By Get in the Game

October 4, 2007 6:46 PM | Link to this

Some homebuilders might not be a going concern within the next 2-3 years. So, the smart ones are slashing inventory, taking their losses, and backing out (Lennar, Divosta) of specific Sun-Belt markets.

Landmark Custom reads and understands the writing on the wall wrt dropping prices. Buyers think why buy now, if I am going to lose money?

Interesting if the appraiser (an opinion of value) is on Landmark’s payroll or not.

Difficulty is, most of these homebuilders are extremely illiquid companies, across any sector. They have a tough road ahead with new home sales levels retreating to 2001/2002 levels.

These guys need to pack up and leave most of the Sun-Belt, consolidate, and move to the Midwest (IN, IL, MO, AR, OK) and other areas of the South (AL NC, TN, Northern GA) where the price run-ups from 2000-2005 were not so inflated. These areas, in most cases, were in keeping with long-term averages. They can keep chugging along in these areas and keep investors happy…over the long-term.

By Get in the Game

October 4, 2007 6:54 PM | Link to this

Where we stand…

I think we all have come to the initial point that residential RE in So FL:

1)Is a imited ‘investment’; and

2)These investments are cyclical

Since residential RE runs in cycles:

3)These cycles are mainly guided by emotion (natl and local media hype)

4)A subset would be the supply/demand curve (economist’s primary set of axioms)

‘Up’ cycles tend to:

5)Have Sellers over-confident in their ‘investing’ ability

6)This emotion (euphoria) led Sellers to overshoot expectations

7)A pre-conceived limited supply with exorbitant demand

8)These up cycles tend to be sharp price increases during a short duration

9)America had a Seller driven cycle from 2000-2005

‘Down’ cycles tend to:

10)Have Buyers thinking they can ‘steal’ houses for $.30/$1.00

11)This ‘stealing’ (fear) shall have Buyers miss expectations

12)Contracted demand with engorged supply

13)These cycles tend to be protracted in length with persistent price decreases

14)America is on the verge of a Buyer driven cycle from 2008/2009 - ???

By BigDaddy

October 4, 2007 7:39 PM | Link to this

Has everyone forgot what a business cycle looks like? We have experienced the largest bubble in modern history, which was artificially inflated further by Greenspan. Now comes the downslope after the peak. Just like prices overshot to the excess on the upside, they will do so to the downside before leveling off. Much like it did in the prior two Florida housing busts. I expect 50% off peak prices in many areas. It needs to come down that far in order to revert to the median 2-3x income level.

Gravity is a b***h….

By Mas says Don't Forget

October 4, 2007 8:57 PM | Link to this

…what a******s the two above are, how much money their real estate expertise has made them (NONE), and how willing they will be to reimburse you for your losses if you lose money based on their predictions of the future.

These two schmucks couldn’t pass a calculus quiz, wouldn’t know a second derivative if they tripped on it, yet want to tell you about the metrics of business cycles and “gravity.”

Guys - why don’t you tell everyone how you got rich —OR ELSE SHUT UP !!!

By Roger the Artful Dodger

October 5, 2007 3:11 AM | Link to this

Maybe YOU shouldn’t forget, ROGER (MAX MOOSE) that you started out with advantages many here don’t have.

We don’t all got billionaire families from Quebec and Sweden to fall back on if we f**k up.

Its easy when you have that confidence.

Everyone can see what a******s GET IN YOUR FACE and BIG DADDY are, but when you come from nothing its easy to wind up with nothing.

So give your big Viking shtick a rest. Its not the tenth century anymmore and you aren’t the King of Valhalla.

By Get in the Game

October 5, 2007 8:52 AM | Link to this

Again, for everyone…

Cycles are not bad!

Growth, recession - sway back and forth.

All ‘asset’ classes have ups and downs, just not that big of a deal.

Actually, these fluctuations are good for the residential RE system, they purge the slag in the system.

Bankruptcies & consolidation - yield future growth & buying opportunities.

