Even in those cases where they aren’t they probably aren’t a large enough group to carry the day economically. My father never carried any debt as he was a child of the depression. On top of that the guy never bought anything that couldn’t be eaten, worn, used to repair something, was a gift, or the daily newspaper. The amount of debt in this country has to be brought down. Someone will have to pay this bill. You can only prolong th einevitable for so long. Even if rates go down that won’t help. Wow, now I can refi my 8% ARM and 10% HELOC at say 4%. That’s nice, but you still overpaid by about 200K for that house and it is losing more paper equity everyday. The only way you win is to stay there for a long time or catch the next bubble in about 10-15 years.
I’ll bet your dad was a happy man too. One good thing about the coming economic depression is that people will learn, on a massive scale, to decouple their self worth from their material posessions. That will be a spiritual cleansing that will improve the lives of millions of people. Even though they will be living in cardboard shacks under interstate bridges and the people with homes will be under constant assualt by heavily armed thieves who will shoot your two year old to get her clothes. Look at Argentina for an example of America in 2012.
Sad to say George I think you may be closer to the truth than you think. Things are going to take a turn for the worse in this country soon. Business as usual is not going to keep on truckin’ like it has. People and companies can lie about their debts for so long before the whole thing blows up in their faces and their are no more pyramid games to be played, except for social security as TXChick has mentioned before (I think, forgive me if I am worng, I thought it was you). What is happening all around is as just like she said, people are beginning to think like criminals and not the ones we commonly think of like Al Capone, per se. People are thinking like Michael Milkin and his ilk since it seems they get away with the millions and in some cases the billions.
To include the ’small fry’ who buy condos with cash kickbacks from the developer (as long as they use the developer’s financier of choice for the mortgage).
This entire country is going down - and it is sad to say, but we deserve to.
I don’t know about the Armageddon predictions. The one thing going for the government is that people are sheep. If they are told that the dollar is legal tender for all debts public and private they believe it. What I think will happen is that the government will try to slowly but gradually add monetary inflation to the mix. Just enough so that standards of living decline slowly enough to prevent the revolution. Think of Hurrican Katrina and the $2000 debit cards that were passed out. Who paid for those cards? No one did. The government just issued them. If things get real bad I would expect all sorts of creative ways to get a little extra cash in people’s pockets - just enough to keep them dependent and keep them in line.
With 69% homeownership currently in the US, aren’t such predictions too dire, especially for those who bought before 2003? What percentage, I don’t know. How often do Americans move nowadays on average?
Sadly, even those home-owers aren’t “home free”….. A shudderingly large proportion, watching their homes escalate in paper value, couldn’t resist HELOCs for any little…or big…thing they’d never had a chance of having before…. Anyone who bought into the “real estate always goes up” belief was ripe to be encouraged to mortgage their entire future for a sparkly, if unstable, present….. Now the bill comes due.
Yeah I think the predictions are too dire, if you only include real estate. If you also include the medicare crisis coming up, the fact that most 45 to 54 year olds have less than $50,000 savings, the fact that 100 million Muslims would leap at the chance to strap plastique and nails to their bellies and take out 5 to ten innocents anywhere that has gone past the horse and buggy stage, the fact that we’ve had a negative savings rate in the U.S. in 2005 and most or all of this year so far, and the fact that college students are more and more enrolled in remedial programs in the U.S. All those spell doom for America when you combine them all, and tie them in a nice pretty ribbon.
This is OT but I think what the 100 million Muslims want is for us to get the hell out of their countries so they can live in the 10th Century and keep their women wearing head-to-toe black sacks or whatever. Once the oil is gone, which it will be in 20-30 years or so, those countries are going to collapse and no one will give a damn in the West - except for European countries who can expect a wave of Mulsim illegal immigrants swarming into their countries.
Whenever I see or hear a media report saying that consumer spending accounts for two-thirds of American economic activity, I ask, “Why?”
It’s called debt saturation.
“‘There’s a correction going on in the Valley’s housing market now, and I don’t think these parcels or many others should be auctioned this year,’ said land broker Nate Nathan.”
