Housing Market Tracker - Homebuilder Outlook

Quote of the Day

"You don't think of that as an investor-driven community. It is a market where people die and have to sell. But there was no plague that made them all die." - Hillsborough real estate broker Craig Beggins, about Florida's housing market, drowning in inventory now that investors have disappeared. (Tampa Bay.com, Jan. 20th)

Homebuilders, Housing Stocks and Housing-Related Stocks

Bon Appetit "Nearly all the major homebuilders are trading below book [value]. Lennar (LEN) and Pulte Homes (PHM) now fetch about 50% of book value, while Toll Brothers (TOL), the high-end specialist, trades for 80% of book. A housing recovery could be a year or more away, but the homebuilders seem to be discounting a dire financial outlook given their current share prices. The combined market value of eight big homebuilders, Lennar, D.R. Horton (DHI), Toll, Centex (CTX), NVR (NVR), Pulte, KB Home (KBH) and MDC Holdings (MDC) stands at less than $20 billion, down from $80B at the peak in 2005." (Barron's, Jan. 21st)

Pulte Homes Cuts Local Work Force By 20 Percent "Pulte Homes, which announced plans eight months ago to slash its nationwide work force by 16%, is cutting 55 jobs in the Baltimore and Washington, D.C., areas, about 20% of its local work force. The homebuilder says it has consolidated its Baltimore and Washington operations under one management team, with the most of its local work force to be concentrated at its Fairfax, Va., offices. It will keep sales and support staff in both Baltimore and Washington, according to Pulte spokeswoman Melanie Hearsh." (Baltimore Business Journal, Jan. 21st)

Lennar Looks To TECO For Board Member "Lennar Corp. has appointed Sherrill Hudson, chairman and CEO of TECO Energy Inc., to its board of directors as an independent member. Hudson will be one of seven independent members. He has been at TECO since 2004. Prior to that he spent 37 years with Deloitte & Touche LLP where he became very familiar with both Lennar and its management team, a release said." (MSN Money, Jan. 21st)

Emaar Sees U.S. Housing Profits Despite Subprime "Dubai's Emaar Properties, the largest Arab developer by market value, expects its U.S. housing unit to report a small profit this year despite subprime woes, Chairman Mohamed Ali Alabbar said on Monday. The company has no immediate plans to buy back its shares although it has approval to purchase up to 10% of its stock, Alabbar told Reuters. Emaar generates about 85% of its revenue from property sales in Dubai and most of the remainder comes from its U.S. homebuilding unit, John Laing Homes." (Reuters India, Jan. 21st)

Pulte's Timber Creek Models Certified 'Green' "The Southern Nevada Green Building Partnership is bringing more environmentally sensitive home building to the Las Vegas Valley. Currently, there are five home builders participating in the program: Pulte Homes, Pinnacle Homes, Signature Homes, Signature Custom Homes and R/S Development. In November 2007, the Green Building Partnership announced that the model homes at Pulte's Timber Creek neighborhood in northwestern Las Vegas became the first homes in Southern Nevada to achieve certification by the program as verifiable "green-built" homes." (Las Vegas Review Journal, Jan. 20th)

Winter Clearance Offers Centex's 'Best Pricing Ever' "Prospective home buyers would do well to check out Centex Homes Winter Clearance promotion, says David Ivin, president of the company's West Florida division. The clearance — through March 9 — focuses on inventory homes in four communities across the Tampa Bay area: Stonebrier in Lutz; Magnolia Park in Brandon; Hawks Point in South Shore; and Southshore Falls in Apollo Beach. "Prices start from the low $120,000s, with unbelievably low monthly payments," Ivin says. "It's the best pricing we've ever had. It's a great time to buy a home." (Tampa Bay Online, Jan. 20th)

WCI Communities, Awash In Luxury, Wrangles With Slump "Investor and corporate raider Carl Icahn grabbed the chairmanship of homebuilder WCI Communities (WCI) in August but that hasn't stopped WCI's stock from free-falling the past year from the low $20s to nearly $2. It closed Friday at $2.86... When Icahn said he'd bought 15% of WCI in early 2007, not long after Bill Gates disclosed his smaller share of WCI, one housing analyst dubbed the company a "billionaires' folly." (St. Petersburg Times, Jan. 20th)