I do not understand why this is bad.

And I added, cw you are correct, the emotional volatility that drives every open market shall overcompensate on the downturn for So FL residential RE, as well.

By Get in the Game

October 5, 2007 8:58 AM | Link to this

Amplifying Jeff’s article, on a national level…

Friday, Bloomberg article entitled:

‘Homebuilders Liquidate Assets as Threat to Survival Spurs Sales’

to provide a macro picture of new house sales.

By what!

October 5, 2007 9:11 AM | Link to this

in palm beach county there are over 2X the amount of foreclosures over sales of houses.

to max and all for the re cheerleaders.

you talk too much and you never shut up. too bad that you now live in atlantis and you are not prepared for the end (pre 2001) prices. then again, i told you two years ago when the train was on the track. now the train had destroyed your house and running away with your (equity or atm).

losers to the 2X power!!!

ha. ha. ha.

By AskTaxman

October 5, 2007 9:29 AM | Link to this

Local reporters should be asking PBC officials what they are planning re next appraisals which have to reflect new, lower market values.

The number of challenges to PBC appraisals is going to be astronomical.

Won’t the lower revenues from RE have to be made up ?

It would be nice to get a clue as to PBC plans for this so we do not get blindsided by huge new fees.

Wonder what the costs of finding and fixing current water (drinking AND swimming) problems will be.

And how these unplanned for extra costs will paid.

By Ex-Palm Beach

October 5, 2007 9:56 AM | Link to this

Who is this guy Roger or Max? What a jerk! This guy lives in Atlantis and he talking big?! HAHA I agree with Big Daddy and Get in the Game. I couldn’t pass a calc quiz but I made 3/4 of my net worth is real estate. I saw the bubble popping years ago and sold all my real estate holdings including my house and moved out of Palm Beach County. It was perfect timing. I saw on the CNBC that you all have 2x as many people forclosing each month as people buying. All my properties are worth about 25% below what I sold them for.

By Max Can't Believe the Idiots

October 5, 2007 10:29 AM | Link to this

One IDIOT says I live in Atlantis (figuratively, I assume — I will give him that much credit) and another idiot takes him literally. ROFLMAO

An article in Bloomberg? Now you are really reaching. How about the article in the National Enquirer showing Elvis is partnering up with space aliens to buy Florida real estate? They have photos - how can it be wrong?

“Get in the Game” - the only cycles you know anything about is tricycles. You are probably one of those people I trip over in department stores. Show us a graph of your “cycles” and we’ll do a little math, OK? Are you one of the Eliot Wave people, or is the Fibonnacci number series too complicated for you?

Finally, for all the simpletons who think they are going to see 2001 prices again, here’s the Reader’s Digest version of why you CAN’T: those 2001 dollars DON’T EXIST any more. The dollar has been destroyed, both versus every major currency and in terms of our own domestic inflation. That accounts for most of the asset inflation you see in houses, and has absolutely nothing to do with “cycles.”

The buying power simply isn’t there anymore. The median price for a SFH in PBC at the end of 2001 was $146,900. The only way we could see that median on houses today is if they had been selling for 70K or 80K back then.

You think you are going to see $146,900 again as a median house price, barring a war or act of God?

There IS a name for that school of thought.

it is called: SCHMUCK!!!

By Ex-Palm Beach

October 5, 2007 10:46 AM | Link to this

Yes I think you will see 146,900 median adjusted for inflation, which would be $196,860. When volume starts balancing with inventory I suspect the median will be under $200,000. See no Calc needed.

By Max Finds a Fool

October 5, 2007 10:56 AM | Link to this

Ex-Palm Beacher:

First of all, inflation is nowhere NEAR that mild, I don’t know where you are getting your numbers from.

Now, what about the devaluation of the dollar? Art you telling me a dollar in 2001 is a dollar in 2007, inflation aside?

We live in an international market here. 25% of ALL foreign sales of real estate are right here in Florida. When the Brazilian currency, for example goes up 37% IN ONE YEAR against the dollar, you think the dollar is the same?

