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Tuesday, October 10, 2006

 

Bye bye equity - You were nice while you lasted.

Oct. 9 (Bloomberg) -- Kara Homes Inc., a luxury builder in New Jersey that sells homes triple the average U.S. house size, filed for bankruptcy after discounts of as much as $246,000 and a year of mortgage payments failed to lure buyers.

The closely held East Brunswick, New Jersey-based company sought Chapter 11 protection in U.S. Bankruptcy Court Oct. 5, saying it owes $296.84 million to lumber, concrete, electrical, plumbing and woodwork companies while holding $350.18 million in assets, primarily unsold houses and land. One property for sale is the 6,319-square-foot, five-bedroom ``Buckingham'' model with a three-car garage, listed for $1.5 million in Freehold, New Jersey.

U.S. housing demand is flagging after five record years, swelling the inventory of unsold homes. Almost half the people who sign contracts with builders are canceling before the house is finished, forcing companies to sacrifice profit margins by offering freebies to attract new buyers, according to James Hughes of Rutgers University, in the same town as Kara's headquarters.

``There could be many similar filings in markets glutted with single family homes,'' said Gerard Cassidy, managing director of bank equity research for RBC Capital Markets in Portland, Maine. ``Kara is already at the table. We expect more people to come to dinner, the question is, how many more?'' h/t eschaton commenter.

........................

Maybe this is part of his plan to make 6,319-square-foot, five-bedroom homes available to the little guy? Viva Bush!

Comments:
Just so we're clear, Bush is responsible for all the bad things in America, but none of the good things. Right?
 
What good things has he done?

As for the housing bubble I blame Alan Greenspan.
 
looks like classic oversupply.

They built more Million dollar pluss McMansions than there were buyers.
 
it is not holding true for Delaware though in NCC. My dad just sold his house in 3 days. If your home is priced right it will sell. The big problem is that sellers are over valuing their homes and refusing to put them on the market for what the market will fetch.

prices in delaware will see a slight 'correction', but that depends where you live. I live in North Wilm and I wont get top dollar but I am still going to get 55% equity in 3 years of homeownership. Not too bad.

Bear, south of the Canal....that is going to be a big problem....
 
The asking prices down this way (MOT area) are declining a little now. Nothing drastic, but there has been a drop. I don't know of what magnitude you are referring when you say there will be a problem here, but I don't expect anything severe. What I can say with confidence is that this home certainly does not bode well for my retirement, which is xx years away.
 
Twenty years?

I think it goes without saying that Frightland if killing house values in my neck of the woods.
 
Honestly I've never seen Frightland... but is it worse that say, 1600 packed-in tract/townhomes including maybe some REAL crack houses?
 
No. People who live near real crack houses are worse off than me.
 
DV awesome! your dad must have priced it right because as a buyers market, sellers have got to plan accordingly.

I have two houses on my circle that have been on the market a few months now (I recently got a letter from the city citing me for a few tires I had on the side of the house near the garbage cans - as if it was ALL MY FAULT that no one wanted to pay the asking price for these houses and they were sitting, sitting ALL BECAUSE.

The homeowner to my immediate left bought her split level 2 years back for oh, 150K with costs.

Now she is marketing it for 250K and has done very little, very little improvements. 100K profit over two years with this market...sorry charlie you waited too long to sell.

Last year the homes were indeed going in a few days time for close to the 250K high in what I call
Starter home plastic fantastic Barksdale Estates.
 
"the city citing me for a few tires I had on the side of the house "


you might be a redneck if...
 
funny anon...

what exactly is a few? More than 2 for sure....No offense, but I would call too if I were trying to sell my house. It matters just as much how the neighbors appear as the house that is selling.

Oh, and how the hell did they get there? I always wondered how tires were just laying around someones house? Who changes those things, puts on new tires, rims and all in their driveway then leaves the other ones....
 
It was two!! and one was in a garbage bag already.
TWO TWO TWO!
They were on hold for spare bare spares.
 
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