I think it’s not just the stabilization or reduction in pricing of the new homes that’s affecting the averages, it’s the reduction in the volume of sales, too. New homes have made up a disproportionate share of the total volume when compared to prior years. Their prices were so much more overextended that reductions in that market would definitely impact the local medians.
I just looked at some more sales data in San Elijo (same project as Tara Rd) yesterday and they’re struggling to break even with some of their yr2004 sale prices. A couple of those listings would represent a net loss from the seller’s pocket if they can sell at the bottom of their listings. And that’s not counting the differential between their PITI+MR and the rents they would otherwise have paid during their holding periods. It’s not looking too good over there right now. I surely wouldn’t want to be in the developers’ shoes right now – those guys must be ordering their Maalox by the quart.
What was the cost of a house times earnings at the high of the last peak and what was the cost of a house times earnings at the last low? Anybody know?
I find it shocking how many units are in process right now. I guess these builders are too far into the process on these subdivisions to not build them out.
I would think that as long as they’re making profit per house, if profit margin gets lower, they would have to build more than before to make up the difference. They’re publicly traded companies, so bottom line is earning. So one way or another, they’ll try their best to hit those earning, even if they have to lower the price and build more to hit it.
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