Tuesday, April 10, 2007

'Feeling the Effects of the Slowdown in the Subprime Market'

From the Sacramento Business Journal:

National homebuilding giant D.R. Horton Inc. on Tuesday announced its second-quarter new-home sales dropped by 37 percent -- or almost 5,800 fewer homes than a year ago, with much of the slow down in California and the Southwest.
D.R. Horton was the Sacramento region's leading homebuilder last year, selling 1,168 homes -- almost 12 percent of the market share. But the company's sales in the area have slowed in recent weeks, after an impressive 100 homes in January, but only seven in February, according to Hanley Wood Market Intelligence. D.R. Horton has 5.6 percent of the new-home market for the first two months of the year.
From the Stockton Record:
New-home sales jumped by nearly 20 percent in the first quarter in San Joaquin County, up from the previous quarter as well as from the first quarter of 2006, when a housing slowdown was settling in.

Prices, though, continued to slide, from an average $519,350 at the end of last year to $507,115 in the most recent quarter, a decline of 2.4 percent, according to the latest sales numbers from the Gregory Group, a real estate information and consulting service in Folsom.

That's down from a high of well above $550,000 in the third quarter of 2006.
Even with the sales-numbers growth, the first quarter was mixed, said Joe Anfuso, president of Stockton-based Florsheim Homes.

The number of people out looking at home models significantly increased beginning in mid-January, he said, but that dried up again several weeks ago with the implosion of the subprime market, which either took many potential buyers out of the market or scared them off for now with reports of tightening credit standards.

"I certainly think all the builders are going to be feeling the effects of the slowdown in the subprime market," Anfuso said. "It will take some time to flush out of the system."

Gregory Group president Greg Paquin said builders have been lowering the presence of incentives in the sales market because these days, would-be buyers are responding better to lower sales prices, rather than to higher base prices with incentive packages thrown in.


EndUser said...

The sub-prime fiasco is solidifying the correction in more ways than just limiting liquidity. I believe that a major impact is in the general public's understanding now of how this all happened. Before the subprime meltdown, most people did not really understand the reason for the absurd run-up of the last four years. All of the sudden, it all makes sense to the general public--many of the people buying houses in california over the last few years could not really afford it. The subprime meltdown has not only limited the number of buyers, but more importantly, has seriously affected buyer psychology for the next few years.

Sittin' Out This One said...

$550,000 in the 3rd Qtr 2006.
$507,115 in the 1st Qtr 2007.

7.8% drop in value over 2 Qrs.

15.6% annualized depreciation.

San Joaquin County. Enough said.

Diggin Deeper said...

American Home Mortgage reported earlier this week that forward looking profits would miss expectations. Stock got a 16% haircut and they don't even do subprime...Hmmm...and they say it won't affect the rest of the economy. Over indebtedness is driving this country to the brink regardless of whether its govt, business, or the consumer.