Real Estate Bubble

[dickmilde]

Homebuilder shares up after Lennar report

MIAMI (AP) -- Shares of major U.S. homebuilders rose Thursday after Lennar Corp.'s second-quarter earnings report showed a significant spike in sales of completed homes and new orders compared with the prior three-month period.

Lennar reported Thursday a 47 percent increase in sales of completed homes and a 63 percent jump in orders from the first quarter. Lennar also reported a 15 percent cancellation rate for the second quarter, considerably smaller than the 22 percent posted in the same quarter last year.

Revenue dropped to $891.9 million from $1.13 billion on a year-over-year basis, but the Miami-based builder still managed to beat Wall Street's $597.5 million revenue estimate.

http://finance.yahoo.com/news/Homebuilder-shares-up-after-apf-15620774.html?x=1&.v=2

We have been exceptionally fortunate in our area that we have been able to avoid the drastic price reductions seen in the hard hit real estate markets. My area is just now beginning to see some price weakness... It has not been reported by the media yet but I have a sense that some cracks in pricing are starting to show up. New construction and sales in general are at a virtual stand still.

Last week I made an offer on a short sale ( when a bank is willing to take less than the current loan amount )for an almost new property. The seller needs to get rid of a bad loan so the bank may foreclose and I get a prime piece of property at one of the best addresses in my area for 22% below the most recent sale that was just reported last week. Because I will pay cash the bank is motivated to close the deal... Looking for a higher offer from someone that needs to finance the purchase comes with additional risks for the bank.

It's all part of the plan to come out ahead when inflation finally kicks in. With the massive amounts that the government is dumping into the economy higher prices are a certain event... Real estate has always been an excellent inflation hedge and I hope that will be the case again.

Dick Milde