Builder's blues: Selling and sulking

Coupla quick items about the continuing troubles for big homebuilders:

Selling: This Saturday and next Saturday only: "D.R. Horton has announced unheard of savings up to 50% off on a variety of homes at 23 participating neighborhoods throughout Southern California. Unlike any sale homebuyers have ever seen, D.R. Horton's UnAuction presents dramatic sale prices and unbeatable new home value without the auction hassle."

Sulking: The Washington Post reports, "The National Association of Home Builders, one of the top 10 corporate donors to politicians, has stopped contributing to congressional candidates after it failed to get what it wanted in recent anti-recession legislation."

More: "The powerful lobby said Tuesday that it was taking the unprecedented action of halting its campaign-giving to protest Washington's failure to address 'the underlying economic issues that would help to stabilize the housing sector and keep the economy moving forward.' The group did not mention any specific initiatives."

Among other things, the builders had wanted changes in the tax laws to reduce their tax liability by allowing them to offset their past profits with future losses. The builders are so ticked off, they even put out a statement announcing that they were suspending contributions.

Thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Photo Credit: The Associated Press

Comments

[sheila]

well if that ain't enough to make us all insist on publicly-financed elections and NO MORE BRIBES TO OUR ELECTED OFFICIALS, before, during and after elections, I don't know what it will take.

one man one vote. it's called democracy. we should try it again.

[Cal]

Boy wouldnt you feel foolish if you were a current homeowner in those DR Horton developments. As an aside, for those reading the DQ numbers reported every month remember that is the sum total sales activity of resale homes plus new homes. So for joe six pack homeseller the situation is more dire than it appears from the reported number.

As for the NAHB, they and the banks will get their handout. The congress will reward their horrible business practices because it doesnt look like a direct check written from Congress to the companies. But that is exactly what it is.

[Producer08]

D.R. Horton has announced unheard of savings up to 50% off on a variety of homes

Yes but what are the prices ?

500000 ? 500000 ? 1000000 ?
200000 ?

if their prices are 500k and with a 50 percent discount you pay 250k ? then I am impressed..........

if their prices are 1 million and with a 50 percent discount you pay 500k ?

they are full of it and in denial.......

[steveRB]

From the financial advisors at firm of Joseph, Nico and Left: "Better buy now before prices start going up again!"

[Robbie Fields]

Peter,

I was looking at the Horton condos for sale in the "wind belt" off I 10 in Palm Desert. $200,000 is beginning to look appealing until I remember a little history ...

In the late 80's, following the '86 Palm Springs earthquake the Coachella Valley property market was dead. Angelo Mozilo eased me into his own country club condo for $129K. In 1992, I could not sell it for even $100K. Even in 1998, you could buy 1 bedroom 2 bath furnished condos at Desert Princess in the 20's, yes under $30K. Deadly combination of HOA and Indian Lease payments.

So will anyone hazard a guess, barring the rupturing of the nearby San Andreas, how low will condo prices go in the Palm Springs/Rancho Mirage/Palm Desert conurbation. Heading towards $100 per sq ft, will we see a collapse towards $50 per sq ft?

[Dave P]

Well....at least the home builders group is not pretending that thier "donations" are nothing short of a flat out bribe.

"Vote exactly the way we want you to vote and we will give you CA$H". "Will Donate for Bailouts".

And I am left with the same question I always have: When these builders were making money hand over fist, did they offer to use some of thier profits to reduce my taxes? I mean, when times are hard (due to their own overbuilding), they want my taxes to bail them out. Why the one way street?

They were going to keep all the money (as they should, I'm not a socialist), so they get to keep all the losses.

[Tombstone Realty]

I'm taking my wallet and GOING HOME!!!!!!

Good thing that there are plenty of other special interest groups to take up the slack. I'd hate to think of all those politicians homeless and starving like the rest of us. No way to run a country!

[Pat]

DR Horton has one development in Palo Alto, CA called Abor Real. No price drops or sales there. Sure, you can get 50% off some place in the middle of nowhere. But, they are doing their best to hold the line in the more desirable areas.

[Andy]

Here is the flyer for the sale by DR Horton.

http://www.myhomedrhorton.com/
public/ViewEmail.aspx?jobid=493138&prospectId=396355

[baruza]

Jingle mail is coming on an epic scale. That's right. The same banks now shocked that underwater homeowners are just walking away are walking away from thier own buy-out deals!

"Leading banks are being advised that it would be cheaper to walk away from big buy-out deals than incur further losses on their funding commitments, increasing the chances that more high-profile private equity transactions will collapse.

"This advice from lawyers contrasts with the conventional wisdom that banks would risk serious damage to their reputations if they were to drop out of deals.

http://www.ft.com/cms/s/0/
5becb572-db30-11dc-9fdd-0000779fd2ac.html?
nclick_check=1

[NAR is WRONG]

I don’t know about the National Association of Home Builders, but if they are related with NAR, then they have no credibility in my book. This “Always a great time to buy / Interest rates are low” is total bull crap. One could very well ruin their financial life acting on this advice.

[Ace]

The NAHB must not be putting their money in the right pockets. They should take some advice from NAR who sent me this emal:

'Thanks in part to lobbying by C.A.R. and NAR members, the Senate passed their version of an economic stimulus package today, Thursday, February 07, 2008. The Senate version expands rebate checks for seniors and disabled veterans and includes the same increases to the conforming loan limits for both GSE and FHA found in the House stimulus package.'

and

'Thank you to everyone who responded to NAR and C.A.R.'s Calls-for-Action urging that the Senate version of the stimulus package included the increased loan limits! By contacting Senators Boxer and Feinstein, you helped make a difference on this critical issue!'

[Keith - letitsink.blogspot.com]

I just coined the term "Arb-hood" on my blog, short for Arbitrage Neighborhood, to describe areas like those with deep discount developer sales.

Anyone who lives in an area with 50% off sales lives in a house that just fell 50%. If comps fall 50% then all home prices in the area fall. If you live in an Arb-hood, have a lawyer look at your loan docs to find out what your obligations are, and then jump to a half-price house.

[Curious]

The Home Builders should count their blessings. Look at all the help they got from the Federal Reserve Board for so many years. The Fed kept interest rates low AND Greenspin said nothing about the housing bubble or the gathering storm in mortgage securities.