Housing Market Tracker - Homebuilder Review

by: Judy Weil

Here's our summary of articles and data points on the housing market. It's part of Seeking Alpha's coverage of the real estate market and homebuilder stocks. Like all other topics and stock coverage from Seeking Alpha, you can have this sent to your Blackberry or desktop email by signing up for our no-spam free email subscription service.

Quote of the Day

"Green, organic -- these are powerful marketing tools." - Chris Dewey, who runs Pasco's Florida Yards and Neighborhoods conservation program, on homebuilders now touting their green building efforts as part of a sales pitch. (Tampa Bay.com, Dec. 30th)

Homebuilders, Housing Stocks and Housing-Related Stocks

  • The Bull: What's to Be Its Fate in '08? (Barron's, Dec. 31st): "The proliferation of exchange-traded funds means investors might more easily sell a losing ETF while buying another correlated vehicle. For example, traders selling the XHB to book a loss might buy the Dow Jones U.S. Home Construction iShares (NYSEARCA:ITB), which also tracks home builders. Bespoke ETF investment alternatives: The DJ US Real Estate iShares (NYSEARCA:IYR) is 30% off its peak, and tax-loss sellers looking for a bounce might consider the DJ Wilshire REIT (NYSEARCA:RWR), the Cohen & Steers Realty iShares (NYSEARCA:ICF) or the Vanguard REIT (NYSEARCA:VNQ)."

  • For 'Green,' Buyer Beware (Tampa Bay.com, Dec. 30th): "Builders sense the market appetite for green. Siebel Falls Homes in Land O'Lakes in Pasco County is building an all-green community called Alsace. Major developers like Newland Communities and Crosland have signaled their desire to build entirely green projects. In the Tampa Bay area, Nohl Crest is acknowledged as a leader in green homes. So is Hannah Bartoletta. But others like M/I Homes (NYSE:MHO) and David Weekley are said to be working toward all-green products too."

  • Housing Falls Further (Markos Kaminis in Seeking Alpha, Dec. 30th): "Beazer Homes (NYSE:BZH); D.R. Horton (NYSE:DHI); Toll Brothers (NYSE:TOL) and Hovnanian (NYSE:HOV) [were] off fractionally [on bad home sales news Friday.] They're just about sold out. Investors holding these shares look to keep holding from here, and buy support should come along soon. However, some may go bankrupt... I'm happy to be first to call a mini-rally in these stocks in January. No portfolio managers wanted to have these shares on their Statement of Holdings going out to fund holders this year-end, but now, there seems value to be had. I would avoid BZH and HOV, but look to add TOL, the best in class."

  • Luxury Condos Shake Off Market Pain (North Jersey, Dec. 30th): "How does the declining real estate market affect New Jersey developments like The Watermark, a WCI Communities (WCI) [project and] next door Hovnanian's (HOV) The Views, that take a couple of years to complete? "Nelson Chen, head of NJ realty Chen Agency: "Clearly all these new places will lose or have lost a certain percentage of buyers... The selling price] is 10% lower than the high number in 2005... The buyers who are trying to renegotiate their contracts or get out of them tend to be investors who had not planned to occupy the units themselves."

  • Builder Faces Lawsuit (Chicago Herald News, Dec. 30th): "A construction lender has filed a foreclosure lawsuit against the developer of Creekside Crossing, a Plainfield subdivision designed for more than 500 homes. Only 49 building permits have been issued so far for Creekside Crossing, which is being developed by one of the largest home builders in the country -- Lennar Corp. (NYSE:LEN). RBC Centura Bank says it's owed more than $14.7 million for construction loans on Creekside Crossing. And, the North Carolina bank has filed a foreclosure lawsuit in Will County to try to get its money back."