Dominion Homes To Be Acquired "Dominion Homes (DHOM) has agreed to be acquired by a buyout group that includes Douglas G. Borror, chairman and CEO. Dominion said yesterday that Borror's BRC Properties Inc., the home builder's largest shareholder, is joining with Angelo, Gordon & Co. and Silver Point Capital to buy the company for $0.65/share. The price represents a 37% premium above Dominion's closing stock price Thursday of $0.47." (Columbus Dispatch, Jan. 19th)

Ryland Homes Holds Sales Event "Ryland Homes (RYL)has a worry-free solution for home buyers who want to buy a new home, but fear prices will fall or interest rates will rise after they commit to purchase, said Dana Rogers, the company's VP of sales and marketing. From Jan. 25 through 27, Ryland Homes' national sales event, called Purchase Power Advantage, will offer home buyers savings with price protection and interest rate protection on new homes. Rogers said the price protection guarantee means that if prices decline before settlement, the home builder will adjust the price to reflect the lower cost." (Las Vegas Review Journal, Jan. 19th)

Housing Market On The Rise? "Athens, Georgia: Despite significant setbacks during the past year in the home building sector, Athens builder and developer Ashley Hill says things are looking up for the local construction industry: "There is a lot of optimism out there. There is no doubt we have seen a tremendous slowdown in the past year, but in Oak Grove... in the past two weeks we've seen a significant increase in customers interested in purchasing or building a home." Oak Grove Builders recently began new construction on several houses and townhomes, Hill said." (Online Athens, Jan. 19th)

Less Artist Housing, But Theater/Gallery Likely New Jersey: "The Jersey City Planning Board at their meeting on Wednesday voted to recommend amendments to the Powerhouse Arts District Redevelopment Plan, changing the restrictions on height and density of buildings to make it easier for national developer Toll Brothers to develop three proposed towers the way they want to... Toll also plans to build a 550-seat theater and gallery in addition to the towers... The three towers are expected to be 30, 35, and 40 stories high, totaling 950 units." (Jersey City Reporter, Jan. 19th)

Lennar Offers Units For Sale At Bulk Price "Lennar Corp.'s 360 Condominium in North Bay Village is seeking a vulture fund to purchase about 50 units whose buyers defaulted on contracts. The developer has closed on all but 12% of the 414 units at its first vertical project, said Craig Studnicky, principal of International Sales Group, which is managing project sales. Lennar will continue to work to sell units in the 15-story towers one at a time, but would prefer to sell them to a bulk buyer, he said. Studnicky added that it's a $20 million deal - about $400,000 a door." (South Florida Business Journal, Jan. 18th)

Meritage Reduces Debt Despite Weakening Orders "Meritage Homes (MTH) preliminary Q4'07 and full 2007 results: For Q4'07, Meritage anticipates reporting $616 million of revenue on 2,139 homes closed and $272M in net sales on 1,048 homes ordered. This compares to revenues of $819M on 2,601 homes closed and $355M in net sales on 1,202 homes ordered in Q4'06. For the year, home building revenues were down 25%, and closings fell by 18% compared to 2006. In addition, the company expects to report approximately $127M of primarily non-cash pre-tax charges in Q4'07 for real estate and joint venture valuation adjustments, and roughly $58 million of goodwill write-offs." (Big Builder Online, Jan. 18th)

Beazer Homes Names New Chief Accountant "Beazer Homes USA Inc. (BZH) on Friday said Robert L. Salomon will become its senior VP, chief accounting officer and controller, effective Feb. 11. Salomon, 47, joins Beazer Homes from homebuilding company Ashton Woods Homes, where he has served as chief financial officer and treasurer since 1998. Salomon replaces Michael T. Rand, who was fired last summer for violating the company's ethics policy." (Forbes, Jan. 18th)

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