Builder Blues
We’ve all heard of buyer’s remorse – but what about builder’s remorse? It would be an understatement to say that homebuilders have enjoyed their share of profits during the housing boom. As real estate is cyclical, those builders that moved in early to purchase empty lots and tear-downs in 2004 and 2005 have done very well – maxing out lot lines and squeezing the most profit out of new construction for hungry buyers during the peak of the market. The builders that paid for overpriced, overvalued shacks in 2006 and 2007 are now experiencing the sobering reality that all bubbles must burst – and the current supply of spec houses way outnumbers the demand.
The following listings are examples of builder’s remorse: get out and recoup what you can before sinking deeper into the hole. Many of these are listed at, or just slightly above, the original purchase price. For those of you looking for land to build your dream home, the Builder Blues might translate into a Builder Bargain!
844 Lake Washington Blvd NE, Bellevue
MLS 28031721
Last purchase: $929,900 (08/07/2007)
Current price: $949,000
7852 NE 14th St, Medina
MLS 28019314
Last purchase: $1,250,000 (07/31/2007)
Current price: $1,100,000
8650 NE 7th St, Medina
MLS 28037813
Last purchase: $1,249,950 (01/12/2007)
Current price: $955,000
9827 NE 14th St, Bellevue
MLS 28061466
Last purchase: $1,050,000 (08/14/2006)
Current price: $925,000
3108 92nd Ave NE, Clyde Hill
MLS 28056873
Last purchase: $825,000 (12/01/2006)
Current price: $999,000
April Showers Bring Tax Dollars | Redfin Seattle Sweet Digs said:
[...] Builder Blues [...]
April 15, 2008 10:32 PM
avorob said:
Nice stats. We’re seing the same trend in Midwest. At some point builders won’t be able to hold their finished projects any longer (interest payments and taxes) and would have to unload.
Susie, whith your permission I reposted this article on our blog – blog.teardowns.com
April 16, 2008 7:52 AM
Susie Naficy said:
avorob – sure you can repost! I agree, Builders are obviously the most vulnerable with high start up costs and upkeep – not to mention that many of these new homes are staged at the cost of thousands per month. At least if you are a homeowner and you can’t sell, you can enjoy your home while you live there!
April 16, 2008 2:42 PM
theresa said:
You made an error on the Medina house it was purchased for 955K and is now selling for $1,249,950 (thats a nice profit for just sitting on a house)
April 16, 2008 3:58 PM
Susie Naficy said:
Thanks Theresa – you are right, those numbers are transposed. Its a nice profit, IF the house sells close to the asking price – which it likely will not considering its been on the market for over one month now. Despite the fact that the value is in the land, the original purchase price was high (at $663 sq/ft) – asking for a higher price, in a slower market, is likely to not be very fruitful. Keep an eye on it – we’ll see!
April 17, 2008 2:20 PM