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Homebuilder Comments in May: “Builder metrics quickly deteriorating
invite response
2022 Jun 8, 2:34pm 1,275 views 15 comments
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2
🎂
1337irr
2022 Jun 9, 11:04am
1337irr
2022 Jun 9, 11:04am
I got my first mortgage of my life at 5.5% for a house I can't live in with my IRA due to tax rules. It's an ARM.
I'm happy!
I'm happy!
3
Booger
2022 Jun 9, 2:09pm
Booger
2022 Jun 9, 2:09pm
If they actually built starter homes, they could sell all that they could make.
4
Booger
2022 Jun 9, 4:18pm
Booger
2022 Jun 9, 4:18pm
HunterTits says
They are less profitable.
They are not profitable to build when you add in all the fees, permitting bullshit and building rules.
They are less profitable.
5
AD
2022 Jun 9, 9:57pm
AD
2022 Jun 9, 9:57pm
HunterTits says
That is why a starter house is a townhome. I noticed that is the trend. Builders can make a profit selling townhomes as starter homes. I can't see them making much profit selling a detached house as a starter house for less than $375,000 on average for the USA.
They are not profitable to build when you add in all the fees, permitting bullshit and building rules.
That is why a starter house is a townhome. I noticed that is the trend. Builders can make a profit selling townhomes as starter homes. I can't see them making much profit selling a detached house as a starter house for less than $375,000 on average for the USA.
6
zzyzzx
2022 Jun 10, 7:12am
zzyzzx
2022 Jun 10, 7:12am
ad says
Sure you can. Bring in modular homes or manufactured homes (and put them on a foundation) and put them on tiny lots. Just enough room for the house, the offsets, and enough room to park 2 cars. It's been done before and can be done again. It's just not as profitable as building McMansions and the local governments hate it when you build affordable houses because it's a net loss to the tax coffers because we wildly overspend on education.
I can't see them making much profit selling a detached house as a starter house for less than $375,000 on average for the USA.
Sure you can. Bring in modular homes or manufactured homes (and put them on a foundation) and put them on tiny lots. Just enough room for the house, the offsets, and enough room to park 2 cars. It's been done before and can be done again. It's just not as profitable as building McMansions and the local governments hate it when you build affordable houses because it's a net loss to the tax coffers because we wildly overspend on education.
7
WookieMan
2022 Jun 10, 7:48am
WookieMan
2022 Jun 10, 7:48am
zzyzzx says
There's no demand for it though. Out of desperation people will live that way, but it's a shitty existence. Our build will be modest by most standards. ~2,200 sq ft ranch with a full finished basement. I'll have nice things on the inside and outside, but 2,200 sq ft is generally small in this part of IL. Most houses are 2,400-3,200 sq ft with a basement for additional space. I will have an acre of land though and a buffer lot with my neighbor friends on each side.
I'd have to be broke and unemployed to live in the photo you posted. I can't live in a place where I can piss out the bathroom window and hit the neighbors house. Also if you need to live like that and park 2 cars, you may need to look at your other spending habits. One of the few positives of urban areas or high density is you can bike places which is basically free.
With regards to modular, it's not what people think it can be. My dad has built 3-4 of them. I've toured a factory in Indiana. It's one of those things that looks good on paper, but just isn't. Also, there are massive regulatory hurdles depending on the municipality and code. All of those homes I mentioned had cosmetic issues out the gate once set on the foundation due to transportation.
Panelized building is much more logical. Get a flatbed with the puzzle pieces pre-fabbed and drop them in place. On site you can frame a house in 2-3 days with a skeleton crew that knows what they're doing. Likely takes only 3-4 days of framing off site to make a single house if that. Wrap it and then you get legit trade workers in there for plumbing, tile, kitchen, etc.
Drywall and tile is the biggest bitch transporting finished modules. It's almost 100% that something will crack or break unless it's only down the block on a smooth and slow street. That's why they seem so cheap if you've been in one. It's all that rolled vinyl "tile" and other cheap fixtures that won't break during transportation. Good luck throwing your kitchen module with 3/4" granite/stone and it not cracking. One big bump at 35mph and a lot of shit is cracking and breaking.
Sure you can. Bring in modular homes or manufactured homes (and put them on a foundation) and put them on tiny lots. Just enough room for the house, the offsets, and enough room to park 2 cars. It's been done before and can be done again. It's just not as profitable as building McMansions and the local governments hate it when you build affordable houses because it's a net loss to the tax coffers because we wildly overspend on education.
