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Columns
Cheap new homes thwart resellers' hopes
By JAMES THORNER, Times Staff Writer
Published February 15, 2008
Where last year there was rural silence, this year there's a concert of hammering, pouring, roof raising and sod laying. I'm talking about my neighborhood, a suburban outpost of new homes. It was Deadwood USA last year, a victim of so-called "rigor mortgagis." Now the builder has a pulse. Measured against prices the past couple of years, these new homes are selling cheaply. A 1,580-square-foot model goes for $175,000. A 2,000-square- footer for a little more than $200,000. My point is that such bargains are inverting the normal hierarchy - that existing homes should sell for less than new homes - and making life miserable for the gummed-up resale market. A week rarely passes without a Times reader complaining about her inability to find a buyer for her house. She's cut the price, polished the hardwood, buffed the brass. But no one's biting. Part of the problem is the aggressive pricing of new-home builders. They jockey for customers more nimbly than the average mom-and-pop home seller. I dumped my 17-year-old house for what I considered to be a fire-sale price of $205,000 last year. Now a builder is selling the same-sized house nearby for $175,000. A guy on my block wanted $340,000 for a house the builder had discounted to $310,000. I wish him luck. When people buy a house, some seek out the charm that comes with age. But new homes pack their own appeal: fixtures you pick, the whiff of fresh cement, the fun of starting anew. A Wall Street Journal column this week claims Florida home prices will have to plunge by a third from current levels. It's the fast way to get housing costs in line with buyer incomes. When I stopped gagging on my lunch, I questioned the wisdom of the Journal grouping us with comatose markets like those in Naples and Fort Myers. A University of Florida prediction that makes the most sense is that we'll give back about half of the run-up in home values that ended in 2006. Lower housing prices seem unavoidable. As the general public takes baby steps in that direction, builders are completing their first mile. James Thorner can be reached at thorner@sptimes.com or (813) 226-3313. Read his (Un)Real Estate blog at blogs.tampabay.com/realestate.
[Last modified February 14, 2008, 22:58:09]
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by CKEL
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02/15/08 09:00 PM
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So basically new homes now depreciate like a car or trailer home? So much for the housing industry's claim that a house is an "investment!" But, for builders to cut prices they may be cutting something else, so beware of construction shortcuts.
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by Indict Janet Reno
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02/15/08 07:34 PM
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Mr. Thorner, don't be bitter. The value of a house (or anything for that matter) is not what you, the seller, prices it at, it's what the buyer is willing to pay.
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by Steve
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02/15/08 01:54 PM
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You are right Bryan, The greedy builders and developers started raising prices because they could, not because of rising costs. The investors ran up the market and not to forget the frauds, now it's time for a major price correction.
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by Bill
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02/15/08 01:13 PM
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There is something to be said for the resale price in relation to new homes. One difference in some homes is lot size. Older homes, like mine, have large lots. New homes have postage stamp lots. You will still have to pay for lot size.
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by Chris
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02/15/08 12:29 PM
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Amazing deals? I think it's more like these are the new standard deals. Based on salaries in Tampa, the pricing's just about right. Sorry to those that got bad deals in '05 and '06.
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by Bill
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02/15/08 12:03 PM
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Price it right and it will sell. DUH!!!!
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by Jack
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02/15/08 11:52 AM
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Resellers got caught caught up in the same greed as builders and real estate companies. Need to sell your home bring down the price! No existing home is worth the outragious prices of today's market.
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by RICK
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02/15/08 11:46 AM
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I bet we have to give back all gains in the run up.The speculators drove them up and they are mostly out of the picture.Them so-called fire sale prices you got last year now look like you made out like a bandit.We are only half way thru this .beware!
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by Bland
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02/15/08 11:14 AM
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Given the University of Florida's prediction about values, will RE tax assessments fall and along with local property tax revenue? This occurred in the late 20's in Florida. Those who fail to study the past are condemned to relive it. What a mess.
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by baba
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02/15/08 10:46 AM
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These deals are not amazing.(Toby, the real estate cheerleader) They are market rate. Markets consume info and stats perfectly. It's not really down market but where it should have been when it went haywire with crooks and kooks.
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by toby
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02/15/08 09:37 AM
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the RE market will come back. it always does. it is still the greatest investment. where else do you have so much leverage w/ your money? only sell now if you have to. if you have the money it's a great time to buy these amazing deals.
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by steve
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02/15/08 09:22 AM
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Same thing happened in the mid eighties. All very predictable. Those running the money center banks were either totally clueless or they knew what was coming. Banks and insurance companies are expert at calculating risk. This didn't just happen.
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by Robert
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02/15/08 09:20 AM
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The reality of the situation is the investors and the people who bought high are never going to lower the price of their homes. The market pricing is going to sink before resellers figure out that their homes are not worth more than $95 per sq ft.
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by Kent
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02/15/08 08:40 AM
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You are dead on. I have been in the surveying industry for 20 years now. I have watched it all. Builders that were building 200 homes a year for 275k to350k (3/2/2) are now barely building 4. I bought my 3/2/2 14 years ago for 63k. to cont.
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by Jay
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02/15/08 08:09 AM
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We still are not at the bottom yet.
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by Larry
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02/15/08 08:07 AM
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To those of us who have bought both new and existing homes know: new homes are more expensive than just their price tag! Add those $ to an existing home - where work already done - & location (existing homes are closer in) to get $ of existing homes
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by Bryan
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02/15/08 07:03 AM
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It's about time the builders have to stop gouging buyers. If they can build now at higher material costs and still sell for less, they must have been artificially raising their cost in the past.
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