Go belly up, I think, or at least, many of them will. Of the 549 single family houses currently listed for sale in Greenwich, 113 of them were built in 2005 or later (104 of those were built after 2005). While a few of these have sold once and are now back on the market, even more new houses are hiding behind their builders having moved into them or rented them out for less than their carrying costs.
So let’s assume that 113 is a rough figure of unsold spec houses for sale. Their prices range from $25 million to $1.350 million and, while I won’t say that I’ve seen every single one, those I have seen are, without exception, suffering under handicaps like poor location, poor land, crazy prices, etc. I don’t expect any of them to sell for their current price. Many of these houses probably still have some profit built into their prices; many do not. Some builders have the financial strength to take a big hit; many more do not.
This happens every cycle – builders get wiped out and are replaced with a new generation of optimists. I think we’re going to see more of that this year, however, than we ever have before.