What’s the choice? Rush to the exits and sell early, or hold on to the falling knife all the way down to pre-bubble price levels? I know what I would do…
Sadly (for them), your typical FB does not think like Getstucco. S/he will hold onto that parcel for dear life, maxxing out HELOC & CCs in a vain attempt to avoid the inevitable, and will only make his/her situation infinitely worse as a result. Call it mental accounting, human nature, etc.
…and then just sit and wait for the guv’ment to bail ‘em out (which they probably will!)
Not AZ but wanted to make sure the California hordes here see this one!
http://www.latimes.com/classified/realestate/news/la-re-lew24sep24,0,6602239.story?coll=la-class-realestate-news
HA! “Work their magic”, indeed. Harry Potter has graduated from Hogwarts and is now selling overpriced homes in L.A. Wave your wand, click your ruby slippers, and POOF!. It’s sold.
Cream rises to the top??? So does sludge.
“Full-serve [brokers] who provide more services and have more tools to sell their listings can justify 6% and 7% professional fees,” says Zeno Weir of Re/Max Gulf Properties in Pensacola, Fla.
…who have more Fools ahem, excuse me, I mean tools to sell…
The thing that makes me laugh about it is with the market puking, instead of cutting their fees to help make deals happen, they are trying to use it as an excuse to RAISE commissions!
No chance - there is now less to go around - it’s making the market more not less cutthroat - meaning dropping fees - too many RE agents will undercut each other as they all need the paycheck from the few greater fools left out there buying.
RE agents are starting to focus on buyers not sellers - 2 years ago you had to fight for listings - as if you got a listing it’d sell within days - now they have to fight for buyers - listings are worthless compared to a buyer.
Following that plan of action will put a Agent one step closer to the food lines some are so fond of speaking about. That’s why these rebate buyers agents and discount brokers don’t last. You cannot last in the real estate business like that. Up or down market. It’s time tested
quality salesmanship?! I know how to get the house sold: lower the price. Nothing ‘quality’ about that - just plain old common sense. The GALL of these people is astounding.
Well, hate to say I told you so…. But I told you so. As the market gets worse and the prices drop and sellers get desperate the rate is going to get higher and higher and sellers are going to pay it. 8-10% will probably be the norm. Supply and demand at it’s best.
LOL that comment oughta stir up a hornet’s nest.
OK, I really wished you hadn’t shared that. My serinity is officially toast. I’m caught between vomiting and hurling my laptop through the office window. Serinity now….serinity now……serinity now…
Serenity, damn-it!!……see how pissed I am? I can’t even spell!
ARE YOU ALL ALLOWED TO POST ON BLOGS AT WORK? I am interested in hearing the policicies on this in your offices.
Since I own the biz, I’m not qualified to answer your question.
“policicies” = “policing policies”? -
“ARE YOU ALL ALLOWED TO POST ON BLOGS AT WORK?”
Sure I am (during my lunch hour or before/after work). However, I don’t work for a real estate broker or a mortgage broker or an appraiser. If I did, I probably would forego the opportunity.
Moron of the year award goes to:
“”Matt Jones of Favorite Agent.com, a growing franchise based in Fayetteville, N.C., has a different take on higher commissions. He advocates increasing not only the agent’s cut but also the price, so it covers the higher fee — and then some. “Consumers care what they walk away with, not how much you charge,” he says.”"
Oh yes, lets increase the price on houses that aren’t selling ! Consumers don’t care, they’re just not buying now because its fall ! PLEASE charge me more !
Funny how this 20% rise in commissions is so strikingly close to the 20% drop in sales volume.
“Art Houston of the Keller Williams Realty Group in Royersford, Pa., agrees. Commissions “must rise because the changing times require the increased skills and services that are compensated by increased commissions.”
What a bunch of freaking morans… increased skills and services like WHAT… Honey stop shopping at Nordies on weekdays and sell the Benz …
They have to learn to type on keyboards, you know, it’s all the new technology.
