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A Lesson For House Builders

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KB Home of Los Angeles posted a loss of $773 million in its most recent quarter, and its shares have plunged 50% in the last year. Lennar Corp., the biggest home builder in California, reported a $1.3-billion quarterly loss Jan. 24. Its stock price has fallen 63% from its level of a year ago.
Stuck with excess inventory, builders throughout California are beginning to offer steep discounts on new homes, sometimes at a loss. Centex Corp. is touting the "greatest prices in years" in its ads. In San Bernardino County, builder Van Daele Homes is advertising 35% discounts.
Until recently, most builders resisted outright price cuts in California to avoid undermining the value of their holdings. Instead, many offered incentives such as big-screen televisions or interior upgrades.

But the incentives weren't working, builders now concede, forcing them to carry the debt on empty, unsold houses.

"Builders don't have the luxury of waiting another year for the market to turn -- they need the cash flow now," said Patrick S. Duffy, principal of Metrointelligence Real Estate Advisors, a consultant to home builders.

Its like looking into a crystal ball.

Ho hum . . . . . . . . .





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  • 296 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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