Speculating On ‘Visions Of Greatness’
Some home builder news. “Brookfield Homes Corporation today announced financial results for the first quarter ended March 31, 2006. Housing revenue totaled $122 million, compared to $143 million in 2005.”
“The decrease in housing revenue is primarily due to fewer units closed during the quarter compared to 2005, and a decrease in the company’s average home selling price to $634,000 from $645,000 in 2005.”
“Growth in earnings per share is a result of the company’s 2005 share buybacks and tender offer.”
“With the slow demand for new homes in the San Diego/Riverside and Washington D.C. markets, it will be mid-summer 2006 before a better assessment of the 2006 home closings will be made. The company’s lots owned or controlled total 29,660. Direct ownership of 12,855 lots provides strong visibility on our future cash flows, and 16,805 lots under option.”
“Total starts of California’s single and multifamily housing dropped 19.5 percent in March from the same period a year ago, the California Building Industry Association announced Tuesday.”
“‘The housing market has cooled from the levels of the past couple of years and builders are adjusting,’ said Layne Marceau, CBIA chairman. ‘We expect that once standing inventory levels are reduced we will see a stable and healthy market, and that 2006 will be a good year for home building around the state.’”
From Utah. “Washington County businesses gathered Tuesday afternoon to learn more about issues surrounding economic impacts of home building. Housing policy economist Elliot Eisenberg, Ph.D., geared the presentation toward answering one question; does growth pay for itself?”
“‘Do the taxes generated from the enterprise cover the cost of infrastructure?’ asked Eisenberg, speaking in terms of building schools, jails, fire, water and waste departments as well as maintaining the services. His answer; an emphatic ‘yes.’”
“‘People who say home building wrecks the quality of life…it’s a subjective argument,’ said Eisenberg, noting bigger cities enable citizens to enjoy more redundant infrastructure.”
From Arizona. “They’re the ones who will quadruple Florence’s nonprison population. They’ll stretch the definition of “East Valley” even farther down Hunt Highway, farther into Pinal County. Their presence will demand new retail, medical and school facilities in the county and town.”
“The first residents of Anthem at Merrill Ranch will make their homes there this summer, and, for a while at least, they’ll travel on two-lane roads to do it. Florence Town Manager Himanshu Patel said probably more than 100 of the roughly 9,100 homes in the subdivisions have been sold. He said the home construction is generating excitement in the town of 5,400.”
“John Montgomery said he was looking for a second home as an investment property. Family homes at Anthem range in starting prices from $179,900 to $449,900 and in size from 1,250 square feet to 4,223 square feet. ‘Pinal County’s booming and you’ve got the lower prices here,’ Montgomery said.”
“A discovered treasure is what Will White, a land broker for Arizona Land investors in Tucson, said Benson has become for incoming developers. One of those developments is Whetstone Ranch. The 20,000-home development covers 15,500 acres along State Route 90.”
“As developers have started looking at Benson, property values here have already doubled and tripled, White said. White said only time will tell if all the land purchases, developments and visions of greatness will actually pan out.”
“One sign of success in Benson is the number of homes being sold in the 201-home Kartchner Vistas subdivision Meritage Homes is building the development on the west side of State Route 90. Shelley Corsi, a sales assistant for Meritage, said they have already sold 26. With prices ranging from $229,900 and $279,900, the homes sizes range from 1,400 square feet to 2,280 square feet.”
“‘Meritage has the market right now because they had the foresight,’ White said. ‘”They are selling homes without even having a model up. That is a very good sign.’”
From the Benson link:
‘At one time Mayor George Scott expected hundreds of homes to go up in 2006, but recent city figures show a more modest estimate. In 2006 the city expects up to 56 homes in various developments, and the population, which is currently about 5,000, to grow by 161 people.’
‘In 2007 projections are much more optimistic with an estimated 371 homes slated for construction and a population increase of 1,033. During the next five years, the city expects there to be 3,894 more homes, and a population increase of 20,205 people. If this happens, White said Benson will no longer be a suburb of Tucson; it will be a self-sustaining community, which means development will continue to head east. Developers are already starting to eye land farther east, White said. With land values in Dragoon, Sunsites and Pearce still low, developers are already in the market, he said.’