  • Pulte Auction Raises $20,000 For Charity (AZ Central, Dec. 30th) Arizona: "Pulte Homes' (NYSE:PHM) employees raised $20,000 at a recent auction of items from new granite countertops with sinks and faucets to a full exterior house paint, from Phoenix Suns suite tickets to a Bondurant Racing package, from golf clubs to electronics and more... an organized charity auction where employees could place bids on items both online and on-site in the Scottsdale corporate building, all in an effort to raise money for Boys Hope Girls Hope of Arizona."

  • Metro Scoops Up 1,000 Lots (St. Petersburg Times, Dec. 29th): "A month after buying 8,300 home sites from Lennar Corp., Tampa's land-hungry Metro Development Group has closed on another 1,000 lots, this time from M/I Homes... M/I said Florida accounted for $22-million of its $35M loss in Q3 ending Sept. 30... Metro has been scooping up lots on the cheap from builders hemorrhaging money in Florida's slumping housing market. A New York private equity firm supplies financing for the Metro deals. Metro has about 30,000 lots in Florida it will sell to builders when the housing market recovers, which Ryan estimates will happen in 2010."

  • Del Webb's First Community In The Charleston Area Caters To Mature Buyers At Cane Bay (Charleston Post and Courier, Dec. 29th): "Del Webb Charleston's [Cane Bay development is] built by the same company that laid out Sun City Hilton Head active adult village in Bluffton. The Cane Bay development will include a commercial area with stores... South Carolina coastal division president for Del Webb parent Pulte Homes: "It's exceeded our expectations. People have come from Florida and the North for affordability, culture and climate." Base home prices are $159,990-$369,990 and sizes are from 1,103 to 2,597-sf."

  • No Kiss Goodbye (The Monitor, Dec. 29th) Texas: "One of the country’s largest homebuilders, KB Home (NYSE:KBH), has announced that it will stop building homes in the Rio Grande Valley, and other builders are reporting a continued decline in the demand for homes... Cathy Teague, a spokeswoman with the company’s San Antonio office: KB laid off its salespeople and other employees earlier this month. Teague wouldn’t disclose the number of employees here or the number of homes built. The company, which has been here since 2002, also plans to shut down its office and showroom near Expressway 83 in South McAllen."

  • Bankruptcy Predicted For Homebuilders (Pittsburgh Tribune Review, Dec. 29th): "Alex Barron, an analyst for Agency Trading Group: Homebuilders, including Beazer Homes USA (BZH)., Hovnanian Enterprises (HOV) and TOUSA (TOA)., along with Standard Pacific Corp. (SPF) and WCI Communities (WCI) are among the publicly traded companies that are most vulnerable in 2008... Beazer is under SEC investigation... An internal investigation found evidence that Beazer employees in its mortgage unit broke federal regulations... Beazer CEO Ian McCarthy: A settlement [could] cost the builder $15 million... S&P: TOUSA's debt rating [could fall] to default status if it fails to make interest payments on senior notes by Jan. 1."

  • US Homebuilder Stocks Take A Hit From Housing Data (Reuters, Dec. 28th): "Mike McGarr, a portfolio manager and analyst at Becker Capital Management: "The fundamentals are still deteriorating and for things to improve we would like to see lower home prices and lower mortgage rates to help shift some of the inventory out there." The Dow Jones Construction Index is now trading more than 70% down from its lifetime high of 1120.47 reached on July 20 2005. Becker: "We continue to watch the homebuilder stocks as they are looking increasingly attractive. But we will probably stay away from them for some time as we suspect there are more impairments and write-downs to come."

  • Toll Brothers Divulges Redevelopment Details (Sentinel, Dec. 27th) New Jersey: "Toll Brothers (TOL) came before the Planning Board last week to discuss its plans for the Golden Triangle site on Route 18. And though the developer is still seeking approval for the retail and residential uses outlined in its redevelopment plan with the township, it acknowledged that market conditions could further change the plans. A large amount of office space initially proposed by Toll has already been eliminated... the residential portion may ultimately be dropped as well. In that case, the developer would build a large retail center "in case the residential real estate market does not improve," said Toll VP of real estate development, Robert Fuller."

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