Builder layoffs continue with 218 job cuts at DiVosta

[OhioChick]

Monday, December 18, 2006, 02:56 PM

In another symptom of the slowing housing market, DiVosta Building Corp. says it will lay off 218 of the 552 workers at its Palm Beach Gardens headquarters.

The laid-off workers include 87 journeymen, 58 laborers and 50 apprentices. They’ll lose their jobs between Feb. 16 and March 1, DiVosta tells the Florida Agency for Workforce Innovation.

“We’re trying to match our work force to the construction pace,” said Beth Cocchiarella, spokeswoman for DiVosta parent Pulte Homes (NYSE: PHM, $32.91).

Meantime, the National Association of Home Builders’ confidence index took a slight dip in December, with builders rating buyer traffic as “poor.”

http://www.palmbeachpost.com/blogs/content/shared-blogs/palmbeach/realestate/entries/2006/12/18/builder_layoffs_continue_with.html

[judaspriestess]

1. thats too bad

I'm a tract agent. Traffic has been poor but we are still selling. I saw this travesty coming three years ago when the 'boom' hit in Las Vegas and the prices pretty much doubled. I knew we were pricing alot of casino workers for example out of the market due to greed. Sure prices are coming down but thats stems from an inflated price back to a more realistic price. I don't anticipate the prices coming down to much more. Things can happen and of course I am not an expert.

[Tansy_Gold]

2. Gold Canyon, AZ

There was a flyer in the local paper this morning advertising a new home in this upscale area for $249,000: 2000 sq ft, 3-4 bedrooms, etc. I didn't look closely at it, but everyone around me agreed that this was a "steal" at that price -- or else there was something seriously wrong with it. Similar homes were going for $300K and up just a year ago.

If anyone knows of a good analysis of the whole housing bubble -- everything from urban sprawl and new developements to resale market to how the refi boom is fueling the consumer economy, please let me know. I've been saying for about five years that this is a bigger bubble than most people realize, and when it pops, it's gonna be a real disaster. But what do I know?


Tansy Gold

[BR_Parkway]

3. The simple answer? Who's left to buy them? If someone wanted

a house, had the credit and income to justify the mortgage - then they've mostly bought already. During the past 5 years, with rates so low, almost everyone who could buy did. In superhot markets, they could flip it right away and profit enough to trade up into something bigger. But now rates are higher, houses aren't going through the roof pricewise - in some cases, they're falling. Supply and demand. Builders kept building because people were buying - but many people were buying to flip, not to live in. And their no payment for 6 months, interest only loans are coming due.

So now they have to sell. But the real buyers who would live in the house already have one, can't afford one or don't have the credit/income to get one. And the other flippers who might have bought the house are having trouble selling theirs.

So now we go back to lower (normal) demand - people getting married, graduating college, having a kid - needing a house or a bigger house. But if you take out the investor/second home buyers (almost 30% of all homes sold last year) you have a huge gap in the demand side of the market. And with all those homes going back into the market to be sold now, you have just as big a gap in the supply side.

Prices have to drop. Buyer's buy based on being able to afford the mortgage payment moreso than the actual sales price. As rates go up, the monthly nut goes up - they have to pay less upfront for the house to afford it. The investors will take less because those who did make outrageous profit on paper can afford to take less to get out from under it rather than making payments that would eat into their "profit" anyway. And the shoestring investor who didn't get in soon enough to make the profit on paper will soon wind up owing more than the property is worth as his neighboring investors sell off theirs. Toss in the increasing record number of foreclosures going back into the market as the banks look to dump them and recover their loans and you've got a situation ripe for prices to drop by 20-25%.