Lennar Backs Out of Deal Lennar bailed on a contract to acquire a full city block in Oakland, Calif., in early May, bolstering claims that downtown development is recoiling. Local sources suggest that the decision to trash the plan, which would have produced between 500 and 850 housing units, was a move to cut losses early.
The city council intends to introduce affordable housing regulations requiring 15 percent of a project to be sold below market rates. Given the area's lengthy approval process, Lennar was unlikely to avoid the inclusionary zoning mandate.
Further darkening the deal is the high price per square foot Lennar was on track to pay for the property as signs of weakening demand surface. The San Francisco Business Times reported that the land was under contract for $320 per square foot, a price that is 37 percent higher than the prior sale record.
Fischer Homes in Legal Tangle After a raid on both an apartment complex and the Crestview Hills, Ky., headquarters of Fisher Homes, immigration authorities had four of the builder's construction site supervisors and 76 suspected illegal immigrants in custody. The site supers—Timothy Copsy, Doug Witt, William Allison, and Bill Ring—were charged with harboring illegal aliens for commercial advantage or private financial gain, a charge that has a maximum penalty of 10 years in prison and a $250,000 fine.
Fischer Homes denies the charges. A formal statement says that the company requires verification of employees' citizenship and insists that subcontractors agree to avoid using illegal aliens on the job.
Dean Boyd, a spokesperson for U.S. Immigration and Customs Enforcement, told The [Cincinnati] Enquirer that “this was not a random roundup of illegal aliens. These were arrests that were conducted as a result of a criminal investigation that has been carefully planned.”
The case creates ramifications in the industry. Home builders will have to revisit such general agreements with subcontractors regarding the use of illegal labor, taking into account that such contracts may no longer legally indemnify them.
Housing Market on Ice The top housing economist at the NAHB's spring construction forecast conference says the nation's housing market is in a transition, cooling but not crashing.
David Seiders, NAHB's chief economist, says among the reasons the market is losing steam are rising energy prices and increasing mortgage rates. “We can't sustain the numbers of the last year. We're going into a cooling period, not a thud,” he says.
However, Seiders says he expects the 2007 housing market to be a strong one after some corrections. But Mark Zandi, a co-founder of Economy.com, has a more pessimistic view. He believes a half-dozen housing markets are already crashing, and mortgage rate hikes have knocked out many first-time buyers and investors.
Among the markets in for the hardest landings: large parts of California, Las Vegas, Phoenix, parts of Florida, and parts of the Northeast. “Housing was a pretty good investment at the turn of the century. It's not now,” he says.