Almost-New Homes Hurt Sales of Brand-New Ones

The L.A. Times reports:

Home builders figured they'd face cooling demand this year. But they're also facing another challenge: competing against some of their most recent customers.

Speculators, whose robust purchases made 2005 one of the best years for new-home sales, have reined in their buying and started selling amid signs of a housing slowdown. The influx of their almost-new homes is making it harder for builders to sell brand-new ones.

The latest evidence of that came late Monday when Irvine-based Standard Pacific Corp. said new-home orders dropped 13.4% in the first two months of the year and blamed it in part on slowing investor demand. Its announcement matched recent comments from other builders.

"This slowing of sales activity is particularly evident in markets which have experienced significant price increases and investor-driven demand in recent years, such as California and Florida," Standard Pacific said.

Obviously,investors are an important part of the demand side of California real estate.With so fews typical Californians able to afford the median home price any real pull back from speculators could whack prices.Remember California in the early 1990's?