We are at recordl lows against the Euro, the Yuan, the Yen, the Real…you name it. Under the skillful guidance of the Republicans we have become a third world nation economically. Our currency is a joke, and th.4e dollar is worth a fraction of what ii was just five years ago.

Are you that Idiot ED who is famous for being senile?

If not, you are beyond SCHMUCK. You are mentally retarded.

By cw1900

October 5, 2007 11:10 AM | Link to this

Ok, “Numbers”, here you go. I’ll take you up on your challenge. You sound desperate begging for a response to something that we have beaten to death countless times before, but here goes.

Yesterday, me, my post and I, October 4, 2007 12:20 PM, I said and I quote….

“Front page of the PB Post Business Section this morning, “Foreclosure rate still soaring”

Now it’s one in every 508 pieces of real estate is in some stage of foreclosure in PBC. This is as overblown a piece of data as the subprime crisis is turning out to be. Yawn. Still no crisis. Like I said before, big deal. The radiator flush continues.

Here is one piece of info in that article that came from the doomer’s best friend and the guy that Max despises the most, Jack McCabe. He said, “”You can realize your dreams but you have to learn to live within your budget,” said housing analyst Jack McCabe, chief executive of McCabe Research and Consulting in Deerfield Beach.

That’s funny. The cult leader of the doomers is telling his followers to at least get a financial clue. Strikes me as funny.

Here’s one that’s not so funny. “Sahnger said he knew of local homeowners who refinanced their house every 12 months.” I hope those idiots get their heads handed to them. That is insane.”

You doomers and whoever “Numbers” is, are going crazy about a statistic that shows there are twice as many foreclosures than home sales. One really has nothing to with the other. One is a new beginning for someone and the other is a crash and burn scenario generally by somone who got himself in trouble usually by his or her own stupidity, greed, and behavior. As Max says, that is people who are in some stage of foreclosure, but does not mean that the foreclosure will actually go through. Most do not. Cmon, you know that. The sold home is a closed transaction, a done deal. If you want to really compare those statistics, then you would have to do one of two things.

You could compare the number of homes in some stage of foreclosure to the number of homes under contract…..OR the number of homes that have actually gone completely through the foreclosure process and the bank now indeed has possession of the property, to the number of homes that have been listed, went under contract ,and officially closed and the deal is done. That would be a better comparison, but as we all know in statistics, data, figures, whatever, you can can make them say whatever you want.

It is a non issue. 1 in 508. Hmmm… I guarantee if you only had odds that something was going to happen one chance out of every 508 tries, you wouldn’t waste your money on that bet, would you? Of course not. 1 in 508 is not a crisis in as so much as 1 in 508 people bounced a check yesterday, or 1 in 508 families were late on their car payment last month. I would bet those numbers are even worse, but there’s no crisis there bantered about in the newspapers, is there? I would also bet more than ten times the 1 in 508 families in your own neighborhood have lost their primary source of income in the past few months due to firings, layoffs, whatever. That’s no crisis. Why? 10 divided by 508 is 1.9% and seems very reasonable to me.

I simply do not believe that this foreclosure number is all that big of a deal. It is overblown and overdone. I have no statistics to back me up because it would take too long to dig out (Fink or Max, get on it, I know you can find it fast), but I do remember in the early to mid 90s, foreclosures spiked up here, and it was in the newspapers a lot. Anyone else remember that? Does anyone else remember Boca in the late 80s? I do. I lived there. Remember all the beachfront condos they couldn’t give away for 50 grand? Many foreclosures and empty condos all over Boca, Deerfield, Pompano, etc due to the overbuilt condition. Many sat empty and many were under foreclosure. How many of you out there right now are thinking, “Man, I wish I bought an oceanfront condo in Boca for 50, 60, 70, 80 grand back then.” Well, the media was pounding the tables that there was a huge inventory of condos and things were bad and flat, and Oh my god, the world is coming to an end.

