Its an unwritten law with large builders that you don't cut prices in subdivisions where you have sold to others at higher prices. Builders can't help but make implications that the home prices are going up when they sell to buyers. A lot of the sales offices were manned by kids in their early 20's. Order takers. No telling what they said. Cutting prices on the same floor plan in a halfway built out subdivsion is asking for a law suit. John
Debt Draws Attention By Terry Savage TheStreet.com Contributor 8/27/2006 9:47 AM EDT URL: http://www.thestreet.com/markets/ec...s/10305903.html Is the U.S. bankrupt? In a study published earlier this month, economist Lawrence Kotlikoff pointed out that the U.S. is responsible for $80 trillion in future entitlement promises -- a figure about six times larger than the U.S. economy. To make good on those promises, future workers would have to pay tax rates ranging from 55% to 80% of their incomes! The same week that Kotlikoff's study ran in the Federal Reserve Bank of St. Louis bulletin, the comptroller general of the U.S. said, "Current fiscal policy is not sustainable, and hard choices must be made ... we're mortgaging the future of our children and grandchildren and creating a shameful legacy." Finally, some knowledgeable and authoritative people are starting to bring this national crisis to the attention of the public. Fiscal Wake-Up Tour The comptroller general, David Walker, is on a national "Fiscal Responsibility Wake-Up Tour" -- a nonpartisan effort to educate the public to the crisis that looms, not only in the next few years, but as baby boomers retire. Walker, who is in the midst of a 15-year term, is being supported by both political liberals and conservatives in his efforts to shine a light on the budget problems that are approaching. Here are some of the facts that he pointed out in a presentation last week: About 60% of our federal spending is now mandatory, primarily because of Medicare and Social Security obligations and interest on the national debt. While the 2005 budget deficit was widely reported at $318 billion, if it is calculated on an operating basis like one that most companies use, the year's deficit was easily double that amount. We finance our deficits by borrowing -- and 50% of our public debt is currently owned by foreigners. Interest on the national debt is expected to be about $200 billion this year -- around the same amount that we spend on Medicare. We currently have a $46 trillion liability for Medicare and Social Security obligations -- and the new drug bill will easily add another $8 trillion in promises. Over the next 25 years, Medicare spending will grow at nearly five times the rate of GDP growth. Every newborn arrives with an immediate debt of $156,000 -- which constitutes fiscal child abuse! Walker's presentation is on the General Accountability Office's Web site. You should see the data for yourself because a picture is worth a thousand bullet points! These are MEGO numbers. That stands for "My Eyes Glaze Over." And that's why our huge and growing financial disaster doesn't stand much chance of gaining attention, especially in a world dominated by reality television shows and news headlines about perverts. When more people take the time to vote for dancing partners or dubious singing talent than vote for the president or their own congressional representatives, then we have only ourselves to blame. Or we could say that we are setting ourselves up for the blame that our children will heap on us for being the first generation to leave this country worse off than we found it. Walker points out that time is working against us, so we have to act now. Since we're in a period of economic growth, with relatively low interest rates, it's the perfect time to get our financial house in order. (That's the same advice I've been giving to consumers!) The real problem is the exponential increase of the deficit 20 years down the line, when boomer retirees will be dependent on promised payments from government. This will implode the system. Spending Solutions Tough choices must be made, according to Walker. Among his first targets is the out-of-control growth in health care spending. He calls on the country to debate the issue of what type of "basic and essential health care" the government should provide citizens vs. what people should pay for themselves. He challenges Congress to assert greater control over the budgetary process, and urges the authorization of a line-item "rescission" that would allow the president to cut individual items from the budget. A 50% vote of Congress would be required to restore any cuts, leading to more transparency in spending. Overall, he says, the challenge is to re-engineer and transform our government into a 21st-century operation. If we don't immediately start dealing with our financial problems, says the comptroller, we risk the fate of the Roman empire, once the most powerful on the face of the globe. Perhaps someone should have shouted out that the emperor wasn't wearing any clothes! And that's The Savage Truth.
I just read this, and all I have to say is: LMFAO!!! Toll has lost 60% of its share price since you made this brilliant call...
Well Mister 9 post, if you've around here I had posted TOL since '04 and oh what an easy double in a short period. I did say it was time to sell last year too. Now just for a laugh, whats your other screenname. Or better yet, do you sell insurance for a living? lol. I guess I'll find out soon...
I was only joking. I don't have another screen name, and I don't sell insurance. True story. The real question any investor should ask right now is, will housing stocks drop further given share dilution.
And they won't lower the price is until it is evident that prices are actually dropping. RE prices always lag, economists refer to this as "stickiness". Prices do not react immedialtely to changing fundamentals, but once they do, watch out. Right now investors are hearing that if they can't sell they can rent, so there is a psychological safety net. I think in some markets (Phoenix comes to mind) where you have had significant investor/flipper activity, you could see prices and rents drop.
homes sold with concessions are lower prices. how'd you like to close on a home at $750,000 in Phase III and see Phase IV next door same model listed at $699,000? they will put in upgrades, do closing costs, put a car in the garage, etc, before they actually cut the sticker price. it will be interesting to see how desperate lenders are, as those concessions and give-aways should be "netted" out of price, shich will likely lower loan amount and raise LTV.
Not only that, but homes sold with concessions allow builders and realtors to claim that the average median sale prices are higher than they truly are - thus, minimizing the dramatic events that are unfolding, and suckering people in the process. The concessions also allow builders to play cute accounting tricks, as well.
Now that I only own the home I live in, I am not talking my book. But, over the last few weeks there has ben a lot of buying in our once great bubble market. One of the builder did slashed prices, but they sold 30 home in the last month to six weeks. My friend who works in a sales office said his builder sold 10 and thee have been a ton of cars in front of the models. The paper said that there has been a lot of title work. I think this reprieve on the interest rates may have allowed people with variable rate mortgages to refi and it also forced some buyers on the sidelines to buy while the mortgages are not so bad.