We are building in The Ridge at Northlake and received this e-mail last night from our builder. Glad we got in when we did. This is common in commercial but pretty sure this isn't normal times in residential. Before this they had a wait list and then the wait list was too full so they stopped allowing people on the wait list. Crazy. Hope this doesn't allow the Californians to start taking over our neighborhood.

i wonder if agents still have any leverage in new construction with this type of stuff.

This is happening in Pecan Square too.

Hincemm said:

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i wonder if agents still have any leverage in new construction with this type of stuff.

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Doubt it. I know buyers have zero leverage during build process because the builders would love for you to walk away from the deal and let them sell the house again for more money. Luckily my best friend works for our builder so he's being nice, but he said his big bosses have told him to not budge on anything and offer to give people their money back if they have ANY issues during build.

agcrock2005 said:

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Hincemm said:

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i wonder if agents still have any leverage in new construction with this type of stuff.

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Doubt it. I know buyers have zero leverage during build process because the builders would love for you to walk away from the deal and let them sell the house again for more money. Luckily my best friend works for our builder so he's being nice, but he said his big bosses have told him to not budge on anything and offer to give people their money back if they have ANY issues during build.

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Which builder does your homie work for? Asking for a friend me, whos currently building a house.

Is that Darling? Pulte?

We signed on a new build in January before **** hit the fan. Now the same house is going for over $50k more. And our build was pushed back a month to September.

fooz said:

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We signed on a new build in January before **** hit the fan. Now the same house is going for over $50k more. And our build was pushed back a month to September.

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Very similar story here - I believe you and I got in at the worst part of the best time!

It seems we are headed for another real estate bubble.

fooz said:

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We signed on a new build in January before **** hit the fan. Now the same house is going for over $50k more. And our build was pushed back a month to September.

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Same, but when including lot prices, upgrades, and base price increases I couldn't get into my house if I gave them $125K more than what I signed for in November. Good equity but sucks on taxes.

agcrock2005 said:

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fooz said:

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We signed on a new build in January before **** hit the fan. Now the same house is going for over $50k more. And our build was pushed back a month to September.

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Same, but when including lot prices, upgrades, and base price increases I couldn't get into my house if I gave them $125K more than what I signed for in November. Good equity but sucks on taxes.

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I have a hard time seeing how the CAD will try to juice as much as they can out of these new builds with the price increases. It's going to poke a lot of bears and anger people. I think (hope really) they will be diligent about the assessment increases they implement.

But then again, I totally expect (and am underwriting for my own new build ) them to jack it up to the max and will plan accordingly. I hate taxes.

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But then again, I totally expect (and am underwriting for my own new build ) them to jack it up to the max and will plan accordingly. I hate taxes.

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Yeah, I don't think taxes were ever supposed to be more than the freakin mortgage...

They absolutely will hit these new builds with the 10% cap. Then again next year as they will not have recouped all the increase over 10%. Rinse and repeat if the area is new and still booming.

File your HE exemption and get Heisenberg to park his RV around the neighborhood and you may see it decline.

Separately, essentially all builders will be moving to spec build, best and finals, and get bent if we have a price escalation market. This will sustain until interest rates move up or economy goes to crapper.

fka ftc said:

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Separately, essentially all builders will be moving to spec build, best and finals, and get bent if we have a price escalation market. This will sustain until interest rates move up or economy goes to crapper.

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And it seems like we have an endless supply of people moving here for now

absolutely endless.

It was just on in the background so I may be wrong on the details, but there was a story on the local news yesterday about a builder breaking their contract with a couple and asking for 90k more before starting the house.

double aught said:

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It was just on in the background so I may be wrong on the details, but there was a story on the local news yesterday about a builder breaking their contract with a couple and asking for 90k more before starting the house.

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A lot of builders have that allowed in their contracts, and several have been exercising their rights for the last few months. I believe it's called a Force Majeure clause but someone correct me if I'm wrong please.

ChoppinDs40 said:

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agcrock2005 said:

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double aught said:

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It was just on in the background so I may be wrong on the details, but there was a story on the local news yesterday about a builder breaking their contract with a couple and asking for 90k more before starting the house.

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A lot of builders have that allowed in their contracts, and several have been exercising their rights for the last few months. I believe it's called a Force Majeure clause but someone correct me if I'm wrong please.