The Mayor has been talking like this for over a year and it sounds like they have yet to build one house in this project. And east of Benson? Better have a small plane.
Benson, a suburb of Tucson? That’s a 50+ mile drive each way. But then by CA standards it’s probally a typical commute.
I think it is actually closer to Mexico.
“John Montgomery said he was looking for a second home as an investment property.”
This is the worst form of evil. Doublespeak, nothing less. Second HOMES are not investments. HOUSES can be investments but not at the same time. They steal the language and we are all their victims.
Take a look at a google map of where this development is. You’d
better like long drives and being away from it all.
“Pinal County’s booming and you’ve got the lower prices here,’ Montgomery said.”
No kidding you twit, the boom is only due to housing build out and once that’s done you’re in left out the middle of nowhere with nothing to do.
Future Ghost Town! Suburb of Tucson? Jeez, I like Tucson, but it isn’t much of a city to start with. Benson would be like living in hell.
Looks like a future Salton Sea. Not a damn thing to do out there. Don’t people work any more? I guess they’d all just keep exchanging houses at ever higher prices to survive.
‘”They are selling homes without even having a model up. That is a very good sign.’”
LOL. Kudos, Ben. You always dig out the funniest quotes to close with
more than 100 of the roughly 9,100 homes in the subdivisions have been sold.
Uhhh… so? 1.1%?
Maricopa and Queen Creek inventory off the charts, and now they think they’ll sell 9000 houses in Florence? Ya right!
if you want to see the despiration in Queen Creek and Maricopa, go onto Craigslist and type in “despirate” and “motivated”
I typed desperate and desparate.. amazing how many bad spellers there are on craiglist
I know how to spell, but I type very poorly and do a lousy job of proofreading.
Yeah, I didn’t get that quote either. It seems to me that’s something I would be trying to sweep under the carpet vice bragging about. Then again, with bubble maniacs everything is good news!
Those snips are great. But now my head is spinning.
I think I’ll go watch “The Incredibles” to clear my head.
Go and watch Family Guy.
So…Watching Family Guy, huh?
Nice.
So, How’s that working out for ya, huh?
Ya know…watching Family Guy?
Good?
Makes ya laugh, don’t it, that Family Guy.
Laugh, haha, ya.
Up to this point the builders have been “nice” by hiding price reductions with incentives to stimulate home sales. With numbers like these, no more Mr. Niceguy………now we move from the builder incentive phase to plain old price reductions, one after the other, and watch the builders raise their middle finger to all the pissed off home owners.
“The 20,000-home development…”
That number is insane, I am still trying to catch my breath.
That’s what Brookfield is doing in Cottonwood Arizona. It is well known they are selling under what they charged in 2005, and the flippers are going down.
The press seem to be picking up on the bubble now……about time
http://www.rockrivertimes.com/index.pl?cmd=viewstory&cat=4&id=13103
That would never get printed at the SD Union Tribune or LA Times…or not yet at least.
Hell no it wouldn’t JWM. Look how much RE-related revenue is generated in the U-T’s Sunday edition alone. They will keep running rah-rah puff pieces even as people are being thrown out of their homes.
That is one amazing article. Take the time to read it and see what responsible reporting looks like. Versus the crap that’s still being thrown around to lure people into the market.
A lot of people will be saved by that article from making a huge mistake.
I doubt it. Very few in bubble cities will read that.
Increased inventory. More days on market. Desperate sellers. Picky buyers (OK… this assumes there are buyers). Shouldn’t advertising revenue increase because of all of this?
This article also implies that Rockford is in a bubble. If Rockford, a dying rustbelt city, has a bubble then it is truly national. Also, if Rockford has a bubble, then how big must Chicago’s (denied) bubble be?
Rockford! Rockford??!! Now I’ve heard it all. The lucky ones in Rockford work at the prison. When that’s the best job in town, you aren’t manufacturin’ nothin’. Rockford is to Illinois what Bakersfield or Fresno is to California.
