Warning About Beazer

At the end of this post you'll find a link to an article about two home builders who are in trouble, Levitt and Beazer.

Levitt is a South Florida based home builder and should have no impact to consumers in this area. Beazer, on the other hand, builds throughout the area.

Beazer's credit rating has taken huge hits recently. It's cancellation rate is at 68%. (Meaning that 68% of the people who sign a contract to buy one of their homes eventually back out.) And they're restating earnings back to 2004 because of some irregularities. All this has the smell of a company in trouble. Read the article and decide for yourself.

I wouldn't be giving a large deposit to Beazer right now. What happens if they're not around to build that house? And how about the 1 year builder guarantee after you're in the house? And, should things get worse and Beazer declares bankruptcy, you've got no chance of ever seeing that deposit again. Like I said, I wouldn't do it with my money!

http://seekingalpha.com/article/49971-kiss-levitt-goodbye-and-pucker-up-for-beazer?source=d_email

Impact Fees

In Commonwealth Magazine, the publication of the Virginia Association of REALTORS, there is an article this month that discusses the effect of impact fees on home affordability.

It quotes a study from the NAHB of saying that each $1,000 increase in the costs of home ownership reduces the number of prospective buyers by 217,000.

The implication of the article is that fees such as higher construction permit fees, tap fees, proffers required frombuilders and such things as the new taxes contemplated by some northern VA counties to pay for infrastructure are a bad thing.

Here's the problem with that implication. All of these fees, taxes, etc. are, in their own way, a way to offset the increased infrastructure required as new homes are built and new residents are added to an area. Increased population requires additional roads, schools, hospitals, sewers, etc.

Since all of these things have costs associated with them, the money has to come from somewhere. If you're not going to get that money from the builders making money off selling those homes, or from the new homeowners who, after all, will be the people utilizing those new services, who should pay?

The only people left, it would seem, are the existing homeowners. They would see an increase in their own taxes to help fund new infrastructure for the benefit of other people. It's hard to see anyone jumping on that bandwagon!

No one likes fees or taxes, regardless of their political persuasion, regardless of whether they use the services that those fees fund. But you can not simply continue to add population without infrastructure. And you can't expect existing home owners to absorb the entire burden. You're asking for an anti-growth backlash!

"Even modest impact fees can have a dramatic effect on housing affordability," says Jerry Howard, the CEO of NAHB.

I'm still waiting for his suggestion on who, then, should pay for the infrastructure!

I think we've all seen what happens when no one pays and construction continues and the services aren't there for the newcomers. Is everyone enjoying their commute from this area into northern VA and DC?

So, what do you think? How do we pay for infrastructure?

Three Housing Articles

Slate is running a series of articles this week based on a book by Witold Rybezynski. The book is called Last Harvest: How a Cornfield Became New Daleville and it explores the design, construction and marketing of a new subdivision. I haven't read the book yet, but it's on my list!

But the excerpts in Slate this week and I though you might all appreciate the chance to take a look.

The first one is entitled "Why Do We Live in Houses, Anyway?"

The second one is "The Ranch House Anomaly" and I'd actually dispute part of what he has to say there. Ranch houses, or what we call ramblers here are actually making a comeback thanks to baby boomers who no longer want to climb stairs. They're just better designed, more open ramblers than the ones from the 50s and 60s.

The third and final article is "How a Cornfield Became New Daleville" This article is actually a slide show showing how a subdivision takes place. It was the most fascinating of the three articles and definitely contains information pertinent to what's going on in our communities today here in Virginia. This is the article that definitely made me want to read this book.

Take a look at these and let me know what you think!

New Construction Rant

It's time to talk about buying new construction.  A large number of home buyers like new construction.  And, what's not to like?  Once you walk into one of those beautiful models, decorated impeccably nothing else ever looks quite as good!

But from my perspective it's never good news when a buyer says they want to buy new construction. My clients who buy new construction are most likely to end up unhappy with the transaction.  And since the vast majority of my business comes from referrals from satisfied clients that's very bad news for me.  Even worse from my perspective I'm less able to control almost any aspect of the transaction in new construction. That starts with a contract written by the builder to protect the builder's interest. That contract is different than the standard regional contract used in this area.

Many builders are very good at over promising and under delivering. My only way of controlling this is working to properly set my clients' expectations.  That means telling them to not take as gospel truth dates the builder gives them on when they will move into their new home. In the typical new construction purchase I deliver an awful lot of bad news! While it's part of my responsibilities to my client, like every other normal human being, I hate delivering bad news!

Buyers of new construction are buying it because it's new and they have the expectation of perfection when they walk into their newly completed home.  That's pretty much never the case. Let's face it, builders and the people who work for them are all human beings and fallible and I've never seen a completely perfect home from any builder. Some builders are very good at taking care of whatever problems arise.  But an astonishing number of them are not. Again, I've now got an unhappy client and very little control over satisfying them.

Part of my reluctance to sell new construction is no doubt due to the fact that I'm a control freak.  I know that repeat business and referrals depends on the quality of the experience of each and every client. In every transaction there are things I can't control.  But I work hard to minimize that and to implement quality control of everything else!

So, I'd be happy to help you buy your next home, even if it's new construction!  But, don't say you haven't been warned about the potential for a bumpy ride!