I can answer this one. Land values are dropping like a rock right now. Other building costs are coming down too, but so far they aren’t coming down as fast.

That’s just a matter of time, though. There are a lot of areas in the nation where the costs of materials never did get anywhere close to what they are here, and there’s no reason why the local pricing can’t get a lot closer to the costs in other areas.

Yes, price declines do cut into the builders’ bottom lines, but those bottom lines were massively bloated back during the heyday. Those guys were marking up their options and upgards more than 300% of their costs. Those big 4×4 crew cab rigs they all drive didn’t materialize out of thin air.

When profitability on these projects drop the developers tend to stop building. This is why very little gets built during a bust, and why the developers try to outdo each other with price increases during the booms.