My pet peeve is the linear nature of real estate commissions. IMHO, they should be variable and a function of the ratio of the sales price to the listing price.
Let’s take a simple example: $100,000 listing with a 6% commission. If the house sells for $95,000, the real estate agent still gets 6% of the sales price or $5700. In this example, the seller reduces the price by $5,000, but the agent only reduces his fee by $300.
I understand that most residential real estate agents are mathematically challenged, but I’d like to see a more equitable reduction if fees if they’re unable to deliver the price they listed the house, and at the same time reward a good sales person for delivering a ready, willing, and able buyer at or near the listing price.
Now let’s add some complexity to the simple example above - let’s tranche the commission structure -
4.5% of the first 80% of the listing price, ($3600)
5.5% of the next 81-90% of the listing price, ($550 + $3600 = $4150 or 4.6% of $90k)
6.5% of 91-95% of the listing price, ($325 + $4150 = $4475 or 4.71% of $95k)
35% of the last 5% of the listing price. ($1750 + $4475 = $6,225 or 6.225% of full $100k sales price).
Anything in excess of the listing price gets compensated at 6% to keep things kosher.
Net result? You separate the wheat from the chaff. A good agent will price the property correctly and share more equitably in price reductions.
I understand that this has a snowball’s chance in hell of coming to pass, but I thought I’d post it to see if the idea draws any comments here.
Too complicated. Requires basic math skills in addition to typing skills mentioned above.
“‘Wall Street sees [land] as a liability,’ said Long. ‘The question is how long are they going to carry it on the books until they build on it or sell it?’”
The question is how long can they carry cheap dirt on the books until they have to reflect its new (lower) market value? I don’t see how either building into a purchase market that has fallen off a cliff or selling into a land market that has crashed can remedy this eventual problem…
The auctions weren’t worth the agency’s time because no builders or investors are willing to pay the appraised prices of $150 million for a parcel of more than 325 acres in Desert Ridge and $130 million for 1,276 acres in Fountain Hills.
I don’t understand this. They want nearly a half a million US$ per acre? I know it’s close to California but dang, land here goes for a few thou an acre. What gives? Isn’t AZ bigger than OK?
Prettier too. Much prettier.
Whatever, you better get an eyefull for half a mil. an acre.
Remember the HBs’ book values are in large part based on the value of the land they own/have under option. All the land regardless of when or for how much is considered worth what the last piece was purchased for. WHEN not if they write down those assets their price to book ratio is gonna double or triple. What they are waiting for is next spring as they book sales of existing projects. Stick with me. This means with no new land purchase/options and/or subcontractor retainer payments they’ll be massively cash positive. That’s when they’ll book both the reduced assets and simultaneous cash positions.
After that they start bleeding but by then the execs will be divested and they’ll have lined up private financing to take the HBs private at a deep discount where as private companies they won’t have to talk about their implosions.
Robert Cote posts ” Remember the HBs’ book values are in large part based on the value of the land they own/have under option”
Do you know if they must pay the property taxes, while the land is under “option?”
Nope. Options are just that, an option to buy at a set price within an agreed timeframe. Sell the option, walk away, exercise.
No, not until title changes hands. The option would be the right to buy at a set price. Until they exercise the option, pay and take title, they wouldnt be the owner and therefore not pay taxes.
And the land is (I believe) largely state trust land, so right now there is no property tax on it. I don’t think the state pays property tax to itself.
Robert,
I think your prediction is right on. Probably why the HBs have been rallying lately. They all anticipate being bought out by private investors. Definitely been leaning this way since I can’t figure out any other reason for their rally on such horrible news.
Question about the revised lending standards -
Is there any mention of the zero down / zero move in loans (103% loans) in the prposed lending standards? What about the FHA gift program? I know these programs have high default rates. Are there any thoughts on changing these programs?
I know the OFHEO is looking at them, but havent seen the final set of documented standards.
OFHEO doesn’t look at FHA. They look at Fannie and Freddie. Nor do they look at lending standards.
