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alstry (35.43)

Homes Selling FAST!!!!................HBs GOING OUT OF BUSINESS

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March 14, 2008 – Comments (5)

“Two newly built homes are on the market on the same street in the same development. One is a bank-owned property offered at $1 million, and the other is listed by homeowners at $1.5 million. Guess which one received 10 offers and has a sale pending?”

http://www.mercurynews.com/realestatenews/ci_8570855?nclick_check=1

Wall Street analysts are telling their clients to buy home builders stocks.  Some are saying activity is picking up.  Sure activity is picking up, homebuilders are actively losing more and more of shareholders money.  And the outlook for as far as the eye can see is for much much MORE losses.  Now that is a great reason to buy homebuilders shares. 

Many foreclosures are concentrated in areas where new homebuilders are building their homes.  It is the areas where people recently purchased homes at high prices and are the most leveraged.  Now, almost HALF of all foreclosures are NOT subprime.  Ouch!!!!!  The reason....because homes price declines have put many owners underwater....regardless whether they are prime or simply USDA Choice.

A key reason for continued price declines is because some HBs are continuing to build specs in areas where foreclosures are spiraling out of control.   After the specs are completed, the builders are forced to dump the property because they are competing against existing home sellers selling newer houses and banks willing to sell at almost any price to get the house off their books.  And with defaults continuing to rise, expect many more homes coming onto their books in the near future.

Forclosures and specs are driving home prices down to such low levels that it is destroying the finances of many American families.  The problem has migrated to destroying some of our largest banks.  Bear Stearns was founded in 1923.  It survived the Great Depression, WWII, and Disco, but was forced to cry uncle today due to its imploding mortgage portfolio.

Sure home sales may be picking up.....but the part that many forget to tell you is that it is distressed sales picking up.  Sales that are destroying the primary asset base of America-the home.  The crazy part is people are cheering the fact people are losing their life savings.  Is that like cheering as the body count goes up during war?

Something is seriously wrong.  Our largest banks are facing liquidity crisis.  Our families are losing their homes at unprecedented rates.  Median income is declining as non housing costs are skyrocketing. 

Then to add insult to injury, Wall Street analysts are telling their clients to invest in homebuilder shares as homebuilders are liquidating their inventories at HUGE losses.  Some only have a quarter or two of vetical inventory left.  Why don't the analysts simply call it what it is for many builders-A GOING OUT OF BUSINESS SALE!!!!!!

 

 

5 Comments – Post Your Own

#1) On March 14, 2008 at 6:13 PM, alstry (35.43) wrote:

MORE SALES COMING-But for Who?

But many may not be considering the stark reality of having a foreclosure in their neighborhood. Last month, RealtyTrac reported 11,139 homes in California were foreclosed on, or almost three times the number of homes sold in the Bay Area.

http://www.mercurynews.com/realestatenews/ci_8570855?nclick_check=1

If it wasn't true, I say I was lying.

3X as many homes foreclosed as sold

3X as many homes foreclosed as sold

3X as many homes foreclosed as sold

AND STANDARD PACIFIC (SPF) has about as many spec homes under construction as backlog.....and management is bonusing themselves for dumping specs at any price....what a country, unless of course you are a shareholder.

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#2) On March 14, 2008 at 7:20 PM, jesusfreakinco (28.87) wrote:

Was your 48 hours prediction based on your awareness of BSC blowing up or is there another shoe to drop this weekend?

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#3) On March 14, 2008 at 8:21 PM, zygnoda (27.18) wrote:

great post!

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#4) On March 14, 2008 at 9:36 PM, DemonDoug (78.49) wrote:

Yeah alstry take some credit - you said on wednesday i believe that the next 48 hours there was going to be some real big swings.  Good call. And good call again on the HB's.  If i'm a bank with any debt with SPF then I'm panicking first before anyone panics before me.

I have a bone to pick though: 

"Our families are losing their homes at unprecedented rates."

Those homes weren't the families' to begin with - they were the banks' homes.  Those families that can't afford a home will do what they always do which is rent.  And that isn't exactly hell or anything.  And smart families that didn't buy or bought before and didn't HELOC the E out of their home are doing just fine now too.

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#5) On March 14, 2008 at 10:11 PM, alstry (35.43) wrote:

Demon,

As you know for the most part you and I track a parallel course.  Remember, although a bunch of the current foreclosures are due to fraud, speculation, and over extending, for the most part,  most foreclosures are still due to an unexpected life change such as illness or job loss.

In the past, those  families could sell their homes and actually maybe pull out some equity, now the are pretty much ruined.

If you can believe this, there are now a number of elderly in Florida who own  their homes free and clear that are being forced out due to rising property taxes and insurance premiums.

What I find amazing is  all this affordability nonsense never factors rising non housing related expenses.  

Get ready, the fireworks are just beginning.

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