There's no demand for it though. Out of desperation people will live that way, but it's a shitty existence. Our build will be modest by most standards. ~2,200 sq ft ranch with a full finished basement. I'll have nice things on the inside and outside, but 2,200 sq ft is generally small in this part of IL. Most houses are 2,400-3,200 sq ft with a basement for additional space. I will have an acre of land though and a buffer lot with my neighbor friends on each side.
I'd have to be broke and unemployed to live in the photo you posted. I can't live in a place where I can piss out the bathroom window and hit the neighbors house. Also if you need to live like that and park 2 cars, you may need to look at your other spending habits. One of the few positives of urban areas or high density is you can bike places which is basically free.
With regards to modular, it's not what people think it can be. My dad has built 3-4 of them. I've toured a factory in Indiana. It's one of those things that looks good on paper, but just isn't. Also, there are massive regulatory hurdles depending on the municipality and code. All of those homes I mentioned had cosmetic issues out the gate once set on the foundation due to transportation.
Panelized building is much more logical. Get a flatbed with the puzzle pieces pre-fabbed and drop them in place. On site you can frame a house in 2-3 days with a skeleton crew that knows what they're doing. Likely takes only 3-4 days of framing off site to make a single house if that. Wrap it and then you get legit trade workers in there for plumbing, tile, kitchen, etc.
Drywall and tile is the biggest bitch transporting finished modules. It's almost 100% that something will crack or break unless it's only down the block on a smooth and slow street. That's why they seem so cheap if you've been in one. It's all that rolled vinyl "tile" and other cheap fixtures that won't break during transportation. Good luck throwing your kitchen module with 3/4" granite/stone and it not cracking. One big bump at 35mph and a lot of shit is cracking and breaking.
8
Booger
2022 Jun 10, 1:51pm
Booger
2022 Jun 10, 1:51pm
WookieMan says
There is tons of demand for affordable houses. You aren't the average person, and what I pictured beats an apartment.
There's no demand for it though.
There is tons of demand for affordable houses. You aren't the average person, and what I pictured beats an apartment.
9
AmericanKulak
2022 Jun 10, 1:57pm
AmericanKulak
2022 Jun 10, 1:57pm
zzyzzx says
Yep.
Building anything to code and Yuppie Building Restrictions do. We need a Starter Family Bill of Rights in every state that limits what Yuppie "Muh Property Values" assholes can restrict.
Manufactured/Mobiles homes have great R values now and CREATE US JOBS.
What's ironic is a huge number of Elderly Hippie-Yuppies did indeed buy a half acre or so and lived in an RV/Mobile home as they slowly saved for a home which they then slowly expanding: But they refuse to allow the youth to do as they did, kicking down the ladder and cutting the rope after they climbed up.
Another group that hates it is Realtors. Affordable housing means smaller commissions.
"But there's not enough space!" - they squeal, as they approve zero lot after zero lot development that is hardly any larger.
One of their favorite tricks is "Open Space", which means they couldn't find any "rare subspecies" of a common non-endangered animal to get it zoned out of development for Enviro reasons.
Sure you can. Bring in modular homes or manufactured homes (and put them on a foundation) and put them on tiny lots. Just enough room for the house, the offsets, and enough room to park 2 cars. It's been done before and can be done again. It's just not as profitable as building McMansions and the local governments hate it when you build affordable houses because it's a net loss to the tax coffers because we wildly overspend on education.
Yep.
Building anything to code and Yuppie Building Restrictions do. We need a Starter Family Bill of Rights in every state that limits what Yuppie "Muh Property Values" assholes can restrict.
Manufactured/Mobiles homes have great R values now and CREATE US JOBS.
What's ironic is a huge number of Elderly Hippie-Yuppies did indeed buy a half acre or so and lived in an RV/Mobile home as they slowly saved for a home which they then slowly expanding: But they refuse to allow the youth to do as they did, kicking down the ladder and cutting the rope after they climbed up.
Another group that hates it is Realtors. Affordable housing means smaller commissions.
"But there's not enough space!" - they squeal, as they approve zero lot after zero lot development that is hardly any larger.
One of their favorite tricks is "Open Space", which means they couldn't find any "rare subspecies" of a common non-endangered animal to get it zoned out of development for Enviro reasons.
10
GNL
2022 Jun 10, 2:54pm
GNL
2022 Jun 10, 2:54pm
WookieMan says
When do you start on this build? I think I've heard you talk about it for a few years(?) now. I ask because I'm wondering if whatever you're waiting on/going through is what adds to the cost of housing. Remember, that alligator eventually gets everyone or at least your children.
Our build will be modest by most standards. ~2,200 sq ft ranch...
