As the Housing Market Changes Builders Court Presale Investors
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Pre-construction investing is like MySpace.com, gold-capped teeth and Brangelina. They’re all just so last year. After all, it was only last summer when buyers were practically breaking down builders’ doors trying to write contracts whenever a “for sale” sign appeared on an empty lot. With price-appreciation rates running at double-digits in many parts of the country, investors knew that in nine months or a year, when the project was finished, they could flip the unit to a new buyer at a sweet profit. |
Oh, how the world has changed. Year over year in July, new-home sales were down 21.6%, housing starts decreased 13.3% and permits were down 20.8%. Inventories of unsold new homes are now at a 6.5 month supply — an 11-year high. The picture isn’t any prettier in South Carolina. Along the coast, which includes Myrtle Beach, July sales of new and existing homes were off 42.7% from the same period last year, according to the South Carolina Association of Realtors. And what about prices? The National Association of Home Builders says that nationwide, the median price of new homes was $230,000 in July, virtually unchanged from a year ago but down 9.4% from the April peak of $253,800. The median sales price of new and existing coastal South Carolina properties was up 17.1% over last year, but Vienna, Va., economist Tom Lawler calls that a “wacky number” because high-end home sales have not fallen as fast as lower-end sales, skewing the median price higher.
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