Toll, Centex, Lennar Join `Moron’ Speculators in Land Grab Bust
Brian Tuttle owns so much land that he paid $3.6 million to get rid of 125 acres ready for development in the middle of Florida’s Palm Beach County.
“In 2005, I was a brain surgeon, and in 2006, I was a moron,” said Tuttle, who walked away from his deposit on the land rather than lose even more money buying it and building homes on it. “The only good news is that I’m not alone.”
The worst housing slump in 16 years made a lot of smart money vanish. D.R. Horton Inc., Pulte Homes Inc., Lennar Corp., Centex Corp. and Toll Brothers Inc., the five biggest U.S. homebuilders, said plummeting land prices cost them a combined $1.47 billion in the fourth quarter.
Builders paid more for land during the boom because home prices were rising, too. They didn’t realize speculators were pumping up demand by buying houses to sell quickly. When prices reached a point where speculators quit buying, homebuilders were forced to abandon so much property they helped create a glut that drove down land prices more than 9 percent last year, according to data compiled by New York-based research firm Real Capital Analytics Inc.