Housing shortages coming to a city near you (Phoenix: house insurance, condo)

[autism360]

Not to mention a slew of new complaints are being investigated as I type this. This is not restricted to only one big builder

These articles are for 1 development of one builder, please reference any articles that refer to multiple complaints for multiple developments.

Many builders represent publicly traded companies that have national reputations that would cost millions in stock losses and lost customers if they intentionally built crap. I am not buying into the notion that there are many big builders who are building crap homes on a regular basis.

There may be a few problem developments here and there but that does nor indicate a pattern of abuse or neglect of building codes.

I have previously worked for several home builders and have always been impressed at how hard they try to satisfy even the most ridiculous whims of home buyers. I have seen hardly any articles or complaints of new home buyers regarding the quality of their homes.

I just started a new thread to see what others think about home construction quality, lets see what comments show up. I think if there are few comments it means the majority think things are ok since it is always the complainers who scream the loudest.

I doubt very much that a few problem developments have any impact on the housing shortage we are experiencing.

[autism360]

In addition, more people are seeking their own homes after doubling up with friends and relatives in the recession. That’s leading to greater demand for apartments and single-family homes to rent.
Still, the supply of available homes for sale remains low. That has helped push up home prices. They rose nearly 10 percent in January compared with 12 months earlier, according to CoreLogic, the biggest increase in nearly seven years.
The number of previously occupied homes for sale has fallen to its lowest level in 13 years. And the pace of foreclosures, while still rising in some states, has slowed sharply on a national basis. That means fewer low-priced foreclosed homes are being dumped on the market.
Those trends, and the likelihood of further price gains, have led builders to step up construction. Last year, builders broke ground on the most homes in four years.
Homebuilders have become much more confident over the past year. But in March, a measure of home builder confidence fell for the second straight month over concerns that demand for new homes is exceeding supplies of land, building materials and workers. In the short term, that could slow sales.[quote]
US housing starts rise, permits at 4 ½-year high


The number of previously occupied homes for sale has fallen to its lowest level in 13 years and demand for new homes is exceeding supplies of land, building materials and workers.
We have several problems coming together for a PERFECT NEW HOME SHORTAGE STORM!!!!

Here is what we lose because of the shortages each new home equals 3 jobs and 90k in revenue

Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to statistics from the homebuilders.

[roosevelt]

If house prices go higher, property taxes and insurance go even higher; you can't win.

[DetroitN8V]

Originally Posted by roosevelt

If house prices go higher, property taxes and insurance go even higher; you can't win.

Really??? How high do you think your taxes and insurance will go? I can promise you it won't be as high as the gain in equity.

[autism360]

W. P. Carey report shows 35 percent jump in Valley home prices in last year - East Valley Tribune: Money

“The biggest factor in the market is the shortage of supply. Just about everyone selling has more than one person interested in it, so they end up in a competitive situation, which causes prices to go up,” he said. “It’s definitely an imbalanced market. We only have about half of the homes we would have in a normal market this size and it’s been that way for some time now.”The competition to buy a home in the resale market is frustrating some buyers, he said. It’s not uncommon for home hunters to look two or three months as they’re outbid time after time.

I remember when folks were saying that the market would not recover for 20 years, boy were they wrong

[MN-Born-n-Raised]

Originally Posted by roosevelt

If house prices go higher, property taxes and insurance go even higher; you can't win.

Not true unless your home goes higher than other areas. Putting it another way, it takes X amount of dollars to run the city and county. If every home and business exactly doubles in value, they they take the same amount of dollars that they need and ratio it out. So the taxes are exactly the same. But if your home raises 30% and another area in the county goes up only 10%, they the ratios of value changes and yours goes up with the guy with the slower appreciation actually goes down.


You are right, insurance values goes up as the value goes up.

[jimj]

Originally Posted by autism360

These articles are for 1 development of one builder, please reference any articles that refer to multiple complaints for multiple developments.

Ok, here ya go.
1. Centex Homes v. Financial Pacific Life Insurance Co., 2010 U.S. Dist. LEXIS 1995 (E.D. Cal. 2010)
2.Lantzy v. Centex Homes
3.Rosa et al v. Morrison Homes
The Settlement
Morrison Homes Settles Class Action Alleging Defective Foundations For $5.9 Million
4.Construction defect lawsuit filed on behalf of homeowners in City of Victorville against homebuilder K. HOVNANIAN FORECAST HOMES

I could go on and on but I'm sure you get the gist.
Here's the thing, most if not all of the big builders insure against such claims so if they lose they don't pay the insurance company does.

[Ponderosa]

Originally Posted by MN-Born-n-Raised

Not true unless your home goes higher than other areas. Putting it another way, it takes X amount of dollars to run the city and county. If every home and business exactly doubles in value, they they take the same amount of dollars that they need and ratio it out. So the taxes are exactly the same. But if your home raises 30% and another area in the county goes up only 10%, they the ratios of value changes and yours goes up with the guy with the slower appreciation actually goes down.


You are right, insurance values goes up as the value goes up.

Insurance costs rise with replacement costs which may or may not be the same as appreciation. For example, when our homes half their value in the past couple years insurance did not go down because the home values were well below what it would have cost to rebuild them. As they go back up now, insurance costs may not rise because we are just moving closer to construction costs. Also, insurance costs go up very little with increases on the high end as very few losses are total. Most of the claims paid are for things like weather damages or burglaries that come in well below the insured value of the home.

[MN-Born-n-Raised]

Originally Posted by Ponderosa

Insurance costs rise with replacement costs which may or may not be the same as appreciation. For example, when our homes half their value in the past couple years insurance did not go down because the home values were well below what it would have cost to rebuild them. As they go back up now, insurance costs may not rise because we are just moving closer to construction costs. Also, insurance costs go up very little with increases on the high end as very few losses are total. Most of the claims paid are for things like weather damages or burglaries that come in well below the insured value of the home.

True. What I did is call State Farm and let them know that the replacement cost was too high. They pushed back hard saying they cannot do that. But in the end, I had the insurance value reduced (because a realistic re-build was much lower than they had computed).

Putting numbers on the table, the person paid $520K in 2006 for the home we bought. I bought it for well under $200K in 2011. But to rebuild it today, the number is around $240K (you cannot burn down the lot). I can buy a home today like mine (of course with a lot) for about $300K. I was only able to get the replacement value reduced down to around $340K. So it's still high.

[TiredOfyycCold]

Originally Posted by MN-Born-n-Raised

True. What I did is call State Farm and let them know that the replacement cost was too high. They pushed back hard saying they cannot do that. But in the end, I had the insurance value reduced (because a realistic re-build was much lower than they had computed).

Putting numbers on the table, the person paid $520K in 2006 for the home we bought. I bought it for well under $200K in 2011. But to rebuild it today, the number is around $240K (you cannot burn down the lot). I can buy a home today like mine (of course with a lot) for about $300K. I was only able to get the replacement value reduced down to around $340K. So it's still high.

We had friends who were in the unfortunate position to actually USE their house insurance during a total loss. A crew working on the road in front of their house managed to rupture their gas line and the house burned to the ground.

What we learned from this experience is that Total Replacement cost includes so much more than just a "new" house. You have to pay someone to demolish, remove and dispose of the old structure and re-grade the land. This is not inexpensive. So as much as you might be able to buy a new build that is similar to yours for $300k, it would still cost you at least 50K to deal with the aftermath of any total loss. You probably aren't over insured at this point.