"Home prices are fixin' to rise

[Rick Hoge]

"Mike Castleman, the Texan with the best realtime view of housing in the U.S., tells editor-atlarge Shawn Tully that the naysayers are about to get a big surprise: rising prices for new homes."

http://finance.fortune.cnn.com/2011/...-to-buy-again/

[Allan Edwards]

"Mike Castleman, the Texan with the best realtime view of housing in the U.S., tells editor-atlarge Shawn Tully that the naysayers are about to get a big surprise: rising prices for new homes."

http://finance.fortune.cnn.com/2011/...-to-buy-again/

I agree 1000% with this guy, and I've been saying the same thing. No starts to speak of for almost 3 years, coming out of recession, population growing by 3 million people a year, and many of those people who want new homes, not stale poorly built inventory or crappy foreclosures. A little Texan common sense by this guy:

"It takes three years between the time a bull mates with a cow and when you get a calf ready for market," he says. "That's how it is in housing too.

Time to get that bull ready for some action!

[BeachBoy]

This is interesting reading too that backs the above, if you haven't read it yet.
http://www.nahb.org/generic.aspx?sec...&channelID=311

My brother-in-law just got started on a 'remodel', keeping only the foundation; an owner and a builder just bulldozed the two houses in back of mine and are getting ready to build; and there is another complete demo a couple of blocks away geting ready to build.

Things seem to be happening, at least in my neck of the woods. Is this the beginning of the turnaround forecast in the above articles? I don't know, but it is sure nice to see!

[jstoddard]

Sooner or later, prices will hit bottom. That's the natural cycle of things. Some of you are seeing it now - for others it could still be 2,3 even 5 years away - but at some point... you'll be at the bottom.

What will move prices off that bottom is a combination of lots of builders having gone out of business (less supply available) coupled with some modest increase in demand - due to (as Allan correctly points out) population increases (in some places - mostly south of the Mason-Dixon).

But here's the thing - national/ regional / state -- even local in some cases - trends don't matter very much unless that's the scope of your market. For the vast majority of you - the only thing that matters is the supply/demand in your neck of the woods. Find the opportunities in your market - meaning the distance you're willing to travel from your home base - and exploit those to the best of your ability. Even if you were in downtown metro Detroit there is somebody needing something built or remodeled, and you might as well be the company to get the job as someone else.

Last week at JLCLive - one thing was really driven home for me. Your attitude in this kind of market has absolutely everything to do with your success or failure. There were multiple contractor/builders from the same exact places in New England, with very comparable experience and equal skillsets. All very talented people. Some were having good success and others were starving - so what was the difference?

Those who were doing well had an incredibly positive attitude. They did what they needed to do even if it was creating a sideline shoveling roofs. And if they shoveled roofs, they created tools and techniques to make it efficient and profitable, and they had fun shoveling the roofs. They had fun working together with their subs. They were having a blast at the show. They mixed easily with people and as a result found all kinds of opportunities in their communities. Their positive attitude rubbed off on everyone around them.

Some were the polar opposite. They opened every conversation with a scowl or a story about how terrible it was - how some "other" builder who didn't have insurance or wasn't paying payroll overhead or whatever else was "stealing" jobs from them. Every excuse in the book why they couldn't go 15 miles from home to find opportunity or why there wasn't any other type of work they could explore. Words are powerful and they were using a victim's vocabulary with everyone they spoke to - including total strangers. Those people had a black cloud following them around, and as a result, were out of work looking for some kind of magic wand.

By the end of the show I found myself consciously trying to seek out "Type 1" because they were like a shot of adrenaline - and consciously avoid "Type 2" because they were such a drain.

I was convinced before - but now I'm even more convinced - there is plenty of opportunity out there and small volume builders have the advantage at the moment. You can move more quickly on opportunity than bigger companies - but your attitude is everything.

JLS

[Ohiobuilder]

Your attitude in this kind of market has absolutely everything to do with your success or failure.

Some of the best advice I have gotten off these forums in a long time, and timely as well.

[swbuilder]

Some of the best advice I have gotten off these forums in a long time, and timely as well.

Agreed. I will absolutely not let anyhting get me down and to quote Winston Churchill, "Never, ever, ever, ever, ever, ever, ever, give up. Never give up. Never give up. Never give up." ,

[swbuilder]

Even more so, the older i get the more it seems obvious that success comes from more than just brains, it comes from effort and attitude. Sure brains are nice, but you need the other two even more.

