K&B Founder – Home Prices Could Drop 20 Percent More
Into the gloom and doom of the housing market comes this tidbit of knowledge from one of the founders of K&B Homes. Eli Broad is thinking that home prices could drop another 20 percent over the next couple of years.
I bet the folks in the corporate offices of K&B are grumbling a bit over that quote as they try to sell their inventory right now.
“I don’t think we’re anywhere near a bottom in housing,” Broad told Bloomberg TV at the Milken Institute Conference in Beverly Hills, California. “We’re going to have a big inventory of unsold, unoccupied homes that’s going to take three or four years to clear out.”
Homebuilders, hurt by banks’ stricter requirements for granting home loans and concern over the rising number of homeowners failing to pay their mortgages, have begun work on the fewest number of houses since 1991, according to the U.S. Department of Commerce.
“People were using their home equity as really an ATM machine,” Broad said, referring to an automated teller machine. “They were spending more money than they were earning by taking equity out of their home. That couldn’t go on indefinitely. We’re now paying a price for that.” via Bloomberg.com
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Comment by Rhea on 29 April 2008:
Then maybe house prices would be realistic instead of astronomical here in the Boston area.