Comments on: Housing Starts and Building Permit Applications Declining http://agentgenius.com/real-estate-mortgage-economy/economy/housing-starts-and-building-permit-applications-declining/ News About Real Estate Social Media, Marketing, Technology Sat, 20 Mar 2010 14:09:14 -0400 http://wordpress.org/?v=2.8.6 hourly 1 By: BawldGuy http://agentgenius.com/real-estate-mortgage-economy/economy/housing-starts-and-building-permit-applications-declining/#comment-42076 BawldGuy Mon, 23 Nov 2009 15:35:38 +0000 http://agentgenius.com/?p=20190#comment-42076 Lord I hate it when I can't elude the need to use a cliché, but in this instance it's inescapable. All real estate is local. (Apologies to those wincing.) The nation's largest builder just broke ground a couple months ago on 1,000 new homes. They appear about to crush more dirt clods on another 800 in the same region. Counter intuitive wouldn't ya say? True enough in the macro view, but not when you look at the data they analyzed to arrive at the decision to put shovel to dirt. Applying macro realities to real estate as it relates to wildly different local markets is almost always a lesson in, well, micro reality. :) This is why I left San Diego in a virtual sense almost six years ago -- that market made no sense for investors whatsoever, no matter how contorted your analytical approach. As much as some markets suck like a turbo-charged Dyson, others are seeing rents rise, prices hold relatively firm, and appraisals come in at contract price. If I'd stayed in San Diego I'd of been a checker at Von's by now for sure. But I eschewed the macro view when analyzing a product demanding micro analytics as it relates to location. Make sense? Lord I hate it when I can’t elude the need to use a cliché, but in this instance it’s inescapable. All real estate is local. (Apologies to those wincing.)

The nation’s largest builder just broke ground a couple months ago on 1,000 new homes. They appear about to crush more dirt clods on another 800 in the same region. Counter intuitive wouldn’t ya say? True enough in the macro view, but not when you look at the data they analyzed to arrive at the decision to put shovel to dirt.

Applying macro realities to real estate as it relates to wildly different local markets is almost always a lesson in, well, micro reality. :) This is why I left San Diego in a virtual sense almost six years ago — that market made no sense for investors whatsoever, no matter how contorted your analytical approach.

As much as some markets suck like a turbo-charged Dyson, others are seeing rents rise, prices hold relatively firm, and appraisals come in at contract price. If I’d stayed in San Diego I’d of been a checker at Von’s by now for sure. But I eschewed the macro view when analyzing a product demanding micro analytics as it relates to location.

Make sense?

]]> By: Lani Rosales http://agentgenius.com/real-estate-mortgage-economy/economy/housing-starts-and-building-permit-applications-declining/#comment-42074 Lani Rosales Mon, 23 Nov 2009 15:06:51 +0000 http://agentgenius.com/?p=20190#comment-42074 Well there are many people more qualified to opine here, but my gut feeling is that because lending is soooo tight and inventory already exists, many builders will not have the option to build a glut of homes because the cash flow just isn't there, so until these sitting homes are sold, many won't have the capacity to build more since their hands are tied. Will some of the big boys predict a spike this spring? I personally doubt it- builder confidence is still down, so the sentiment is pretty unanimous= sell current inventory or die, not build on top of current inventory and wish upon a star. Anyone else want to weigh in? Well there are many people more qualified to opine here, but my gut feeling is that because lending is soooo tight and inventory already exists, many builders will not have the option to build a glut of homes because the cash flow just isn’t there, so until these sitting homes are sold, many won’t have the capacity to build more since their hands are tied. Will some of the big boys predict a spike this spring? I personally doubt it- builder confidence is still down, so the sentiment is pretty unanimous= sell current inventory or die, not build on top of current inventory and wish upon a star.

Anyone else want to weigh in?

]]> By: Matt Stigliano http://agentgenius.com/real-estate-mortgage-economy/economy/housing-starts-and-building-permit-applications-declining/#comment-42055 Matt Stigliano Mon, 23 Nov 2009 10:56:40 +0000 http://agentgenius.com/?p=20190#comment-42055 Lani - I'm curious to hear your thoughts on this... With the new tax credit being extended to April and the large production builders always eager to advertise it like crazy and use it as a selling point, do you think the possibility exists that housing starts will pick up with the builders assuming they will have the market for their inventory? With an average home taking between 3 and 5 months to build (meaning they'd be complete in mid-February or mid April), I wonder if builders (at least the ones that have the capital to do so) would begin another cycle of overbuilding. Obviously, if they do, this could be troublesome heading into Summer 2010. Just a thought I've been wondering about. Lani – I’m curious to hear your thoughts on this… With the new tax credit being extended to April and the large production builders always eager to advertise it like crazy and use it as a selling point, do you think the possibility exists that housing starts will pick up with the builders assuming they will have the market for their inventory? With an average home taking between 3 and 5 months to build (meaning they’d be complete in mid-February or mid April), I wonder if builders (at least the ones that have the capital to do so) would begin another cycle of overbuilding. Obviously, if they do, this could be troublesome heading into Summer 2010.

Just a thought I’ve been wondering about.

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