Saturday, July 19, 2008

Financial Times: US builders forced to sell off holdings

by Bill McBride on 7/19/2008 11:42:00 AM

From the Financial Times: US builders forced to sell off holdings (Hat tip Terry)

Demand for new homes on the outskirts of US towns has fallen spectacularly in the last three years, while foreclosures and speculative building have created a far greater supply of homes than there are buyers. At the same time, soaring fuel costs have made the long commute to work that much less attractive.

The result is that farmland close to cities that has often been the seedbed for new housing developments is becoming less valuable to builders, at the same time as farmers want more of it.
...
Lakewood Homes, a small mid-western builder, sold 290 acres of land in the Chicago suburb of Newark at $9,650 (€6,086, £4,831)) an acre in April, nearly 40 per cent below the $15,865 an acre the company paid for the land in November 2005, to a local agricultural investor. Now instead of hundreds of new homes, the land will yield a range of crops including corn and soyabeans.
Housing Cartoon 1993 Click on graph for larger image in new window.

It looks like that cartoon I posted yesterday was prescient!

This cartoon was drawn in 1993 by Eric G. Lewis, a freelance cartoonist living in Orange County, CA (used with permission).