I don’t think there’s any mention of zero down beyond the general “look at your risk factors” stuff that’s always in every guidance. The proposed guidance is focused on disclosure and payment to income standards (qualify at the fully indexed payment, not the initial payment type stuff). As far as the FHA gift programs go, HUD has punted to IRS which promised to end them back in May, but hasn’t done anything yet. see http://www.hud.gov/offices/hsg/sfh/np/irstatus.cfm
FHA reform legislation would let FHA go to 103 for a higher premium, obviating the need for the “gift” “non-profits” but that legislation is stalled in the Senate (for now).
Former HB mayor gets prison and fines for RE scams.
Illegal condo conversions.
http://www.latimes.com/news/local/la-me-houchen26sep26,0,3522853.story?coll=la-home-local
update on dade county (miami) sales and inventory:
September is by far shaping up to be the slowest month by far…
506 condos have sold
486 houses have sold
inventory = 92,370
http://www.housingtracker.net/askingprices/metro/Florida/Miami-FortLauderdale-MiamiBeach/
assuming there will be 50 more sales this month ..well you do the math ….
88 MONTHS OF SUPPLY !!!!! LOL!!!!
Looks like they need someone with expertise like Matt at FavoriteAgent.com to find some buyers and help them to move some of that supply there.
Well, if not him, then Suzanne.
According to the site, the 92,370 isn’t just Dade, it’s also Broward and Palm Beach. You’re not saying there’s only around 1,100 sales in all three counties so far in September, are you?
88 months? Double lucky!
Ok, I saw the post noting that this is a three county inventory. IIRC palm beach had ~655 sales, I have no clue on Broward’s sales…
But I can’t imagine > 3,000 sales or a 30+ month inventory.
Yikes! Imagine how desperate sellers are going to be in 3 years…
And it doesn’t include new build unsold homes/condos! (Or does it?)
Any one from SOcal heard the latest mortgage ad on KNX1070
ONLY $63 for $300000 loan. Less than a cellphone bill…..
Posted “Any one from SOcal heard the latest mortgage ad on KNX1070
ONLY $63 for $300000 loan. Less than a cellphone bill….. ”
Hey! I am from So Cal….. write me up. Can I use “stated income” because I live a little rough. You know I gott’s to wear a football helment when I sleep soz I don’t gits kicked it the head too much at night. I could cut back on the Thunderbird and make that 63 buck ez…. I am good as gold for it.
Hey, even with no interest, it would still take almost 400 years to payoff. Great, I’ll leave it to my great-great-great-great-great-great grandkids to payoff.
I saw one yesterday in the local pennysaver, get this, 0.25% on something like that 300K you mentioned. Of course, there was an asterisk after it and you would need a atomic microscope to read the fine print beneath the rate listed.
desi,
Yes, I’ve heard about that one. I believe they claim it’s a fixed rate as well (???). It could only be a hybrid/teaser rate mortgage, but it would appear lending standards are not tightening much at all.
I work on Wall Street, and I’m pretty sure that we don’t see land as a liability. That’s why it goes on the asset side of the balance sheet. Of course, the owner of land must pay taxes, and has the risk of being a PRP as defined by CERCLA, but for the vast majority of parcels, once the land is owned carrying it is no big deal unless tax is greater than appreciation.
People use business terms all the time without knowing what they mean. It’s frustrating.
It goes on the balance sheet as an asset for the amount of purchase. It is actually a liability unless you are receiving income off of it. Especially if you borrowed to aquire it.
So tomorrow morning Durable Goods and New Home Sales stats are released. I’ve already placed my bet that both will rattle the markets.
in the same way that the existing sales report rattled the markets today ?
Yes, HB stocks should rise another 5% on declining sales yet again! Yipeee!
existing homes came in at 6.30 million prior was 6.33M that wasn’t enough of a drop to do much. I think durable goods will have more of an impact. Oil inventories are also out. I think all will point to consumers pulling back. It will be interesting to see if incentives on new homes will have much impact. I guess I will find out tomorrow.