One of the first Credit Bubble Stocks posts was about Amrep, the New Mexico land developer. At that time, we observed that the fundamentals were not looking good for land in Rio Rancho.
There was an incredible parabolic blow-off in the Amrep share price at the beginning of 2007. Just now, I was blown away by the collapse in the price since then. It has traced out a classic parabolic bubble and collapse.
AMREP Corp. (AXR) is the $400M company in Rio Rancho, NM that owns approximately 18,000 acres of the town.
What's bad for Rio Rancho is bad for Amrep, and there's a lot of bad news:
1. Starting in August 2007, Intel is laying off 1,000 workers at its chip fab plant in Rio Rancho. There are only about 40,000 people of working age in Rio Rancho.
2. Rio Rancho building permits were down 66% from March 2006 to March 2007.
3. The city of Rio Rancho is increasing by 29-40% the impact fees charged to homebuilders. (An “impact fee” is assessed by the city against new construction, and due at the time of the issuance of the building permit.)
All the fees in the tables below are per unit. Remember, an increase of $3000/unit means an extra $9000/acre in cost assuming 3u/ac.
The fees differ based on whether the lot is in a master planned community and connected to city services, or else in an area with domestic wells, septic systems, and limited roads and drainage.
This is the change in fees for lots in master planned communities:
This is the change in fees that would apply to lots not connected to city services (e.g. the famous "scattered lots"):
Sources: 1,2,3.
Posts
All Comments
