Will Ghost Homes Ever Be Built?
IHT.com has a report on the home buying boom. "There was a time when most people buying a new home waited until the house was built to buy it. But over the 12 months through March, only 23 percent of buyers did that. That is a record low."
"Meanwhile, 40 percent of buyers bought homes before the first construction worker appeared on the site. That is a record high." That raises an issue. If all these home sales numbers we've heard recently included these ghost houses, they may never be built if the speculators rush to cancel.
The inventory levels that this blog has reported regularly has shown up on their radar. "Homebuilders seem to think that the risks of not having land ready are greater than the risks of having too much of it. Greg Jensen of Bridgewater Associates, a money management and research firm, put together balance sheets from a group of builders, and found that in 2004 their inventories, largely land, soared to the point that operating cash flow was negative even though profits were up sharply."
"It sure looks like the end of a bubble to us," Mr. Jensen said.