Spec Housing “Really A Gamble Right Now”
The Greenwich Time reports from Connecticut. “After years of frenetic activity, builders are starting to show signs of restraint even in Greenwich. ‘I’ve actually held off on pursuing new deals just to get a clearer picture of what’s going on longer than the next six months,’ Greenwich developer James Higgins said.”
“There are enough signs making institutions such as banks wary of the market, said Richard Muskus Jr., a senior VP at Greenwich Bank and Trust Co. Because some builders have not been able to sell their houses banks have become more careful about how many more new loans they will give, he said.”
“‘The lending practices have absolutely changed for us,’ Muskus said. ‘We are examining potential construction loans a little bit harder than we usually do. And this is pressure coming from government examiners and auditors and things like that.’”
“‘I’d shy away from spec housing right now,’ said Greenwich developer David Dall. ‘It’s really a gamble right now.’”
“Some real estate agents, such as Ali Granmayeh, a former appraiser who tracks sales history carefully, said he sees some vulnerability in the $3 million-plus listings. ‘There are too many houses in the market, 44 percent of the inventory is over 3 million,’ Granmayeh said. ‘The customers are scarce. It’s a very scary market for us.’”
The Eagle Tribune from Massachusetts. “After years of strong sales at high prices, developers are facing their first housing slump in more than 15 years. Builders are also lowering prices and offering incentives to lure buyers for the homes they have already built and those they hope to build.”
“‘We’re not seeing a lot of new projects coming through the pipe; that’s indicative of the economy,’ said William Pillsbury, Haverhill planning director. ‘Single-family homes and higher-end subdivisions have slowed down.’”
“Pillsbury is confident, however, that the almost 300 condominiums and apartments now under construction downtown will find buyers and renters and that construction will proceed on hundreds more that have been proposed.”
“In North Andover, a controversial development that was four years in the making has been put on hold, said Town Planner Lincoln Daley. The 96-home Boston Hill complex was scheduled to start construction this fall but likely won’t begin until next year, Daley said, because of the current slowdown in the market. ‘(The developer) decided to take a step back,’ Daley said.”
“Other major projects, there are about 470 new homes planned in North Andover, are going ahead. ‘Developers are anxious right now,’ Daley said. ‘There’s grumblings about the economy. There is still a lot of building and renovating going on.’”
“Real estate agent Blaise Coco said he believes home prices are leveling off after a decline. But, he said, ’supply is on the high side. They’re not selling as quickly as we like.’”
“One major project in the pipeline is a 240-home development proposed by the Toll Brothers, a national luxury-home builder. A year after the project was announced, city planners are still waiting for the company to apply for permits.”
“When sales started to drop, builder Stephen Doherty lowered the price of town houses under construction behind Bradford College in Haverhill. Prices were dropped from $359,000 to $334,000 for end units and to $324,000 for interior units.”
“‘We’ve had the flexibility (in financing) to roll back prices,’ Doherty said. ‘We’ve also included bonus incentives. We’re not building as fast or selling as fast as a year ago, it separates us a bit from the competition.’”
‘The buyer was perfect. Real estate saleswoman Karen A. Dotolo told builder John J. Santosuosso that she had found a wealthy Fidelity vice president willing to pay for the $660,000 house he was building in Plymouth. The buyer even picked out expensive granite counters, hickory cabinets, and natural oak floors. Only one problem: The buyer didn’t exist.’
ROFLMAO
What? A real estate agent LIED?
I’m not so sure there’s anything really funny about this. The realtor screwed over a small local builder. This guy was not Bob Toll. He lives and builds in his community. He’s going to lose his own house over this deal.
Yes, he should have checked out the story and asked to talk to the buyer directly. But even people with the best intentions sometimes get conned. These guys aren’t private detectives. They don’t have an army of lawyers. They bang nails themselves.
Yeah but see below. The guys probably a lot like me. Small hands on builder. But I would never have dreamed of trying a 500k project for my first. Just look what this guy risked. If he’s looking at possibly losing his main house then he didn’t have the cash cushion necessary to try it. If he had any experience he would know that banks like to get small builders over extended and then “take” the project off their hands when they get in trouble.
And furthermore, what kind of experienced builder takes the word of a realtor? He puts in 100K worth of custom upgrades on a realtor’s say so without ever meeting the customer?
