Two home builders, Del Mar-based Brookfield
Homes and Texas-based D.R. Horton reported drastic drops
in San
Diego homes sales. The San Diego Union-Tribune staff
writer, Mike Freeman, described how the San Diego market
is affecting local and national home builders, in his
July 21, 2006 article, “Developers cast more bad news on
market.
“Both Brookfield and . . . D.R. Horton
said they are experiencing an increase in cancellations
across the country-where buyers who have entered a
contract to purchase a home decide to walk
away.”
As a result, home builders have been
offering extra incentives to potential buyers, to try
and persuade them to buy. D.R. Horton chief executive
Donald Tomnitz said that every time home builders are in
a downturn, the rut lasts longer than everyone expected.
“So we’re preparing for the worst, and we think
this one will be longer and deeper than just the last
six months,” Tomnitz said.
Tomnitz then told a
Wall Street analyst that San Diego County is “a very,
very weak market for us.”
“Companywide, the home
builder [D.R. Horton] wrote off $57.2 million in the
quarter for deposits on land that it is now not going to
buy.”
Tomnitz told analysts that Sacramento and
San Diego had the poorest sales, but not all of
California was poor. “San Diego is our weakest market in
California. California continues to be a challenging
market for us. There continues to be a small percentage
of affordability out there.”
The local housing
market has been declining for two years. June 2006 sales
were down 24 percent from June 2005 sales, marking the
24th consecutive month of decline in year-to-year sales.
This is alarming since there are 20,000 available homes
on the market, nearly double the amount from last
year.
“The median price for a San Diego County
home was $488,000 in June, down from a peak of $518,000
in November.”
Brookfield’s chief executive, Ian
Cockwell said that they are experiencing the long
anticipated decline in the San Diego and Washington D.C.
housing markets.
“Brookfield, which has seven
communities selling in San Diego and Riverside
communities, lowered the number of homes it expects to
sell this year from 1,625 to a range of 1,200 to
1,300.”
Overall, D.R. Horton’s sales are also way
down. They are now forecasting to sell about 50,000
homes this year. They originally expected to sell 58,000
homes.
Home
builders and sellers are suffering from the San
Diego market. This may be good news however, for
prospective home buyers, since there is a surplus of available properties. |
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