An Ugly Time For Home Builders

Posted by Joe Manausa on Wednesday, September 15th, 2010 at 11:11am.

Market reports show an ugly time for Home Builders, as permits and sales figures are at record lows and show no signs of changing over the next several years.

Nobody has been hit harder than home builders with the down-turn in the economy and falling housing market. Here at the Tallahassee Real Estate Web Site, we often write about the glut of homes for sale on the market and why we do not need any more inventory, but we often fail to point out the fact that it means  many great Tallahassee businessmen and employees will be out of work.

The glut of homes for sale in Tallahassee means that the demand-side of the market is in complete control right now, so home builders have no orders to build new homes. Currently demand is falling due to a combination of tightened borrowing requirements as well as the end of a year-long stimulus program that motivated buyers (back then) who would have been home buyers today, so the prospects for improvement are not good.

Ugly Time For Home Builders

How bad is it for home builders in Tallahassee? The real estate graph below shows new construction permits and sales trends in Tallahassee for nearly 20 years. The number of new homes being built is not only at an all-time low, the number represents less than 1/2 of "normal," and less than 1/3rd of the amount of homes being built four years ago.

Home builder Tallahassee

Land Values Drop To Create Home Builder Opportunity

Don't mistake the pockets of new construction activity in Tallahassee as a sign that home builders are starting to recover. The fact is that land values have dropped (just like home values) so there are some niche opportunities for builders to sell new homes at prices equal to or less than current resale values. They were able to purchase cheap lots and thus create a profitable opportunity for their company.

Home builder lot sales Tallahassee

A few years ago, I wanted to learn more about video production so I created a slide-show style video of a new home being built. The following video has been viewed nearly 50,000 times on Youtube and is featured all over the internet as a "Watch A Home Being Built" opportunity.

[youtube width="400" height="324"]http://www.youtube.com/watch?v=HH1rvr54nzU[/youtube]

Take a look and let's push the views to 100,000!

Joe Manausa, MBA is a 26 year veteran of real estate brokerage in Tallahassee, Florida and has owned and managed his own company since 1992. He is a daily blogger with content that focuses on real estate analytics and providing his clients with a tactical advantage in today's challenging market.

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