RISMEDIA, September 22, 2009—According to the John Burns Real Estate Consulting September survey of home builders, the housing market is stabilizing, with more builders raising prices than dropping prices in California.
“For the first time since we began our home builder executive survey 15 months ago, more California builders reported raising prices than those who reported prices were flat or down,” said Jody Kahn, vice president of Irvine, Calif.-based John Burns Real Estate Consulting.
This month’s sample consists of 269 home building industry executives from public and private companies (62 from California). In total, their insight is reflective of on-the-ground conditions in 86 MSAs and 1,855 communities.
The survey’s color commentary underscores the positive effect of federal intervention, though most builders also expressed concern about their prospects for the next six months as the Nov. 30, 2009 expiration of the federal tax credit approaches. Other challenges cited include ongoing competition from foreclosures, continuing appraisal problems, lack of job creation and a void in financing for future projects.
“The survey confirms our belief that the market bottomed in the Spring, and that it is highly likely there will be another leg down late this year or early next year,” said CEO John Burns.
-Net sales per community increased nationally this month to 2.0 from 1.4 last month. The gains in net sales are driven by improved affordability, low conventional mortgage rates, and especially by the urgency around the first-time buyer Federal tax credit. There are plenty of reports of rising prices at lower price points, and spotty reports of sales gains at higher price points. Also, active adult communities in Chicago, Phoenix and New Jersey are reporting improved sales velocity.
-Cancellation rates continue to drop, with 61% reporting rates between 1% and 15%. The majority of builders are targeting entry level buyers, who