Well, the world didn’t come to an end, and there is no such thing as a beachfront condo on A1A in Boca Raton for $50,000 today, nor will there ever be. Max, don’t worry, that’s not predicting the future, that’s just simple common sense.

One more thing and then I’m gone until Monday morning… PB Post headline today, “Builder takes loss to get rid of land” tells of Standard Pacific selling a piece of land here for 20% less than it bought it for in 2005. Ok , you doomers have at it, but wait a minute. I and others here have ranted and raved about the frenzied buying of any piece of land that these builders were taking to build a luxury this or luxury that condo or tract of SFH’s to the frenzied buyers, right? You have heard me say many time how I couldn’t believe that a luxury condo building was being built on “x” piece of land because it was next to the railroad tracks or a row of strip joints and auto repair shops. It’s the same piece land those same builders passed on years before, but then during the frenzy, they thought, hey wtf, let’s build one on this piece of crap land, the idiots will buy it. The idiots I described in detail in yesterday’s post did just that. Now they are holding the bag until the next frenzy starts and they are complaining about their own stupidity.

Location. Location. Location. Homework. Homework. Homework. Bandwagon. Bandwagon. Bandwagon.

“Standard Pacific hoped to build 266 homes on the property along the turnpike. The new owner, West Palm Beach developer Steve McCraney, has much different plans. He wants to build 600,000 square feet of industrial space.”

This is exactly what I have been describing on this blog since I’ve been here. That exact scenario.

Look, you people. You do not buy a luxury home on a piece of land that is next to known industrial areas, I don’t care how many palm tress they put by the front gate with the pretty waterfall, or how nice the master bathroom toilet is, or how nice the upgraded window treatments are, or…….you do not buy if what??? Yes, you’re finally catching on. You do not buy any luxury housing within walking distance or a one minute drive of a 7-11. That’s what the good lord of real estate invented trailer parks for. How many times do people who have at least an inkling of a clue about real estate have to tell you this basic, fundamental rule?

To “n8tive”, great post as usual. It was a home run, you nailed it, best post of the day. I couldn’t have said it any better.

Max does have a very valid point about the dollar and most everybody, doomers included, has disregarded that for months for some reason. It is another one of those big elephants in the room type of thing.

Have a nice weekend everyone.

cw

By Ex-Palm Beach

October 5, 2007 11:13 AM | Link to this

I seem to remember the Demos won the last election big time and they even run the legislative arm of government. Let’s see when did the dollar start to tank….? The fact that Helicopter Ben dropped the rates so you poor real estate investors wouldn’t jump off the cliff had no effect on the dollar? If all these people are going to save you why aren’t they buying? I mean the dollar is it a record low correct? So where are they? You should have Europeans, South Americans and Asians buying like fools, right? But instead you have 2x as many foreclosures as sales.

By lovefest

October 5, 2007 11:45 AM | Link to this

Look at CW patting native8 on the back, the cheerleaders are loving each other for the lies they tell.

By forecl

October 5, 2007 11:48 AM | Link to this

The foreclosures include many with location,location,location.

The fact they have tried, unsuccessfully, to sell before hitting this point underscores the weakness of the market.

Many are sitting still unsold for months despite very low prices, relatively speaking, and satisfying that location, location, location, concept.

Even vultures haven’t grabbed. Yet.

It will be interesting to see what these properties (some very high end) finally sell for.

Local realtors, already unable to sell much of the normal listings, better pray more buyers show up who have no Internet skills or any other means of seeing the huge number of short sales, and foreclosures being dumped by banks.

By Obsever

October 5, 2007 11:49 AM | Link to this

Another knock out punch against max. Go get hime Ex-Palm.

By cw1900 is an

October 5, 2007 11:53 AM | Link to this

Ae. Ae. A*e. Liar. Liar. Liar. Going bankrupct. Going bankrupct. Going bankrupct.

