But Did Prices Really Rise?
I don't actually think prices rose, rather, people buying new homes got more for their money in the form of incentives. If you look at the third quarter results of the homebuilders, you will see that gross margins tightened pretty considerably from the third quarter of 2005 to the third quarter of 2006. In the case of Lennar Homes, the gross margin fell from 16% last year to 8.7% this year. In short, Lennar added larger kitchens, granite countertops and mortgage paydowns to in order to induce buyers to make a house purchase. The extra incentives show up in Lennar's financial statements as an increase in Cost of Goods Sold, or as a decrease in gross profits as a percent of revenue.
"Nov 29, 2006 — WASHINGTON (Reuters) - Sales of new U.S. homes dipped in October and inventories rose, but builders boosted prices by over $30,000 per unit after a sharp decline in home prices a month earlier, a government report showed Wednesday.
New single-family home sales declined 3.2 percent in October to an annualized rate of 1.004 million units from a downwardly revised rate of 1.037 million in September, the Commerce Department said. Analysts polled by Reuters were expecting October sales to ease to a 1.044 million rate from a rate of 1.075 million in September.
October sales were down 25.4 percent compared to a year ago.
The median sales price of a new home rose more than 13 percent to $248,500 in October from $218,200 in September as builders were able to boost prices despite a modest decline in the rate of sales. October's median home price was the highest since they reached $257,000 in April."
posted by Little_Silvered at 10:13 PM
7 Comments:
Little Silvered, with no Kara items up, we've lost our place to post.....
No.
-Jamey
any way we can get the old kara home blogs back??
yea, just search any word in the title using the search engine on the main page.
obviously njcoast has never been to a auction or bought and sold a stock..when you try to sell a stock you put a higher price on your sell order than what's bid....same thing with homes ....I bet any of thoes homes that sold in Rumson made a tidy profit from where they bought it .Bubble aside this will keep happining ,all the while people have a place to live in ....not bad eh?
“Are sellers wisely taking properties off the market now? Are brokers flooded with price reductions that may have been bloated in the first place? Is this an infinite regress where buyers can sit back until - Bingo! - they are finally getting value?”
The above is from an article on the Hamptons - ground zero for excess in America and a house of cards housing market that is on its way to massive collapse.
See: http://tinyurl.com/uxjy6
njcoast ,YEP I see what you mean the bubble has burst ,the bloom is off the rose ,some are no longer making hugh profits ...perhaps just breaking even.(while living in the house)...the Bubble has burst ....
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