Exactly, he deserves BK. Don’t let your emotions get in the way. He thought he was in “Disneyland” where there is no risk only reward to those in housing. Life lessons need to be re-learned during speculative manias. Unfortunately our government has been sponsoring manias for the last half century.
How about requiring a cash deposit before all the work and upgrades? When my friend bought her house with granite countertops and wood floors etc, the builder required a $20K deposit on the $200K house. He should have asked for a $30K deposit in escroll at the minimum
He’s going to lose his own house over this deal.
I remember a big developer high roller in the 90’s who stiffed a bunch of small scale sub -ontractor’s when one his condo project’s went belly up.
Within 6 months his cars were shot up as a warning.
When that message was ignored-his house and horse barn were torched.
He moved on.
Small town Maine justice.
This was his first attempt at building and selling a home for profit, he said
You coudn’t just start out with a 3 bdr rancher could you? Had to roll the half million sized dice your first time at the table?
The level of Fraud is only beginning to be exposed. All of these “little” lies will soon be exposed. Someone pass the popcorn - this is getting good!!
posted ” The buyer didn’t exist.’
Man, I hate it when that happens.
The realtor sounds like the soccer mom turned realtor turned nutcase variety.
Should we refer to this type of transaction as a “naked long” as opposed to a “naked short”?
‘Only one problem: The buyer didn’t exist.’
As they say, “No sh!t, Sherlock…”
homes sales rose in 10 states ?
wow
Alaska, West Texas and Wyoming are booming thanks to the price of oil.
and LA via abused taxpayers
that’s 4 hhhhhhhhmmmmm probably some hagover for or,wa,ut and ID
but they’re down now
The rumor mill here in our small town in flyover country (SW MO a.k.a. Ozarks halfway between Springfield and Joplin) is that builders are not longer building spec houses (there are still hundreds if not thousands finished ones still on the market in the Springfield, MO greater area; and who knows how many in the Branson area…). Builders are supposedly now only taking on custom houses and remodels. I’m considering building next year…might be perfect timing for getting a good builder at a good price. Any thoughts on this? Will 2007 be too early to build?
07 should be perfect even concrete should crack by then- must ask for certified financials though as many will lose deposits etc…………………
What part of Branson has all the empties? We came in from the south (Arkansas) and only noticed one development of a few McMansions and a bunch of vacant lots, about 15 miles away. Lots of old single- and double-wides. Most nicely kept up, too.
Having now visited Branson, who’s idea was it to build such a place? Truly a big, ugly blot on otherwise very attractive land.
There’s lots of developments they aren’t so obvious because of the hilly landscape. There’s a development called “Morningside” involving Jim Bakker targeted at Christians.
“Blue Eye condos cater to Christians
Jim Bakker will be among development’s residents.
Kathryn Buckstaff
News-Leader
Compared with similar attractions aimed at the Christian market, Branson developer Jerry Crawford said Morningside has an ace in the hole.
Crawford’s trump card for the new planned development is Jim Bakker, whom Crawford brought to Branson four years ago and supported as he regained a position in TV evangelism.”
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Here’s another one of my “favorites” — Stonebridge (what a creative name!)
STONEBRIDGE VILLAGE
Unrivaled Branson Real Estate.
“Imagine a life where every day seems to be a vacation with a breathtaking backdrop of lush, wooded hills, lakes, a championship golf course, panoramic sunrises, and astonishing sunsets. Take a long, deep breath of fresh, crisp, morning air. Hear the birds sweetly sing to you as you peacefully relax on the deck of your comfortable and very private home. Is this merely a dream? No, this is Branson’s little slice of real estate heaven - for a lot less than you’d expect to pay.”
LODGES AT HIDDEN VALLEY LAKE
Waterfront Homes
“The beauty of Hidden Valley Lake is captured in a pristine setting only Mother Nature could have originally created. Tucked away inside Forest Lake at Stonebridge Village, this gorgeous tree-lined and lake-centric residential development is flush with an abundance of panoramic vistas and man-made amenities. Consider the walking trail around the lake, the extended walkway that leads to an island gazebo, every home offering a backyard deck view onto the water. Come view this spectacular scenery for yourself. Hidden Valley Lake is a private, family-friendly community catering to the lifestyle you want and deserve. You won’t find anything else like it in Branson.”
According to Zillow my sisters house has dropped about 30K in ‘value’ from when she bought it. It held steady until July then dropped. That’s about a 7-8% drop in about 4 months.