By cw1900 is an

October 5, 2007 11:58 AM | Link to this

Asshle. Asshle. Assh*le. Liar. Liar. Liar. Going bankrupct. Going bankrupct. Going bankrupct.

By Rich R

October 5, 2007 12:38 PM | Link to this

CW,

LOL

I beg to differ with you on the odd’s thing.

The odds of winning the pick 3 is 1,000:1 and yeilds a prize of Half that or $500 yet people buy them every single day.

In other words, even if you hit the number, you loose because it only pays out half the odds.

But people still do it.

Go Figure.

LOL

By TO CW

October 5, 2007 12:50 PM | Link to this

I do agree with you that 1 in 508 is not much and may very well be overblown, as you argue. It is still high in relation to years past, and that is a fact. If it turns out to be as overblown as the subprime story is turning out to be, I will come on this blog and admit I was wrong, but I don’t think so.

By Get in the Game

October 5, 2007 12:52 PM | Link to this

Alright cw, I read your pre-wknd post, and I agree with your comments on foreclosures and house builders.

Foreclosures Right now, just not a major concern. Foreclosures would need to increase far greater, than current levels, for there to be a significant spike in the system. Also, it is going to take a while for banks to run these delinquencies off their books. Plus, throw in an election year, where everyone needs great press, so there should be some sort of major bailout approved (in addition to the one circulating through Congress) that all Americans will pay for. The levels would need to increase threefold (from current, 2007 numbers) for there to be a catastrophe.

In the short-term, foreclosures are only going to add more supply to the used AND new So FL houses for sale. Regardless, going to take years for the down cycle, so the foreclosures, and further consolidation, are just always part of every major downturn…

House builders Running a parallel track to house leasers right now. That ‘pack of wolves’ or herd (as cw stated) mentality was pervasive throughout America, especially in FL, CA, and NV. I just think, cw, that house builders purchased land at irrational $/sf ratios EVERYWHERE, not just next to the railroad tracks. Open pastures, next to 95, oceanfront, orange groves, Intracoastal…no place was immune from them gorging themselves on land. And banks were holding their hand, every step of the way..until now. Now house builders have a stomach ache are being hospitalized. Some may even die, in about 2 years, from overeating.

Cycles

Since we have reached an accord on ‘investments’ and their cyclical nature…

Cycles exist. All ‘investments’ have them…part of the game. You can attempt to avoid them…fruitless. So below, is my experience on the way up and my experience (applying to the residential RE sector) on the way down.

Also, these cycles are steeper and tend to be realized quicker on the up and down side by house builders…since a good majority of them must report to shareholders and major shareholders understand ‘investments’ (yes, there are more factors (research, scale, etc…but this is the major one).

On the ‘Up’ cycle 1999 – Discovery: “Quicker, faster, cheaper’ and the American Dream

2000 – Party ‘chatter’: ‘I heard people are making money by doing’…

2001 – Fear of ‘losing out’ by not being in residential RE

2002 – People quitting jobs and further liquidation of other ‘assets’ for ‘investing’ into residential RE

2002/03 – Euphoria: making money ‘hand over fist’…media turns up the get rich quick stories/cable shows

2004 – Irrationality –‘flip, flip, flip’

2005 – Invincibility – ‘residential RE never loses money’ and ‘I can turn a 30% profit, annually’…I did it the last three (3) years

On the ‘Down’ cycle 2006 – Discovery: this is an ‘isolated occurrence’

2007 – Denial: the media ‘is only adding to the problem’ by printing ‘negative stories’ OR I am ‘not taking a loss on my property’

2008 – Anger: ‘why is this happening here’ (specific markets: again, areas that had major run-ups from 2000-20005)

2008/2009 – Recognition: maybe there is some ‘credibility to all the (media hype)’

2009 – Acceptance: fine… ‘prices are and have been going down’ and ‘Yes, I am going to lose money on my property (if purchased post 2003/04 and maybe even earlier…overshooting on the way down)

2009/2010 – Coping; ‘I just want out’

Adjustments – 2010/2011: ‘Adjusted expectations’

Recovery – 2012: ‘Normal, historic appreciation’

By Max Wrecks "EX"

October 5, 2007 1:07 PM | Link to this

CW - Have a good weekend. Excellent post, putting these phony “crises” into perspective.

