So, is the consensus on this forum that housing prices, assuming they drop 35% – 50%, will fall far below replacement value?
Most builders work on 10%-15% margins (in good markets and a lot less in bad ones). A 50% drop puts a new home (or a resale) at a price way below the cost to build that home (including the land).
Is that what is being predicted here? Not only will land values have to fall a long way but also the cost of all construction materials and labor. With commodity prices increasing I certanly don’t see that with materials and the cost of labor can’t fall too much either.
Honestly, if homes values fall 50% on a mass scale, the entire building industry, not to mention all those related businesses, at least those which pertain to residential construction, will collapse and disappear from the landscape.
