Finding Their Margins Bend Toward Non-Viability
A report from Bloomberg. "Sentiment among U.S. homebuilders fell in December to the lowest level since 2015, missing all forecasts and signaling that the industry's struggles are intensifying amid elevated prices and higher borrowing costs."
"The National Association of Home Builders/Wells Fargo Housing Market Index dropped to 56 from 60 in the prior month amid broad-based declines across sales, expectations and buyer traffic, data released Monday showed. With November's eight-point decrease, it was the biggest two-month decline since October 2001."
"Three of four geographic regions showed a decline, led by the Northeast, where sentiment plunged by the most since June 2010. Builder sentiment in the Northeast declined to 37 from 52. The Midwest dropped to 52 while the South decreased to 61. The gauge for the West held at 65."
From MarketWatch. "Before the housing bubble burst in 2006 — and even before it actually began inflating — builders were constructing homes running, on average, under $150,000. Now, not so much. Earlier this year, there was a rebound in homes built in the next priciest range of $150,000 to $199,999. But even that’s trailed off."
"The price bracket that seems to be picking up the most steam is the $300,000-$399,999 market segment. That makes sense; the median-priced new home was $309,700 in October.The October median price was lower than year-ago levels for the second month in a row. "
From WUSF Public Media on Florida. "With Hillsborough County in the midst of an affordable housing crunch, developers continue building luxury homes and apartments, especially in Tampa's trendy neighborhoods and downtown."
"It’s a common refrain you hear from residents when they're talking about affordable housing: 'Why do I see so much construction in Tampa, but it’s not anything I can afford?'"
"Kevin Robles, Chief Operating Officer of Tampa's Domain Homes, said it’s the cost of building, not greed, that's driving up the cost of new housing. 'In a 'for-market' environment that we are currently in today, I can barely put forth in the market anything less than high $200,000's, low $300,000's. Anything below about $285,000, you just can't produce it' and make a profit, he said. "
From The Oklahoman. "The nation's housing market is 'broken' because buying a new home is out of reach for too many middle-class Americans, said John McManus, vice president of Washington, D.C., construction data firm Hanley Wood's residential group."
"'Housing is broken because businesses — when they add up what they have to pay for land, fees, people, materials, and capital — are finding their margins bend toward non-viability,' McManus said at Hanley Woods' recent Hive Conference in Austin."
"'Housing is broken because the only housing builders, developers, architects, distributors, and investors can build right now profitably is unaffordable to people who earn average salaries, take home median wages, live normal lives,' he said."
From Seattle PI in Washington. "Prospective home buyers are finding more options around Western Washington, with plentiful inventory, recently announced increases in lending limits, and moderating interest rates over the past few weeks."
"Realtors in the NWMLS report can't stress enough: This isn't signs of Seattle's market falling apart, just slowing down a bit. So, if it's not the weakening of real estate as we know it, what is it? NWMLS director Dick Beeson credits a combination of stabilizing factors like those mentioned above: a plethora of inventory, only slightly increased interest rates, coupled with 'more receptive and savvy sellers.'"
From the Wall Street Journal. "Rising interest rates have made life tough for mortgage brokers lately, many of whom are being forced out of the business, so a reminder of the good old days naturally cheered them up."
"Former Countrywide Financial boss Angelo Mozilo last week received a standing ovation at the National Association of Mortgage Brokers meeting in Las Vegas, according to mortgage professional Jeff Lazerson."
"Mr. Mozilo has long denied any responsibility for the housing debacle a decade ago, including in an interview earlier this year with The Wall Street Journal. 'Not subprime mortgages, not Countrywide, not Angelo Mozilo,' Mr. Mozilo said of who was to blame. 'I wish I had that kind of power.'"
"Based on his warm reception, he at least has the power to cause temporary amnesia."