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force majeure because of commodity price increases is bogus. That is not an "act of god".

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That's just what my buddy said it was. He works for a very large builder in DFW, but they don't have the clause in their contracts so he could have misspoken which is why I said to correct me if I'm wrong. I just did a quick google and this article refers to "escalation clauses".

How Builders are Dealing with Rising Lumber Prices

We finally got our house on the market Friday. Had 21 showings Sat, open house Sun, and all offers in by 2pm Mon. We got $60k over asking price with appraisal waived/letter from lender. Madness.

Builder of new house said things should speed up if lumber prices continue to drop. They just finished pouring our slab.

Tough situation for sure. One of the buyers in that article is actually an attorney, I'm guessing they though that clause would never actually be enacted, assuming they actually reviewed the contract in detail?

Corps_Ag12 said:

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fka ftc said:

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It is indeed escalation clause and is clearly explained to the buyer. They were put in place for most builders 6 months ago or so. Absolutely nothing wrong with it. If buyer does not like, they should not have signed.

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I hear what your saying but is it ethical to do right before closing and blind side the buyer?

https://www.google.com/amp/s/www.ampgoo.com/fort-worth-family-loses-dream-home-message-for-buyers-read-the-fine-print

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As mentioned in my statement, most of these clauses were put in place months ago, explained to buyer so blind side has not applied. I believe most have been holding their original pricing on contracts closing within "x" days.

Is it "ethical" for the builder to absorb all the costs, layoff people, go bankrupt, etc because of an unanticipated, radical shift in lumber prices? If lumber had dropped by 50%, the buyers would sure as hell be beating the doors for a lower price. Would it then be "ethical" for the builder to say "suck it buyer, we have no desire to reflect our lower costs when its time to close".

What these builders did was both legal and ethical. It may not meet your moral standards though.

No going to disagree that doing so right before closing with apparently no other reason than they knew they could sale at a higher price is a crap thing to do. As mentioned in the article, a one-sided termination for convenience is somewhat unusual and most require some issue to arise in order to terminate.

Increase of costs would be one of those reasons but the buyer should be made aware of or make themselves aware of those provisions.

TxAG#2011 said:

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Most market participants would have been completely unaware of the price of lumber before this most recent spike (which has now dissipated) so I'm not buying that argument at all. Or the price of construction costs for anything for that matter.

But yes let's keep standing up for the corporations over the consumers here.

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What a weak take. The builders and contractors hit hardest by this are small businesses. The corporate guys are the ones with enough clout and reserves to make the mills balk and bring pricing back down.

Construction costs are up. Not sure what you are "not buying". And even those in the industry did not anticipate the run up that occurred and how long it is taking to get it back in line. The builders are not seeing increased margin due to the commodity price increases, quite the opposite. Profit numbers these days are being driven by demand and scarcity of supply.

When customers take advantage of a downward market or too much supply vs demand, is it wrong? By your logic, customers should pay a standard price regardless of supply and demand. They have a name for that its called communism.

fka ftc said:

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TxAG#2011 said:

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Most market participants would have been completely unaware of the price of lumber before this most recent spike (which has now dissipated) so I'm not buying that argument at all. Or the price of construction costs for anything for that matter.

But yes let's keep standing up for the corporations over the consumers here.

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What a weak take. The builders and contractors hit hardest by this are small businesses. The corporate guys are the ones with enough clout and reserves to make the mills balk and bring pricing back down.

Construction costs are up. Not sure what you are "not buying". And even those in the industry did not anticipate the run up that occurred and how long it is taking to get it back in line. The builders are not seeing increased margin due to the commodity price increases, quite the opposite. Profit numbers these days are being driven by demand and scarcity of supply.

When customers take advantage of a downward market or too much supply vs demand, is it wrong? By your logic, customers should pay a standard price regardless of supply and demand. They have a name for that its called communism.

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They aren't canceling due to construction cost increases, they are canceling because the market is crazy hot and they are looking to make more money.

TxAG#2011 said:

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So the builders entered into these contracts without knowing the prices could increase? My sympathy meter is low.

These terminations have much less to do with construction costs and everything to do with a red hot real estate market. They're backing out to list on the open market. Pretty easy to see what's happening here.

And please leave that communist crap over on the politics board.

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You are simply misinformed or just projecting your cynicism despite the facts.

I described capitalism. You described communism. But this is economics not politics.