Three Homebuilders, Three Different Views on Foreclosures

Many public builders have acknowledged the impact of foreclosures on the housing market. An example from MDC Holdings' (MDC) recent conference call:

Every home that's foreclosed upon creates a housing unit that someone has the opportunity to buy and the short sale phenomenon that the banks are forced to do is definitely competition. The market is affected by foreclosures. 

M/I Homes (MHO), however, said on its recent conference call that it isn’t impacted by foreclosures: 

CEO: There was an impact from [foreclosures] in terms of the appraisals lines and so forth, but… the preponderance to foreclosures appear to be at the very low end of the volume spectrum and that’s not ever been our business. 

CFO: [In] our subdivisions, we don’t seem to have any concentration of foreclosures. They certainly don’t have a significant impact on our appraisals yet.

On Centex Corp.'s (CTX) recent conference call execs said they're affected, but that the company isn't chasing foreclosure prices and that speculators have disappeared from the market:

Certainly foreclosures impact our volumes. The fact that they’re 50%, 60%, 70% of some of the resale markets in the country certainly has an impact on our volumes. We’re not trying to chase foreclosures in price at all. We’ve said that before. That will remain the case.

Anecdotally, what we see happening is, foreclosure buyers tend to be different than new home buyers anyway. So we are not sharing customers with foreclosures very much at all. What we’re also anecdotally hearing is that foreclosure buyers now are owner-occupants. They’re not investors, they’re just people who intend to occupy that home. So it’s a clearing process [that] has to happen.