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New Home builders resort to not selling homes
[link|http://online.wsj.com/article/SB119492391355890969.html|Wall Street Journal]
As the glut of unsold home remains stubbornly high and housing demand slides, home builders face a dilemma: to sell, or not to sell?

Lennar Corp., for one, has joined the "not to sell" camp at its development in Orange County, Calif. The Miami company plans to finish building 259 homes -- the first phase of a 1,100-unit development in Irvine -- but it has decided not to sell any of them until the constrained mortgage market and swollen housing inventory improves.

"We are better off holding off on sales at this asset and not discounting as steeply as the ...

It's a subscription article, but that is the only version I have been able to find so far. Quite simply, the big home builders are finishing the homes and then mothballing them without putting them on the market.

They hope that doing that will make the homes for sale glut look smaller then it is, while reducing their costs for keeping the home since they won't have to keep it ready for show and sale. But it is a desperation strategy, since they still have pay interest on the loans they took out for the land, material and construction costs.

Expect further reductions in planned construction and even bigger losses at the home builders. We still have not reached the bottom of the housing market and it looks like we could be well into next year before we do*.

[link|http://www.dallasnews.com/sharedcontent/dws/bus/stories/111507dnbuscommercial.24faffc.html|Dallas News]
While the housing market suffers through one of the worst downturns in decades, the commercial property sector is thriving in many markets.

But economists see some signs of moderation in the commercial property business. And a slowdown in the U.S. economy could put the brakes on commercial building.

Commercial construction is now beginning to slow as the economy slows down. This could be bad, with both commercial and residential construction down it will drag on the economy even heavier.

Jay

* On average of course, there are a few locals where sales are still fairly strong.
New The land itself is becoming a liability
[link|http://www.bigbuilderonline.com/industry-news.asp?sectionID=NaN&articleID=595594&artnum=2|http://www.bigbuilde...D=595594&artnum=2]

[...]

"For the quarter ending Aug. 31, Lennar wrote off deposits and pre-acquisition costs on 15,000 home sites it no longer plans to buy. That adds up to a total of 24,000 home sites the company has abandoned in the first nine months of this year.

"We look at costs to develop a parcel of land and actually develop home sites and include in that the cost of building a home, and you get to the point where the residual value of the land itself\ufffdeven in well located areas\ufffdis close to zero," says Lennar CEO Stuart Miller.

"Lennar has mothballed some large projects because the effective result of selling currently implies the land has zero value," says Stephen East, an analyst with Pali Research. "It also provides the company some accounting breathing room. By mothballing the projects, LEN is able to avoid taking impairment charges on the land that would reduce the value effectively to zero."

[...] the article gives more details on other home projects which are being re-evaluated
New Land -- they're not making any more
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New Do builders pay taxes on ALMOST developed land?
New They pay on all land if they own it.
Based on assessed value, which is higher if they prep it for development.
Too much of today's music is fashionable crap dressed as artistry.Adrian Belew
New But what about when there is no comparable houses?
Taxes are based on value.
Value is based on what it can sell for.
Sell for is judged by looking around the block and seeing what other houses with the same approximate construction, same condition, yadda yadda yadda, have sold for in the last few months.

But in this case if an entire neighborhood is empty, with no slaes history, how could anyone judge what the house is worth?
New Dude, there is a market for land only
and thats what the valuation is based on.

Thats actually the current year tax basis for the homes I'm looking at down here...they are under 1 yr old...so the tax valuation on file is the cost of the land only...and thats what the builders pay taxes on...and they get no break for ownership (resident owners have a tax ceiling).

Since we're going to year end...this tax bill is actually going to help me get a really good deal :-) (hopefully enough to offset the really bad one I'm likely to get when the house up there sells:-(
Too much of today's music is fashionable crap dressed as artistry.Adrian Belew
     Home builders resort to not selling homes - (JayMehaffey) - (6)
         The land itself is becoming a liability - (dmcarls) - (5)
             Land -- they're not making any more -NT - (andread)
             Do builders pay taxes on ALMOST developed land? -NT - (crazy) - (3)
                 They pay on all land if they own it. - (bepatient) - (2)
                     But what about when there is no comparable houses? - (crazy) - (1)
                         Dude, there is a market for land only - (bepatient)

dude...?
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