And no, saying you won’t see million dollar condos for 50K again is not predicting, because it is simply mathematically impossible. We would need the same dollar we had back then, and it doesn’t exist any more.

Of course, all bets are off in the event of natural disaster - tsunami, tornadoes, massive hurricanes, rising oceans - or other mass destruction such as war. But I am in no better position to predict such things than anyone else. We all live on the premise that we are NOT facing imminent destruction. That’s how many of us made it through the Cold War without becoming nervous wrecks.

Now on to Ex-Palm-Beacher. I see why this guy richly deserves his reputation for senility. I think I picked out a few confused thoughts from the maelstrom, however.

The dollar started it’s precipitous drop during the Nixon administration, when Tricky Dick unilaterally dropped the gold-equivalence standard, because some unreasonable nations actually expected us to meet our obligations. We showed them. With the dollar worth nothing more than the “full faith and credit of The United Sstates,” the most obvious way to hedge the value of the dollar was with — you guessed it — more dollars. The classic recipe for devaluation — and inflation.

Nixon combatted the inevitable rise in the price of everything by ordering wage and price freezes — you could not legally raise salaries or the price of goods or services that were not exempt.

Does this sound unbelievable to those of you who were not yet born? Nonetheless it happened, and we are talking about the USA - not the USSR.

Today the wage and price controls are gone, and the globle economy imposes its own restraints. The dollar sinks relentlessly against the Pound, the Euro…well, everybody more or less, and we put up with adjustments like the prices of houses doubling in two or three years. Those who are entirely clueless as to economics or history replace thinking with a couple of shibboleths like “regression toward the mean” or “cycles.”

Anothe EX idiocy is the notion that Bernake lowered rates prior to last September. Actually, he raised them 17 times in a row — unprecedented in U.S. History — in a pointless attempt to slow asset inflation.

He raised and raised and raised until he effected a miiniscule drop in home prices. Tiny, but nonetheless the first since the Great Depression.

Median house prices that have climbed every year since the Depression apparentlty constitute “cycles” for the hapless “Get in the Game.”

By Benjamin

October 5, 2007 1:10 PM | Link to this

CW has been making sense this past week. He must, if the person who has a hard time spelling BANKRUPT is so indignant about his postings. LOL

By Get in the Game

October 5, 2007 1:45 PM | Link to this

Max

I thought I would never type this…

KUDOS to you on your currency history, valuations, and explanatory review.

On the house median price, I also concur about the $1 M condo dropping to $50 k, never going to happen.

However, I know everyone is mis-communicating on the eventual down cycle.

First, BTW for WPB MSA prices increased YOY 1% (1994) and -2% (1998).

I would venture to state NO ONE is expressing an interest for the So FL market house prices to regress, recede, drop, crash, what have you by 90% or 80% or 70%.

Instead, we are merely indicating an anomaly, a rather large one, from 2000-2005.

From 1993 to 2000, for WPB MSA, house prices increased from $116k to $138k or 19% over 7 years for 2.7% annual appreciation…

From 2000-2005, (same area) house prices increased from $138k to $390k or 182% over 5 years for 36.5% annual appreciation…

Now forget about all this and that everyone has been sliging back and forth…

Economist or Buffett or Cheerleader or Doomer or Realist, these numbers are weird, ‘fishy’, inconsistent, on and on…

And I am only furnishing numbers for this area from 1992/93

When you run out the numbers since the Great Depression or WW II, whenever… for natl avgs, they are in keeping (just above) with inflation (whatever type you choose to use)

So, yes prices are going to fall, from 2005 prices, just a matter of when and by how much…

Again, people looking for $.30/$1.00 are in for a tough road, but there are going to significant price reductions from 2005 levels.

