Buried in this article, Going green is a hard sell for struggling home builders, are some colorful quotes that give you a flavor of what’s really happening among new home builders.
“These guys are fighting for their lives at the moment,”‘ said RL Brown, a Valley housing analyst. “They’re trying to figure out how to make a sale, how to carry the burden of the inventory, how to get rid of the excess land, how to get the cancellations to go away. They’re into serious, hard marketing challenges right now. They’re not into that (green) kind of thing.”
Arizona home builders continue to over-produce. As an Arizona native it’s easy for me to remember back to what happened in past slumps.
Home builders went out of business.
Since home builders can’t control their compulsion to build homes despite the huge oversupply, the only solution appears to be the tried and true “shakeout.” That apparently is the only way to get the new home supply back into balance.
Doug Fulton of Tempe-based Fulton Homes said his company has started to sell houses below cost in some fringe markets, and he believes other builders are, too.
I bet a lot of these Arizona home builders will burn through all of their 2005 windfall cash until they are forced to pack it in.
I would advise struggling home builders to gather their chips and walk away from the table while they are still ahead… if it’s not too late already.