San Diego Housing Bubble News and Analysis

I live very close to the Horton project on Loma Linda in Temecula. These homes went up fast and are not selling. Many are close enough to the road to see the omnipresent "AVAILABLE" signs in the upper story windows.
I would have to guess that D.R.Horton will need to do something here as well to move inventory. Certianly, they are going to continue to sit on the market with the current pricing, even with the upgrades.

Do builders pay taxes on the land and homes that they own, until they are sold? Or is there some sort of tax break to help them "develop".

Normally they just pay taxes on the land but they pay it from the time the aquire it so often they have paid taxes for years before they sell. They also pay for building permits and inspections which are "taxes." When the house is complete and it sells, it is assessed at the sales price so the tax goes up for the buyer since the new purchase price is higher than the land price was. Normally the house sells at the same time it is completed, what is happening now is abnormal but it would be difficult for the county to assess standing inventory because the value is hard to set (if it was worth what they are asking it would have sold). The trouble for the builder with standing inventory is not the tax burden, it's the interest. They buy the land, materials and labor often times with borrowed money, until it sells they are losing money. They do not get to live in it while it sits like a reseller does but they get to make the mortgage payment. The worst thing is their stock gets hammered because standing inventory slices into their profit margin and the lack of sales and profit pound their stock prices, most builder stocks are down 50-90%. If they lower their prices, blow out their inventory and break even for a quarter or two they will make millions from the stock rise. I think D R is trying to do that, they want to be declared the best bet in the industry as far as their stock goes, many builders will fold in this downturn and the ones that survive will be in better position for the next cycle. What is better for a company, selling at cost and surviving or holding the line on prices and going bankrupt?

Love the names of these developments. Truly, I could not make these up if I tried

Contessa's Vineyard
at City in the Hills

Don't the builders have to pay mello-roos and HOA fees?