Still Weak
Lennar has again identified Sacramento as a weak market.
Lennar plans to cut land costs, production costs and selling, general and administrative expenses to try to partially offset the increased incentives, Miller said in a statement. The current uncertainty in the new homes market was "primarily the result of speculators exiting the market and changing homebuyer sentiment," Miller said, but he also reserved a positive long-range outlook.
"Although current market conditions have softened, we believe favorable demographic trends and high employment levels bode well for long-term homebuilding fundamentals," he said. Some weaker markets were Sacramento, San Diego and Washington, while Florida and New York remained strong. Miller said speculators who are exiting the market have contributed to inventory and potential buyers are waiting to see how the market performs...
The health of the economy and its impact on consumers and employment, which could result in a "sharp slowdown" in housing demand, poses a risk for Lennar, UBS analyst Margaret Whelan said in a research note.
2 comments:
if by long term he means 10 years plus,maybe.this has just started and will take years to play out,no one has a good handle on how the shift to ARM and I/O short term financing has affected the risk,beyond the fact that it has increased the risk and volatility of the real estate market substantially.50% plus debt to income ratios on subprime loans are insanely risky,and typical.this will ge very ugly indeed.
You might want to point people at Mish's Blog:
globaleconomicanalysis.blogspot.com
There's been a lot of problems with Lennar homes in Florida that some people in Sac might want to be aware of.
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