Sunday, February 01, 2009
One more new home builder files for bankruptcy
Well, the list keeps growing longer and longer. The St. Petersburg Times reports that Mercedes Homes has filed for Chapter 11 bankruptcy. The list of new home builders with local presence who have not filed for bankruptcy or chosen to leave the market is much shorter than those who have! Full Story
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There is a positive way to look at the picture. As the number of bankrupt builders grows, they have to compete against each other for a growing number of buyers who are becoming interested in acquiring homes at prices we may never see again. That is, of course, if there are no more major economic disasters looming. Mercedes Homes sold homes in Austin at prices that were competitive with newly built homes just coming onto the market (http://www.homebuilder-bankruptcy.com/2009/03/what-sale-prices-are-bankrupt-builders-offering-mercedes-homes-january-sales/). Competition and new buyer interest could be creating a bottom there. The prices make the homes attractive despite the risks of buying from a company (like Mercedes) that is reorganizing. Ongoing selling reduces supply. The perception of prices as being “really low” increases demand. Time will tell. Do you think there is a possibility that the Tampa-St. Pete market could be bottoming out?
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