Hi Wendy: Supply is great...demand is low...we are experiencing a buyers market. There are signs a housing slowdown that has gripped certain high-growth markets during the past few quarters, is now spreading nationwide.
Preliminary reports from builders Hovnanian Enterprises Inc. and Toll Brothers Inc., whose quarters ended April 30, indicate demand is falling faster and more sharply than previously thought, and that the pullback is no longer confined to hot markets that had seen sharp home price run-ups in the past few years.
Hovnanian's orders fell 20% in its fiscal second quarter -- an about-face from the 5.5% order growth reported in its fiscal first quarter. Toll's orders declined 32%, which is steeper than the 29% dropoff posted in its fiscal first quarter.
For Toll, the order decline was across the board as all of its geographical regions reported year-over-year decreases in demand. Chairman Robert Toll attributed the declining demand to higher cancellations and to speculative buyers who are dropping out of the market and putting the homes they recently acquired up for sale. Although Toll said his company doesn't sell to speculators, "we have certainly been impacted by the overall increase in supply."
On top of this, some builders, such as Centex Corp. and Hovnanian, have started taking writedowns in connection with land options. In general, when builders take writedowns to walk away from land options, it is a sign that either land values are falling or demand in that market has dried up. In past cycles, declining land values often were a sign that a market was falling fast.
Until now, home-building executives said the pullback in demand was largely confined to markets where sales had been overheated and home prices had skyrocketed during the past few years, such as Washington, D.C., parts of California (especially Sacramento), Phoenix and parts of Florida. They blamed speculative buyers for much of the pullback, saying investors had exited the market, causing less overall demand and more inventory.
These hotspots continue to see the sharpest pullbacks, but other markets also are slowing.
Majestic Research analyst John Tomlinson, in his monthly report that tracks new-home sales in 40 major markets, found sales fell year over year in every market during February and March, with the average decline being 25%.
Washington, D.C., Los Angeles/Long Beach, Tucson, Ariz., Sacramento, San Francisco, and Phoenix saw the biggest declines with sales falling 22%, 50%, 50%, 46%, 30%, and 37%, respectively. However, even markets that hadn't been weak previously -- such as Philadelphia, Dallas, and Las Vegas -- softened in the quarter, with sales falling 30%, 15%, and 13%, respectively, he said.
"Almost every single major market that we track is showing pretty significant year-over-year declines in sales," Mr. Tomlinson said. "It's much more broad-based" than it was prior to February.
Rising inventory, slowing sales and bigger incentive packages all signal a correction in the housing industry, Mr. Tomlinson added. But time will tell if this will lead to big dropoffs in home prices, "which I think most people are most afraid of," he said.
So far, builders' efforts to offer more incentives and discounts have "failed to move the needle" in driving sales, Mr. Tomlinson said. As a result, he said some may need to resort to bigger price discounts. "That's the million-dollar question," he said.
Bernard Markstein, director of forecasting at the National Association of Home Builders, said there is no question housing demand is slowing nationwide. He said rising mortgage rates have given people reason to "pause" in their decision to buy.
"We've been getting reports of a slowdown in housing across the board," Mr. Markstein said. But so far, he said, it's just a "moderating of activity -- not a falling off of the cliff." He describes it as a "return to normalcy."
Mr. Markstein is predicting that overall housing starts will fall 7% to 1.95 million from 2.1 million in 2005. He sees demand returning to 2004 levels.
If companies continue to build at the pace they had in 2005, there could be more serious inventory problems.
"We were building at a pace that we did not expect to be sustained and we're seeing a slowdown," Mr. Markstein said. He expects builders to slow their pace of construction to meet the softer demand.
However, many builders aren't cutting back, and are instead talking about opening many new communities in order to drive order growth. Toll Brothers, for example, plans to open 80 communities during the next six months, and expects to wrap up fiscal 2006 with 295 subdivisions, up from 230 in fiscal 2005.
Mark Palace, CEO/Founder
Palace Properties International, Inc.
I recommend looking into the Bryan/College Station market place. You can buy a 3 bedroom 2 bath home for $150,000 and have students or families rent the house out for $1350-1500 a month which will easily cover your mortgage, taxes, interest and insurance.
Please let me know if you are interested in more information and I would love to send you some. I am a realtor and investor in the College Station market place myself.... more
Average time on market depends on a lot of factors including the condition of your property and the price you list it at. I can guarantee you that if you price it at $100 (one hundred dollars) you will have a sale in 0 days on market.
My advice to you would be to speak with a local real estate agent who knows your area well and will be straight forward with you regarding pricing and conditioning. If it is priced right and it is conditioned right, then it will sell.
I have a coworker that specializes in that area. If you would like, I would be happy to refer you to her. She will be able to give you a ton of information on the current housing market in Deer Creek Ranch. Contact me if you are interested.
Because it's more than real estate. Its RAYL-Estate!
Brian Rayl, REALTOR®, e-PRO, SFR
Keller Williams Dallas Park Cities
You really need to analyze the prices that homes in the area you are looking have sold for. Looking at days on market, percentage of list price, price per square foot, percentage on county valuation and making adjustments for the quality, features, condition and location will help you determine what a house's value is in todays market. The seller's motivation and financial situation, as well as the inventory levels in your area will also play significant roles in what a seller may end of accepting.
At this point a qualified Realtor® will be a huge asset to you in your search for the perfect home. The right agent will go a long ways towards your success in fully understanding the area around Cedar Park and ensuring you find the right house to meet your needs and negotiating the best pricing and terms. A couple things I would tell you is to NOT sign a buyer's broker agreement with anyone. This is a form an agent will use to tie you up and ensure any transaction you make will only be through them. Find an agent who is happy to perform their services with the knowledge that if they do not properly meet your expectations they will lose your business.
Second, NEVER call a listing agent about a home they have listed as their initial relationship with the seller will prevent you from working out the best deal.
Finally, I would recommend that you interview at least three qualified agents in your area to assist you and select one who you feel will have your best interests as their primary goal. If you would like I can recommend agents in your area and help you along your path to finding the perfect home. It is a great time to buy so please let me know if I can be of any help.
Always at Your Service,
Tom Priester e-PRO
"Results Driven Real Estate"
Keller Williams Realty
Typically the market has an upswing in February (this month). Activity is good right now with interest rates at an all time low. Twin Creeks is a popular area for relocations and those buyers usually make their decisions to move when school is out. I would be happy to do a free Market Analysis for you and give you a better idea of timing and price for your home.... more