Nood-ling (nōōd’lĭng) n. 1. Fishing for catfish using only bare hands, practiced primarily by crazy people who cannot afford proper fishing gear. 2. The intentional annoyance by bloggers who are skeptical of the news as it’s reported, as in “Noodling bureaucrats is more fun than fishing bare hand for catfish and a lot more surprising.” This is now an end of the month feature.
Pulte, Meritage and Ryland Report Lower Revenue
The current housing market is dominated by the single belief, “Wait until tomorrow, the price will be cheaper.” This is the same in both the resale and new home markets. Sure there are pockets of resistance, but, overall, the market is waiting, sitting on the sidelines, taking a timeout. If you are a public builder of detached single family homes the outlook for the rest of the year is dire. The WSJ reported today that margins are getting weaker, the buyer is afraid to buy a new house simply because they believe it will be worth less a month after they own it. The three builders lost over $65 million over the quarter, this cannot go on forever.
New versus Old, The Gap Widens
Normally the sales ratio of existing homes to new homes has been seven to one, Builder Magazine now reports the ratio at almost 20:1, a threefold change. Older homes are always more affordable. New homes can’t compete and in a seriously depressed market, don’t even try. Four out of ten sales are now foreclosures and distressed sales.
You Can’t Sell Energy Savings
Even with all the pushing and prodding by the gov’ment with incentives, tax writeoffs, and financing help, the buyer is just not seeing or buying the increased value energy saving construction provides. Even after Meritage (no, this is not a Meritage blog today) substantially improved the energy efficiency in its designs and construction thereby saving buyers a couple of thousand dollars a year, the banks and appraisers failed to mark up the value of the homes for these improvements. Meritage thinks this is an improved value, the buyer just expects it to be there, and so do the lenders. The market would not pay the full cost of solar either, they believe that, like standard heating and cooling and insulation, it should be an inherent part of the house.
Home Prices Lowest Since The Great Recession Began
News Flash: Home prices continue to drop. This drop is expected to continue through the rest of the year, and, to be honest, what could change the direction? Buyers who have been holding their homes or properties, hoping for a change, have thrown up their arms and put the property on the market, hoping for even a nibble, something to start a negotiation, anything. Foreclosures continue, and, I will bet, the banks will take on the same attitude and begin to unload more dead elephants. The seller’s market is wrong side to be on. Ah, but if you are a buyer, especially a young buyer, the opportunities are tremendous, ‘cept you can’t get a loan. But then again that’s what the Bank of Mom&Dad is for, and the rates are better.
China’s Bullet Train Must Slow Down
China is discovering that their high speed rail costs a lot to run. Gee, you mean these things are not green and run on wind farms; they actually use electricity to float above the rails. Yes, Virginia, the Emperor is not wearing clothes (sorry about that). Seems that China’s trains are using too much power to fly across the countryside, they are being SLOWED down to save money. The communists have discovered a relationship between costs and ticket prices. Seems there is a ceiling price that they can sell tickets for, higher and the buyer doesn’t bite. So they have to lower costs to make the ticket affordable. @Karl Marx, the market is supreme, signed Ludwig von Mises.
Chevy Volt is Number Three
The Chevy Volt ($41,000) is listed as number three in the Upscale Midsize Car Market, behind the Buick Regal (they’re still making that thing?) and the Hyundai Genesis. It passed its safety test, and gets about fifty miles of travel with 80 cents worth of electricity (check this out China). As always I am skeptical about the viability of the car. I will wait and see.
Stay tuned . . .