And I am not speaking about $14 M oceanfront mansions, no…

Those are ‘preception’ purchases with a high barrier to entry and usually are immune to the flucuations in the common market or ‘trophy’ buildings for comm RE.

However, houses under $1 M and maybe even up to $2 M. Again, I hope they can make it. They are going to need to last for, easy 3+ years…

Again, though Max, by in large good post…’Get’

By Will Pigs Fly?

October 5, 2007 1:50 PM | Link to this

If Maxi comes back with a civil comment to Get In The Game, the sky is purple, Mike Fink is a cheerleader, and pigs will be flying over our cars on I-95.

By crazydem

October 5, 2007 1:56 PM | Link to this

What? DiVosta fired 12 people? THIS IS THE END! THE APOCALYPSE IS UPON US!

Signed,

Reuters headline today: US Employers added 110,000

By Why foreclosures matter

October 5, 2007 2:10 PM | Link to this

CW, you claim that the foreclosure is a non-story b/c only 1 in 500 are in it.

What you fail to realize is that those properties being foreclosed on will set the new comps for a neighborhood. Those new comps will drive the price of the other 20,000 homes in PB County down.

By chkdemout

October 5, 2007 3:45 PM | Link to this

Seeing so many referances to Foreclosure #s, browsed some of the online sites.

Over 800 short sales listings for PBC . Very small number, agreed.

Range from 2/2 Greenacres condo -$100K, to 6/5 8,000 sqft in Wellington for $2,100,000.

Small though the number is, totally ignoring these is not sensible.

If some of these nicer props do not move soon, especially at the prices listed, the numbers continue to climb, effect is going to be very negative all over.

Also, as I am sure some of you know, many foreclosed properties being held off market in hopes of higher price in future. If these start getting dumped also, selling at decent price is going to get tougher and tougher.

By WAKE UP

October 5, 2007 4:45 PM | Link to this

Inflation seems to be popping up quite a bit again today - I’ll chime in with my usual comments. Like it or not, for various reasons there have been ridiculous price escalations in construction materials over the last few years. Many prices have stabilized, but have yet to return (and probably never will return) to prices prior to 2001-2002. I’m talking like steel going from sub $200/ton to over a $1,000/ton in 12 months (400% inflation). Scrap copper ranged from 60 cents to a $1 a pound for years - in 2004 it jumped to about $5/pound and has settled back down just under $4/pound. Again nearly 400% inflation. Concrete was $60/yd for YEARS, it’s now over $100/yd. There was a period in 2005 where concrete was sold in allotments - suppliers would only sell to their regular customers and only in the volumes that they had previously purchased - if you bought 100,000yds last year, that’s all you can get this year - you never bough from us? (click) you won’t be buying this year either.

Much of these escalations were due to fuel and oil prices - on top of escalated concrete prices they were charging fuel fees based on the distance of the jobsite from the batch plant. PVC has soared since oil went over $60/barrel - it’s a petroleum by product. These items don’t show up in the CPI index either, because they’re not everyday purchases by the everyday consumer. But I have to tell you, it’s not going away. Yes builders have dropped prices SLIGHTLY, but not in half. WHY? It’s very simple, they can’t afford to. Do they make ridiculous margins on new homes - ABSOLUTELY. Some materials have adjusted because there is lower demand. But now that the suppliers know they can get more than they did for so many years, it’s a whole different ball game.

By Game Plan

October 5, 2007 8:00 PM | Link to this

The Game is still on. The “Fix” was spotted. The Heavy Hitters are coming off the bench. Raising the stakes to a level where the house can’t afford to pay.

By TT Trash

October 5, 2007 8:44 PM | Link to this

You do not buy any luxury housing within walking distance or a one minute drive of a 7-11. That’s what the good lord of real estate invented trailer parks for.

Yes, that about sums it up. You forgot to add That’s what the good lord of real estate invented Boynton Beach and Lake Worth for.