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I hear some folks talking about how they can build new homes these days for cheaper than builders can sell their new 2008 homes for, and certainly cheaper than they can buy a resale home tied to a bubble-sized mortgage.
I used to to build homes here in So Cal and let me tell you: you CANNOT build a quality home cheaper than you can go out and buy one. The cost of labor and materials is out of sight, not to mention plans, permits, lot, and a million other things. Builders can sell cheaper because they build bulk and pass the savings onto the buyer. If you want to buy a lot out in the mid-west and plunk a single-story modular onto it, then yes, it's cheaper to do it that way.
Actually my point of posting this is simply that IF new homes were down 3 months in a row and plunged 11% in the 3rd month, the resident doom and gloomer's would be using that as proof of how bad things are as would Zerohedge, Shedlock and Denninger.
The truth is all it means is that we're working off inventory and that is good. But the same way 3 bad months doesn't mean squat about the future neither does 3 good ones.
Perspective. Never lose it and remember things are never as good or bad as they appear.
I used to to build homes here in So Cal and let me tell you: you CANNOT build a quality home cheaper than you can go out and buy one. The cost of labor and materials is out of sight, not to mention plans, permits, lot, and a million other things. Builders can sell cheaper because they build bulk and pass the savings onto the buyer. If you want to buy a lot out in the mid-west and plunk a single-story modular onto it, then yes, it's cheaper to do it that way.
I don't think you understood my question. Compared to this time last year:
Hasn't the cost of labor fallen with these unemployment levels? The construction workers I know cannot find work, and I seem to recall that there's data to support this view that there's a glut of housing-related workers.
Hasn't the cost of materials fallen? I know that we've had big layoffs at several building materials suppliers in my area. Perhaps this is regional.
Has the cost of land not gone down? It would seem logical that they'd fall along with housing prices, incomes, employment, lending, etc.
If these were true, it would explain why people were buying 2009 homes, instead of homes built with 2008 or 2007 labor & material costs, 2006 land and financing costs, etc.
The truth is all it means is that we're working off inventory and that is good. But the same way 3 bad months doesn't mean squat about the future neither does 3 good ones.
No, at least around here in Colorado, this means that people are contracting to build even more inventory...the supply of completed spec houses is already at rock-bottom lows, and nearly all of the new home sales around here are custom orders.
Let's also not forget seasonality...an 11% spike (from dismal record-setting lows) is not cause to declare victory, as we're already approaching the end of the normal annual buying season.
Are these not just signed contracts, and not final sales ? I'm not sure, but if that's the case then this does not really mean all that much since close to 40% of all signed contracs on homes fell through in the past several months.
When I see unemployment go down dramatically from what it is now and that its because they are now fully employed and not part time employed or just stopped looking altogether for work, I will say the economy has gotten better.
No, at least around here in Colorado, this means that people are contracting to build even more inventory...the supply of completed spec houses is already at rock-bottom lows, and nearly all of the new home sales around here are custom orders.
Let's also not forget seasonality...an 11% spike (from dismal record-setting lows) is not cause to declare victory, as we're already approaching the end of the normal annual buying season.
I don't get your point. If inventory is at rock bottom lows then it makes sense to add inventory. Victory? Why can't I declare victory if you can?
Seasonality is seasonality. It's an apples to apples comparison. What more do you want?
You folks need to wake up to the fact that there has never been a time when you couldn't find enough problems to conclude it's over. But, the American economy is a lot bigger than most can get their minds around.
The housing number is a huge number. It's moving in the right direction and IF that continues it will be good for the overall economy. Same as if housing tanks that would be bad for the economy. Nevertheless, the time to be negative was a few years ago when you thought everything was fine.
Early bird gets the worm as they say..Yumm. I feel hungry.
When I see unemployment go down dramatically from what it is now and that its because they are now fully employed and not part time employed or just stopped looking altogether for work, I will say the economy has gotten better.
Okay, now back to that day job. Lunch break is over.
While encouraging news, a one-month spike is no cause to pop the champagne corks just yet.
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