If real estate is local, why should we watch what the big builders are doing? Take a look at some of the stocks for national builders. The only ones who currently have local presences are K Hovnavian who are building Four Seasons in Greene County and Ryan Homes who are building everywhere.
The national trends are far too macro-oriented to directly apply locally, but they may offer insight into what direction our local market might go. For example, national builders building in Northern Virginia were offering incentives such as plasma televisions, new cars and mortgage buy-downs long (~3-6 months) before those types of incentives appeared in the Charlottesville market.
In short, the large builders are a bellweather for what may happen. Locally, don’t fret about their earnings unless you’re a stockholder. The scales by which they can succeed and fail are far greater than most anything one will see locally. But if we can learn from their mistakes and adapt quickly …
As I have said before, the correlations between Northern Virginia and the Charlottesville market are often significant. Politically and economically the Central Virginia region tracks NoVa to a certain degree, if only because we are experiencing growth.
From a cvillenews commenter:
Pretty much any area with large growth tends to go slightly more Democratic. When I was working Earlysville for Tim Kaine, many of the new residents were from liberal areas of the country. Red Sox bumper stickers were not an uncommon sight.
Big builders and growth … signs of the times.
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Hi Jim,
Another reason to watch the builders is that often people have trouble selling their homes, if there is a lot of new construction in the immediate area.
Clearly if people can buy a brand new home for not much more than the cost of a resale home, the builder will win out.
What I have seen around the country is that markets are weakest when homesellers are competing with new construction nearby and strongest where new home is not an option in the immediate marketplace.
Ardell –
Thanks for visiting.
In our area, resales are always competing with new construction. Now, however, new construction properties are slashing their prices rather than bumping them up the longer they sat on the market.
With each price cut, those in resale homes are seeing their own perceived equity cut by a commensurate amount. Some of my sellers are experiencing this first hand. Darn it.