Oops, almost forgot. Go to Find Out What’s Coming to see what they have started at a recently demolished office complex. It’s right at the 405 & El Segundo in Los Angeles. YAY!!! Keep ‘em coming!!!
Went to a party last night here in LA. I’m hearing about more and more Angelenos executing their “escape fantasies.” Our wonderful city is choking to death on traffic, and the middle class is slowly being crushed by illegals, legal immigrants, and, as we all know, outrageous real estate speculation. Now don’t get me wrong: I love LA’s ethnic diversity. My kid goes to a preschool that is a mini rainbow coalition, from Mexican-Americans to Afghani refugees to a lovely French-speaking family from Cote Ivoire. To me, it’s what makes LA great. But no city can be a great city without a solid middle class.
Anyway, one couple at this party already bought their 200-acre farm with 120-year-old farm house in Maine and are chomping at the bit to move. Alas, they can’t close escrow until they unload their LA house, and it’s going on 100 DOM. They got their third 30-day extension on their home sale contingency (apparently the sellers in Maine had tried to sell it forever). What’s sad is that their escape from LA was motivated by the cost of living in LA, but they can’t finance their escape from LA unless they get the peak bubble price for their house. So I guess you can say this is an ironic situation.
Wow, and I sort of have a “resturn to LA” fantasy from time to time. Actually, return to Santa Monica or Manhattan Beach that is.
Anyway, one couple at this party already bought their 200-acre farm with 120-year-old farm house in Maine and are chomping at the bit to move
hehehe…nothin’ more wanted in Maine by the impoverished locals than snotty, rich-f*ck, west coast transplants.
These turkery’s ain’t got a clue.
They’ll be gone in 5 years.
I more or less agree with you, even though I’m a (not snotty!) West Coast transplant to suburban Boston. Very few people anywhere (much less those who’ve spent years in LA) really know what keeping a 120-year old house entails. It’s a lot of work that is never done. (All that said, I *love* my 160 year old farmhouse with the 200 year old addition (small house moved from another location and bolted to the main house) but it’s not for everyone!)
I just hope these folks don’t try to subdivide their land; if they don’t already know what Maine natives think of them, they’ll find out!
You aren’t far off. They vacationed in the area last summer, “fell in love with the place,” and went back a few months ago to house-hunt and made the offer. They are very nice people, but I don’t know them well enough to know if they’ll adapt or flee. Personally, I think they’re nuts.
I have friends who did the same thing despite everything I explained to them about the market. They were happy to get a 30k reduction on a 700K property at the time. Last I spoke with them they were looking at 50k in fireplace repairs.
Speaking of spec homes…check this out
This will be at El Segundo and the 405 in Los Angeles. They just demolished an office complex.
Interesting link to William Lyon Homes. Any idea when they closed the deal for this property? I’m up in the bay area, but I keep hearing about projects along the 405. They are still building up here, and even grading in some cases. The thing I ask myself every day is: just who is going to buy all these thousands upon thousands of homes? I rent a condo, and when I go home at night I see MANY units dark and apparently empty. Somebody owns these, bought at the top in 2003-2005. What is going to happen when the four or five new condo buildings in the area are completed in 2007? Prices here are up by 60-70% since ‘03. I can easily imagine 30% drop going forward.
Here’s a RE question. When flippers walk away from their condo investments and the monthly assessments don’t get paid, does the board have to then “stick it to” the remaining good-faith owners and landlords?
Imagine if 50% or more of the “owners” just walked away.
Greenwich sellers assume that bigger bonuses imply plenty of buyers. They forget that their target market is people who make their living by timing markets. Also of note: hedge funds have not been doing well for several years and an industry wide consolidation is underway. Nobody is heading for the poor house, but few people want to make unnecessary commitments. My prediction is that the “invulnerable” high end in this region will be hit VERY hard precisely because builders have been sanguine.
“One major project in the pipeline is a 240-home development proposed by the Toll Brothers, a national luxury-home builder. A year after the project was announced, city planners are still waiting for the company to apply for permits.”
Hmmm. So when is Toll Brohters going to write down the value of this “asset?” Oops!! Value of assets drops, but the value of its debt remains the same….. An unintentional increase in leverage?
I am in MA. I was in a church meeting yesterday, and 2 people were talking about their real estate disasters. Each of them is leveraged to the hilt in speculative investments. They can’t sell and they are close to panic. Everyone thought they couldn’t lose in RE. Now, everything they have is threatened.