I learned two valuable lessons this week, fellow bloggers. Here are two “from the trenches” stories:
1) My best friend just moved from San Jose to Las Vegas this very week, he is a dealership mechanic and found work the very first day of hitting the pavement, and his wife works at the big Qualcomm plant out there (transferred from Qualcomm in San Jose). As native Californians, $275k for a very average 2-year-old house was totally do-able for them, and they jumped on it. They were smart enough to get a fixed rate loan, and buy a house that was totally within their financial means, but not smart enough to rent for awhile first or research the local market’s history. They don’t obsessively read Yahoo Finance and blog here like I do, so their thinking is very different from mine. He brought up the bubble and asked if I thought he was stupid, and I said, “Now is not when I would have bought, but live your life, enjoy your house, and I can’t wait to come and see you.” Maybe in 2002 I would have squawked about the bubble, but this bubble has forced me to grow up quick, and now I know better. He’s probably in his backyard right now playing frisbee with his dog — the first time a 31 year old Bay Area native has ever had a backyard in his whole life.
Moral of the story: We often ask “Who is buying now?” For the average joe, and my friend is very much the average joe, life is moving forward with the housing bubble ranking very low on their list of priorities.
2) My neighbor across the street here in Anaheim listed his house for sale. It’s a 1200 sq ft 3 bd 2 ba built in 1950, in very nice shape. He listed it for $649k, a good $60k higher than the other three identical houses on our street for sale. I asked him why (he only bought it two years ago for $449k) and he said that he is being transferred to San Diego — he didn’t plan on it, and doesn’t have any choice. I’m sure he’ll reduce the price soon, and “chase the market down” like they always do.
Moral of the story: Life is unpredictable. Sellers who plan to “wait it out” may not have that luxury. Job transfers, job losses, illnesses, divorces, etc. sometimes force your hand when you least expect it.
Jerry’s Final Thought: If this guy were smart, he’d sell that house for $20k below the other ones, and be rid of it for a tidy profit. I think he could ask $549k and sell it within a week, pocketing $100k for two years of ownership. Every day he plays the “price it high and drop it slowly” game will cost him real money.
Nice post, OC Max!
http://www.rockrivertimes.com/index.plcmd=viewstory&cat=4&id=13103
I think these guys Plagiarized your blog BEN !!!!
Kind of sad you have to read an Illinois paper about places like Florida, California, Arizona and Nevada.
How many people will lose their life savings like the lady in the article. How many flippers are holding the bloated bag?
People hate to admit failure and I feel that there are more screwed flippers out there than anyone predicted.
It was very ironic to see that story in a Rockford, IL paper (I’m from Chicago) and here I am renting in San Diego…ground zero for the bubble.
Wow. The news is coming fast and furious now. We’re sure to see some more denail for a while, but I think some former housing bulls have already made the mental switch.
‘We expect that once standing inventory levels are reduced we will see a stable and healthy market, and that 2006 will be a good year for home building around the state.’”
Once standing inventory levels are reduced? Who do they think they are kidding?
Didn’t you hear?
At least 20,000 people a month want to move to, uh… wherever that is in Arizona!
Everybody wants to live there! (wherever that is!)
East-valley (of what?) Homes for Everyone!
I’m sure inventory will start dropping anytime soon now…
Look, they’ve already sold like 100 homes out of 9,100! The pace of sales is blistering!
And that awesome town (wherever it is) does have 5400 people. If you ask me (and you should), extensive research by Suzanne indicated that they need 1.7 MORE houses for every man, woman, and child who lives there! (the housing that’s already there is clearly not acceptable.) When you get right down to it, the East Valley (wherever that is) has a severe housing shortage!
Luckily 5400 x 1.7 = 9100 new homes! It’s foolproof.
clouseau
Bwahahahaha……..coffee on the keyboard again
Nooooo your confused, it’s Nevada where everyone wants to live. ;o)
That’s not what my realtor said! She said that it was where I live that everyone wants to live. That’s why there’s no bubble where i live.
