Wednesday, April 06, 2005

Home Builder Sales Slow In California, Florida

Standard Pacific Corp., a California based home builder reported activity was off in the last quarter. "Orders in Northern California dropped 26 percent. Southern California orders fell 18 percent. Total orders in California, the company's largest market and one of the strongest U.S. housing markets, fell 21 percent."

"Florida orders fell 18 percent due to a conscious decision by the company to slow the pace of sales to catch up with construction demand, Standard Pacific said." After so many years of increases, why do these firms feel compelled to explain away any slowing of demand? The stock market may hold the answer. "Shares of home builder Standard Pacific Corp. dropped more than 4 percent..after the company said first-quarter orders fell."

4 Comments:

At 10:07 AM, Anonymous dry fly said...

It is slowing where I live... rural/exurban Minnesota.

I'm having my kitchen done - the guy who is doing it specializes in remodelling only... never has and never wants to do 'build new'... he has been doing this for 30 years and does a real good job on 'older homes'... and by that I mean pre-depression era... tube-n-node electricals, plaster walls, etc.

Anyway he tells me that starting about October... the local yards were complaining that the builders weren't showing up. Our town doesn't have a Toll or KB... but there are established builders... but they don't 'spec' build... only firm/financed orders... In some ways because they produce to 'just-in-time' market demand they can be looked at as a 'leading indictor' of what is to come.

My remodeller says this was the slowest winter the 'new build' guys could remember in almost 30 years... completely dead... no orders in the pipeline. They are praying spring & summer will be better... but not looking good yet.

It has gotten so bad that a few of the local 'build new' folks are now soliciting 'remodelling' work... something they wouldn't even return phone calls for a year ago.

And they have a lot of learning to do in our part of the world... this isn't the kind of town where 'older house' means Reagan era... half the homes in my town were around for the LAST big crash... 1929. My remodeller says - they won't make it... he's seen this before.

 
At 11:17 AM, Blogger Ben Jones said...

dry fly,
Thanks for the local report. All first-hand accounts of conditions are appreciated and will be more valuable as time goes on.

( a few of the local 'build new' folks are now soliciting 'remodelling' work... something they wouldn't even return phone calls for a year ago)

That observation is very telling..Ben

 
At 12:01 PM, Blogger Dave F. said...

Just some more anecdotal evidence of the recent sales downturn: A good friend of mine (a realtor) listed her house here in El Dorado County (East Sacramento foothills) for 850K last fall. She had a lot of interest from would-be buyers at the time, but had to take the house off of the market due to personal reasons. She re-listed the house about six weeks ago at 815K and now there has been virtually no action on the house at all. By listening to the way real-estate brokers spin market conditions, you would have thought that she would be able to raise her price this spring and enjoy multiple offers but the reverse has happened: lower price with no action.

I’ve often heard that that high-end homes like the type mentioned above (3800sf, newer, pool, etc) are the first to suffer in any market downturn. I believe this is happening in California right now. I asked my friend what she thought the problem was and she simply stated: “people can’t afford houses like this right now.” I believe this is correct but is only one small part of the story. In looking at other similarly priced homes in this area, many of them have been sitting for several months. Also, there are many, many vacant rental homes that have high weeds in the front yard and have been sitting vacant for several months as well.

I also saw an ad in the local newspaper here actively soliciting fica score 400 people with bankruptcies for mortgages! Jeez!

 
At 3:08 PM, Blogger Ben Jones said...

(By listening to the way real-estate brokers spin market conditions, you would have thought that she would be able to raise her price this spring and enjoy multiple offers but the reverse has happened: lower price with no action)

It is much more common than is reported. The financial media is whistling past the graveyard on this one. Great info, thank you..Ben

 

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