New home construction stalls: 'No land ho!' says industry p2
We are still discussing the real estate market and the problems home builders are facing. Sales may be increasing, and prices may be on the rise, but for the most part the improvements have been in existing home sales. This isn't just true in Baton Rouge, either; this is a nationwide trend when housing starts show a 60 percent drop from pre-boom 2002.
The economy may not be the only thing holding home builders back. The glut of housing that hit the market during the boom may have tipped the scales in the suburbs from just the right housing density to overbuilt. Developers focus on large pieces of land -- farms, for example -- where they can put up more than a couple of homes. Unfortunately, those tracts aren't there anymore; they've all got houses or condos or apartment buildings on them.
If developers don't have access to land, then home builders don't have access to developers. The wait is excruciating for some smaller businesses, but the demand from home buyers is just not there.
One home-builder consultant says, too, that developers lucky enough to find open land can't convince the landowners to sell. The farmers are holding out for better prices, but the developers can't pay more until business picks up, and business won't pick up until they can purchase more land and build new homes.
The consultant adds that his company surveyed 13 publicly-traded builders -- these are corporations, not mom-and-pop shops -- about the market. The respondents said that new communities are definitely in decline; in some cases, the rate of decline runs into double digits.
While the trend is nationwide, different parts of the country have had different experiences. The Midwest and the West actually saw increases in new home sales from May to June. The Northeast fared worst, with a 60 percent decline from May to June. The South? We saw a modest decline of about 8 percent.
Source: The Wall Street Journal, "Land Problem Weighs on New Home Sales," Robbie Whelan, July 25, 2012
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