You must live in Oregon with me and my realtor.
Or maybe in Florida…people want to live here so much…notwithstanding the hurricanes… that they are migrating here at the rate of 1000 per day…or 2000 0r 3000…depending on who you are asking!!
I was just in Phoenix for two days. Temperature was 96F in early May. I had an hour to kill before going to the airport, so drove around for a while. Take some boring suburbs of Los Angeles, plop them in the middle of the desert, and you get Phoenix. I was impressed by how one could drive for miles and miles at a time and encounter NOTHING but boring housing tracts. It reminds me of the San Fernando Valley in some respects, but dryer and hotter. Why anyone would choose to live there is beyond me.
Bidding on homes?? Not going to well. Just a couple of hours left
http://www2.xpresssites.com/bakersfield/californian/apr06/products.jsp?_RND=1622544306
OT:
Dumbo Bubble Leaking? One Main Apartment Still on the Market Even With 50K Price Cut
“If a nice looking website won’t do it, try DIY flyers on Dumbo lamp posts. This 1BR apartment in Dumbo, which the owners have been trying to sell directly, has been on the market now for some time, despite the $50K price cut from $899K to $849K (and the listing through brokers in the $900s). That it has been on the market now for nearly a half-year would seem to indicate that some hyper-expensive Dumbo real estate is moving slowly, even at a discounted $657 per square foot. GL does not recall previously seeing a flyer for an $850K apartment taped to a lamp post like a stoop sale sign, but he doesn’t read every flyer he passes. Really nice apartment, though.”
Just another sign of how out of whack things got and how far we’ve got to go to turn this mess around:
850K properties -that’s almost 1 million dollars folks!- advertised on a lampost like a “Have you seen this kitty” or “Yard Sale 9-4″ sign. Wowsers.
Yup. We’re certifiably insane now.
Ha — might be the same set of apts I see the giant multicolor billboard for now every time I go over the Manhattan bridge hawking Dumbo Lofts -how times have changed. Jmunnie, if you got this from curbed, also note the item about the rat problem they are having in one of the buildings down there.
Dumbo is interesting, but a river of traffic (via the bqe and bridges) run through it -and amenities are few. great views though for you and your rodent friends…
after 20 years in NYC i never understood this love affair some people have of paying huge amounts of money to live in the grungiest neighborhoods
Interesting - if this is the building I think it is, the clock-tower penthouse is also for sale. They’re asking quite a bit more per square foot, but you get that awesome clock-face window.
As these shockingly stark news reports now roll in day-after-day I’m still stunned at the level of deceipt being perpetuated in general in our society across-the-board like it’s no biggie.
I think it’s been mentioned before but I feel like I’m in the Matrix and blogosphere has been the only goggles that let you see the demons. Neo are you there?
Beam me up scotty, this feels too much like 1984.
“As these shockingly stark news reports now roll in day-after-day I’m still stunned at the level of deceipt being perpetuated in general in our society across-the-board like it’s no biggie.”
I’m with you huggybear. I feel like someone has turned the world upside down. It truly is every man for himself. It helps to have friends to get thru it but most of my friends don’t see some of the deceipt that is discussed here.
So I have to put that fake smile on and keep my observations to myself so I don’t come across as Debbie Downer. I’m actually getting kind of used to my Stepford Mask…and that in itself is scary.
http://www.gazette.net/stories/050306/germnew194404_31944.shtml
Attached is an article about Gernantown a community in metropolitan DC (Montgomery County) where SFHs that sold for around $190k a few years ago now sell for more than $500k. Gemantown has become the crime capital of Montgomery County.
I don’t know why the government wants more office buildings, as you drive up I-270 almost every office bulding between Rockville and Frederick has a for-lease sign.
Can someone translate as what they really mean that housing development outpaces employment development? Is this the first public indication that the bubble has burst on the Maryland side of the Potomac?
I recall someone called Greenspan or some name like that once said “there’s a little froth in some areas”. It’s not a national problem.
Yeah right !!!!!
Try international……..