[David Meiland]

A letter to the Economist from this page http://www.economist.com/node/184382...TOKEN=14360975

In the slumps

SIR – Your special report on property (March 5th) made scant reference to two important determinants of the American residential property market: the underlying demographic impacts on demand and supply, and the serious shortcomings of a fixed-rate mortgage market. While the demand function for first-time buyers is frequently analysed, the fact that Americans make their largest home purchase at the average age of 45 is rarely considered. Once one appreciates this fact, and that the apex of the baby boom was 1961, it should be no surprise that the peak year of inflation-adjusted home prices was 2006, after 15 years of increasing demand.

The average age at which Americans make their largest home sale is 60. Since the number of Americans born in 1976 is almost 25% lower than the number born in 1961, and the bulk of aggregate property value is in the largest homes, it is therefore reasonable to assume there will be no demand and supply equilibrium in the American market until approximately 2021.


Moreover, in addition to the 25% of homeowners with negative equity, a similar proportion have insufficient positive equity to refinance their high fixed-rate mortgages. Until home equity improves and/or a vibrant variable-rate market develops, there will be many reluctant homesellers.

The outlook for homeowners is unavoidably grim. Fed funds will therefore probably remain very low until home prices rise materially. Meanwhile, those who borrow at 100 basis points over fed funds to buy attractively priced liquid securities will probably make out like bandits.

Ian Ellis
President
MicroCapital
Southport, Connecticut

[MarkMc]

Well aren't you a bubble of sunshine!

Dodd-Frank fails to meet test of our times

By Alan Greenspan

Published: March 29 2011 18:31 | Last updated: March 29 2011 18:31

The US regulatory agencies will in the coming months be bedevilled by unanticipated adverse outcomes as they translate the Dodd-Frank Act’s broad set of principles into a couple of hundred detailed regulations. The act’s underlying premise is that much of what occurred in the market place leading up to the Lehman Brothers bankruptcy was excess (hardly controversial) and that its causes would be readily addressed by this wide-ranging statute (questionable).

The financial system on which Dodd-Frank is being imposed is far more complex than the lawmakers, and even most regulators, apparently contemplate. We will almost certainly end up with a number of regulatory inconsistencies whose consequences cannot be readily anticipated. Early returns on the restructuring do not bode well.

http://www.ft.com/cms/s/14662fd8-5a2...#axzz1I5YYNcgb

Nothing quite like the fresh air of Spring, eh?

[Ted S.]

I refuse to read all the speculation anymore -whether it's good or bad.

Things are getting busier in my neck of the woods and although I won't bet the farm on it (I don't have a farm anyway) I'm just going to suck it up and keep going.

If you eat enough scraps you will still get fat.

My new motto.

[David Meiland]

Dude, you reach for that scrap and I'll stick my fork in the back of your hand!

[Ted S.]

Who's using a fork?

I'm eating with my two hands...

[Dick Seibert]

It's a good time to build for people with cash, it's a bad time to speculate in housing, Case-Shiller says we are into a double-dip.

[jstoddard]

Of COURSE we're in a double-dip -- did you ever doubt that?
You had a dump of federal money into the economy which was like turning up the voltage on the paddles just long enough to get the patient's heart beating again. But since there is no job recovery (and isn't going to be any time soon), and all the dilution of currency is going to cause inflation to creep in - a "double dip" is inevitable isn't it ? That's sort of econ 101.

But again - who cares? None of us are D.R. Horton or Centex. The only thing that matters is what's happening in that 30 mile radius from your office (or whatever) that you're willing to travel to to do work. I read today that Saddlebrook Homes went belly-up - they were out of Knoxville or Memphis (can't remember) but had an office next to a client of ours in Gallatin TN. They were stupid and got over-extended. Now that they're gone, our client will have a better shot. It's all relative.

Pay attention to YOUR market - that 30 minute radius. Your opportunity will be the difference between the demand... and the supply.

JLS

[BeachBoy]

Joe, there were four demos in my neighborhood recently. Any idea what a rough estimate for labor (assume 3500 sq ft, upscale finishes) is? Something like 10 man-years I would think... So that should cover about 40 equivalent heads over the next year.