How are builders making a living here... (sales, real estate market)

They aren't.

The only way I can imagine anything penciling out for local developers is that they are taking advantage of "value engineering" which is a euphemism for building the cheapest shi* we can build to code and get away with coupled with cheap labor and reduced prices for land.

I am sure developers are working on razor thin margins. Many have closed up shop and sold their land to other builders who are now building cheaper products in formerly middle to high end neighborhoods. I have seen this in Mountains Edge and Providence. I know America West is back to their hype machine game, but they are one of the last local builders that might have purchased their land a decade or longer ago and therefore, they can afford to pump out homes.


In my travels, I have noticed the products of some builders, just about every one, have taken a negative hit on asthetics, such as the ommission of pop-outs around windows, stucco systems, plumbing systems, HVAC systems and on and on. It is very difficult to size up one builder to the next when the homes they build out of ticky-tacky all smell like chocolate chip cookies, have no interior doors (are they raised panel or flat panel??) and decorated to the 9's.

Yup -

At the moment I would not touch new build other than custom. The labor has gotten a lot cheaper and you can buy high quality workmanship at mid level prices.

Other than that I would wait until these guys have a little margin...and that is likey a couple of years out.

Building new construction when there is already an over supply is never a good idea.

They don't build on spec so there is little risk to builders now as long as they cut down their staffs and fixed costs to very low levels. Enough people hate the run around of dealing with foreclosures to the point there are new sales going on. Certainly not at prior levels, but as most of the builders will tell you they are building houses only because they are selling them.

Just remember it is a business and empty land is not earning them any money. They must utilize what they have to at least some degree or else they will lose control of their companies and their land. The only options are to sell off the land and close up shop in LV or they can do their best to at least continue to generate modest cash flow.

The largest hunk of our 14% unemployment is from construction, so builders can't be making any money except for some of the commercial projects possibly.

Hey, oldC, the builder right to the west of us just built about ten or eleven new homes, filling up all the empty lots in the development. They went up pretty fast too. Any idea what he's up to? He couldn't have had that many buyers could he?

Right by our house, American West is still building houses. Maybe 5-7 houses at the same time. Just only a few months after they finished, there are people moving in. And the builder starts building a new house. Look like they are making money. I do not know about the quality, though.

Hundreds of new homes a month are being sold, of course they could have that many buyers if they are priced right. Builders can make money on residential if they cut down their fixed costs enough. The key is in the cash flow. What they spent and lost on previously acquired land or built houses is in the rear view mirror, all that matters now is how much it costs to run the business a month and how much cash they can generate in sales at the moment. The construction staff and costs are all variable.

They're finding a price/quality level in the resale market where they think they can compete with whats already on the market.
People will always buy a new house before a resale at a given price.

Of course its good for the builders but for the overall real estate market its awful. Injecting more volume into an over saturated market and driving down resale home prices putting more people underwater.