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.