Why are so many new homes still being built?

[escapetacoma]

Originally Posted by questioner2

The new homes hurt everyone as they flood the market and lower prices for desparate sellers. Can't the City step in and force a stop to this foolishness?

Why would the city try to stop them building new houses unless the city doesn't want to grow? The houses will sell eventually. If the sale prices are down then there will be a larger pool of possible buyers. Keeping houses going up is keeping also people who presumably live near by, if not in the city proper, employed which is, once again, good for the city. The only downside I see for the city is that lower valuations on homes will result in lower property taxes, but municipalities are very inventive at getting around little things like that

If the city were to try to regulate this, who would be the one who decides that there are "too many" unsold houses? You can just bet that there'd be serious conflict of interest issues here

As for worries about the seller, not me! I was recently in the position of selling into a market headed south but I'm not going to whine about the forces that drove prices down. I consider it to be more of a correction toward a more sustainable valuation. I didn't catch the peak - my bad. I sold at a reasonable amount above what I purchased at (167% appreciation over the course of 12 years) so I don't feel too bad that I didn't get the additional 33% that I might have gotten 5 months earlier.

[Noahma]

they produce a product, like car companies, like Microsoft, like tyco and fisher price. If they regulate how much product they can put on the market, why not do that to every company? Lets tell Ford they can no longer produce the Escape because they produced to many last year, or tell fisher price that they have way to many toy dump trucks on the market? This is an open market, and the home companies are doing what every manufacturing job does. They produce, if they overproduce themselves, they hurt themselves. If they can weather the decline, more power to them. If they cant, they go out of business and another company takes their place.

[jhlcomp]

Once a builder has secured a bank loan there is no turning back and they have to move forward as scheduled.

[kshe95girl]

Originally Posted by ara^bess

I agree with HighPlainsDrifter73. Even though we see the same type of new single family home over-building here in north Florida, there really isn't any way to regulate it as long as the investors/builder involved is willing to take the financial risk. Only the consumers involved can change the trend. However, more energy efficient homes with less initial maintenance are apparently much sought after.

Please send more old folks with money, situation bad here! Economy is in the dumper, we have lots and lots of houses that are not selling. My own business is part of the building economy that we have staked our financial fortunes on here in Florida.
It seems we are forever doomed to be a boom and bust state, guess I am gonna have to go get a real job.

[Sandy Nelson]

Questioner2,

The process to develop a new subdivision is often started a couple of years before the homes are actually completed and ready to hit the market. Once the builders start to receive funding on their construction loans, they will need to carry out their projects.
It's frustrating as a home owner in a buyers' market to see even more inventory come on the market, and most likely drive the home prices down. It's also scary for a builder who made plans to develop when there was a need for more housing, to then realize that the market has changed in the middle of a project. Eventually the supply and demand will even out again. In our area in 2005, we saw a strong sellers' market with home prices appreciating over 20% in one year. This attracted the builders, who've created an oversupply. That oversupply, coupled with fewer buyers due to stricter (sounder) lending practices, has created a buyers' market.
I suspect that the market will become more balanced all on its own over the next year or two. There's no need for government intervention.

Sandy

[recuerdeme]

I don't understand all the new construction either.

What's even more baffling is the "cookie cutter" homes. I see nothing appealing about living in brick front, paneled side and back, same as all your neighbors home. Is it too much to ask for to have a little exterior design in these homes.

[K'ledgeBldr]

Originally Posted by recuerdeme

I don't understand all the new construction either.

What's even more baffling is the "cookie cutter" homes. I see nothing appealing about living in brick front, paneled side and back, same as all your neighbors home. Is it too much to ask for to have a little exterior design in these homes.

The "appeal" is the price point of these type homes. And thats call profit margin.
You can ask for just about anything- doesn't mean you're going to get it, and if you do get it, it will surely cost you.

"Ask and ye shall receive", or, "you get what you pay for"

[KristyLiz]

Originally Posted by Noahma

they produce a product, like car companies, like Microsoft, like tyco and fisher price. If they regulate how much product they can put on the market, why not do that to every company? Lets tell Ford they can no longer produce the Escape because they produced to many last year, or tell fisher price that they have way to many toy dump trucks on the market? This is an open market, and the home companies are doing what every manufacturing job does. They produce, if they overproduce themselves, they hurt themselves. If they can weather the decline, more power to them. If they cant, they go out of business and another company takes their place.

Exactly right!

I recently moved into a new development and despite the poor market, the builder is still building houses left and right. Each day I see new lots with "Sold" signs up, so obviously the houses are selling.

I guess our houses would be considered McMansions, but so are the resales on the market around here - so it's pretty fair.