When do you start on this build? I think I've heard you talk about it for a few years(?) now. I ask because I'm wondering if whatever you're waiting on/going through is what adds to the cost of housing. Remember, that alligator eventually gets everyone or at least your children.
11
Onvacation
2022 Jun 10, 8:34pm
Onvacation
2022 Jun 10, 8:34pm
AmericanKulak says
My uncle did that. He lived in a tent and grew pot to pay for the land they bought in N California in the mid 70's. He now has a nice house on the highest point of his property. I doubt he would approve of anyone living like he used to in his neighborhood.
What's ironic is a huge number of Elderly Hippie-Yuppies did indeed buy a half acre or so and lived in an RV/Mobile home as they slowly saved for a home which they then slowly expanding
My uncle did that. He lived in a tent and grew pot to pay for the land they bought in N California in the mid 70's. He now has a nice house on the highest point of his property. I doubt he would approve of anyone living like he used to in his neighborhood.
12
HeadSet
2022 Jun 11, 7:46am
HeadSet
2022 Jun 11, 7:46am
Onvacation says
So, your uncle is a hippie-crit?
I doubt he would approve of anyone living like he used to in his neighborhood.
So, your uncle is a hippie-crit?
15
AD
2023 Oct 2, 10:49pm
AD
2023 Oct 2, 10:49pm
as far as home builder confidence , it is at 45 right now (source: https://www.nahb.org/news-and-economics/press-releases/2023/09/high-mortgage-rates-continue-to-weaken-builder-confidence )
It was 31 back in December 2022 and 76 in February 2020.
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It was 31 back in December 2022 and 76 in February 2020.
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Some homebuilder comments courtesy of Rick Palacios Jr., Director of Research at John Burns Real Estate Consulting (a must follow for housing on twitter!):
May homebuilder survey results published last week. Top themes: 1) Builder metrics quickly deteriorating across the board. 2) Price cuts on standing ‘speculative’ inventory accelerating. 3) Buyer incentives are back. Market commentary to follow…
June 8th 2022
#Austin builder: “Some parts of town where finished homes are now taking a month to sell versus hours. Market is definitely correcting. Incentives are back and seeing some builders cutting prices on inventory.”
#Baltimore builder: “Customers now mentioning potential reduction in prices and/or increase in incentives.”
#Bend builder: “Market drastically changed in last month. Traffic slowed significantly. Sellers of both new and used homes are dropping prices.”
#Birmingham builder: “Steep decline in sales over past 2 weeks.”
#Boston builder: “Recently started seeing drop off in buyers wanting to get on interest list. A release of 4 new homes this past weekend may be the first one in quite some time that is not fully sold out from buyers on our waiting list.”
#Charlotte builder: “Still not meeting [sales] goal and seeing less traffic, with people taking longer to make decisions. Some close-out communities are not getting traffic.”
#Columbus builder: “May traffic down 25% from April and don’t expect June to compare well to May.”
#Dallas builder: “Lower priced, outlying communities have slowed. Interest lists are nearly half of what they were.”
#Denver builder: “Higher rates are definitely bringing a chill to the market.”
#Greenville builder: “Lowest traffic in many months.”
#Harrisburg builder: “Market is soft, inventory is building. Missed May projected sales by 50%.”
#Houston builder: “Home prices hit a ceiling and incentives are starting to show up.”
#Jacksonville builder: “Released 4 inventory homes in a HOT community and only sold 1 (first time haven’t sold them in under 48 hours in more than a year)."
#LosAngeles builder: “Seeing more cancellations due to payment shock for those in backlog that didn't lock rates.”
#Nashville builder: “Most builders are cutting speculative housing starts by 15%.”
#Philadelphia builder: “Forced to reduce some pricing and become more competitive.”
#Phoenix builder: “As interest rates rise and pricing continues to escalate, there’s no way we can sustain the type of sales rates we are used to.”
#Portland builder: “Incentives are back in the market.”
#RiversideSanBernardino builder: “Pricing in this market will correct by 5-10%. If this administration lets the housing market slide because of inflation, we’ll probably take some more hits to pricing.”
#SaltLakeCity builder: “Had a rough May.”
#SanAntonio builder: “Builders are requiring higher earnest money deposits. Rates are impacting buyers due to debt-to-income ratios.”
#Tampa builder: “Website and phone traffic slowed dramatically in the past 45-60 days. Longer-term pause in buyer traffic would cause alarm for our 2023/2024 business plans.” THE END
https://calculatedrisk.substack.com/p/homebuilder-comments-in-may-builder