Builders Feeling Wrath Of Buyers: Do They Deserve It?
I realize we’re in the doldrums of December, not exactly a hot time in housing, even during a boom cycle, but I’m hearing some disconcerting rumblings from some builders, anecdotally speaking of course.
One mid-sized private builder told a friend of mine that potential customers coming through their model-home doors are openly hostile. They’re not just looking for good deals; they’re looking for payback.
Apparently some of today’s new homebuyers blame the builders outright for the current housing predicament. They are telling unwitting sales reps that they are to blame for running up prices and foisting untenable loans on clients during the latest housing boom. Buyers are telling the sales people stories of how rudely they were treated during the boom, how they were told that if they didn’t want to take the deal they could stick it, because there was a line of buyers right behind them.
Another builder told someone else I know that buyers today aren’t just low-balling, they are making truly ridiculous offers, like half the asking price. I guess I’m not surprised at the offers, but the hostility is, I think, a little much. Sure, the builders overbuilt, and sure, prices surged with the demand. Was there aggressive lending? Absolutely.
But the builders are paying for it now. Just take a look at any public builders’ latest earnings report, and you’ll see what I’m talking about, not to mention their now-aggressive sale pricing; and don’t even bother to look at their stocks! As for private builders, many are shutting their doors; others are cutting back and tightening belts. Trust me, they’re all paying for it.
But back to the hostility. Are the builders really to blame for today’s housing recession? Partially, for sure, but I really can’t stand it when everyone blames the current debacle on builders, lenders, banks, and realtors. Buyers were there, on the front porches, outbidding each other and signing up for no-money down loans that clearly stated in black and white that the interest rate was temporary. Everyone gambled on housing, fair and simple, so ease up people.
Questions? Comments? RealtyCheck@cnbc.com