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!