UK Homebuilders to Follow American Counterparts? - Housing Tracker

Quote of the Day

"All the homebuilders are on fire; we are all just relentlessly stealing from each other.” – John Downs, VP of Human Resources at Toll Brothers, said on Sept. 8th, 2004. Downs said then that there was such a phenomenal need for construction workers and managers, and so few candidates, that the homebuilders ended up poaching workers from each other. (Wall St. Journal, Apr. 22nd—Article Reprinted from Sept. 8th, 2004)

Homebuilder Stocks and Homebuilding Trends

Shorting Homebuilders- A Sure Thing. “Reasons to short homebuilders: Unsold inventory of homes is rising… exacerbated by stricter lending criteria… and rising foreclosures… Weak economy, rising unemployment… higher down payment requirements and still too high property prices… Home sales continue to deteriorate… Many of the builders have loans that will mature and be due for refinancing over the next two years and some of them may not be able to "roll" them... Rising cost of labor and building materials against collapsing revenues… Despite all of the above, homebuilder stocks have risen year-to-date as much as 60%. Insiders are actively selling their stocks at fraction of the value of 2006-2007.” (Alan Gomelsky in Seeking Alpha, Apr. 23rd)

Deer Valley Moves Into Multi-Family Construction. “Manufactured homebuilder Deer Valley Corp. has been awarded a $16.1 million construct to build more than 120 twin-townhome units for a 264-acre master-planned residential community in Ocean Springs, Miss. Deer Valley (DVLY)… was awarded the contract by M&C Development LLC as part of a rental community that will be known as Orleans Place. The total contract is expected to reach as much as $25M for Deer Valley. Construction and delivery of the first homes in Phase I is expected to begin in Q2’08… Deer Valley continues to construct cottages for the Mississippi state government, [for] $25M… so far.” (Tampa Bay Business Journal, Apr. 22nd)

U.K. Homebuilders Downgraded at Merrill, Volume Estimates Cut. “Bovis Homes Group Plc and Taylor Wimpey Plc were downgraded to “sell” from “neutral” at Merrill Lynch & Co., while Barratt Developments Plc, Bellway Plc and Redrow Plc were cut to “neutral”. Merrill: “Rather than stabilize as we had previously anticipated, the key spring selling period has seen a further deterioration in the mortgage lending environment.” The Merrill team also cut their 2008 industry volume expectation to a 25% drop from a 15% fall: “We now assume no volume growth in 2009 versus our previous 5% growth expectation… U.K. prices will likely deteriorate 5% in each of 2008 and 2009.” (Bloomberg, Apr. 22nd)

Egg Harbor Township Oks Plan For 657 New Homes. New Jersey: “The Planning Board gave final subdivision approval Monday to Ocean Club… the largest housing proposal ever in Egg Harbor Township's history. Pulte Homes (PHM)… plans to build Ocean Club on a 273-acre tract… by the Atlantic City International Airport, the Atlantic County Utilities Authority landfill and recycling center, and the Garden State Parkway. The project includes a mixture of multi-family houses and homes for people over age 55, two clubhouses, two pump stations, swimming pools, tennis courts and a recreation field. Pulte also proposes to donate $350,000 and a 2-acre section of land to the Farmington Volunteer Fire Department.” (Press of Atlantic City, Apr. 22nd)

Houston Real Estate Developer Delivers Home Buyers to Builders With MediaTrac's Realtor Reward Program. Texas: “In today's soft housing market many home builders and developers have put plans for new housing communities on hold or significantly scaled back. Developers and builders are waiting for signs that the market is turning around before committing to build out and start new properties. Land Tejas Companies is… moving ahead with ten master-planned communities throughout the Houston area and it has embraced MediaTrac's realtor reward program to offer independent real estate agents luxury incentives to show its participating builders' specific properties… helping its partner builders drive more retail customer traffic to their communities.” (Centre Daily, Apr. 22nd)

Somerville Landfill Upgrade Unveiled. New Jersey: “Somerville County: Pulte Homes, in partnership with AvalonBay Communities (AVB) and the Rockefeller Group Development Corporation, submitted in March the lone application in response to a borough request for qualifications and proposals to redevelop the approximately 160-acre site off Route 206… The proposal calls for approximately 1,200 residential units, 167,000-sf of commercial space and 28,000-sf of retail space.” (Courier News, Apr. 22nd)

Beazer Not On Fortune 500 List. “Last year, Beazer Homes USA (BZH) was No. 420 on the Fortune 500 list of top corporations. In the new list released Monday, Beazer doesn't even crack the top 1,000. The company is in the process of restating earlier financial reports, so there's no data Fortune can use to rank Beazer, spokeswoman Leslie Kratcoski said. "We're absent from the list because we haven't filed our fiscal 2007 financial statements," Kratcoski said. The company expects to release revised financial information before May 15. In 2006, Beazer was the nation's seventh-biggest homebuilder.” (Austin-American Statesman, Apr. 22nd)

One Way To Sell Your Home? Buy A New One. Michigan: “The Forte Group works with local builders to move inventory by purchasing the buyer's existing home for 90% of the appraised value... At the end of 2007, there were 40,298 houses on the market in Wayne, Oakland, Macomb, Livingston and Washtenaw counties. That represents a 17.4-month supply at the current sales pace, nearly double the 9.6-month national supply… Other companies running similar programs catering to new-home builders include Trade & Trade Up and Marketplace Homes LLC… Trade & Trade Up works with Lombardo Homes and Centex Homes to get buyers to move up from manufactured homes to their subdivisions.” (Detroit Free Press, Apr. 21st)

Permits For New Homes Plunge 40% In 12 Mos. “DataTraq April 2008 report: The average number of permits issued in the Albuquerque metro for the year ending March 2008 dropped 35% from March 2007, from 457 to 297. Average permits between the year ending March 2008 and the same period two years ago dropped about 62%, from 779 to 297. D.R. Horton (DHI) was issued the most permits for the year ending in March, with 514, which represented about 20% of all permits issued in the metro area. Pulte Homes, Albuquerque's Longford Homes and Centex Homes (CTX) of Dallas followed, with 380, 316 and 294 permits, respectively.” (New Mexico Business Journal, Apr. 21st)

Losses May Turn Into Relief For Home Builders. “Homebuilders are expected to post losses when they start issuing their quarterly earnings results this week, but they are likely to be smaller than the staggering losses seen last year… Under the Senate bill, U.S. companies, including homebuilders, would be able to apply losses in 2008 and 2009 to 2004 and 2005 income, when the homebuilders' profits continued to break records. But first the provision would have to survive the reconciliation procedure with a yet-to-be-approved House of Representatives' bill that doesn't contain the carry-back extension… Lennar (LEN) could get back $573 million under the Senate proposal.” (Reuters, Apr. 21st)

RimRock at Rifle a New Project of Meritage Development Group. Colorado: “RimRock at Rifle, a 350-acre master-planned community is the newest project of Meritage Development Group of Aspen. Designed to meet growing housing and commercial needs in the center of Colorado's energy and I-70 corridor boom, RimRock is Rifle's first master-planned community. Meritage (MTH) acquired its ownership interest from Littlestar Ranch, LLP of Aspen who remain involved.” (Press Release, Apr. 21st)

Local Homebuilders Going Green. Texas: “Home Builders Association of Greater Dallas: Large and small homebuilders are helping save valuable natural resources by building homes to meet the HBA's Green Built North Texas program [GBNT] standards. GBNT is a partnership of homebuilders, industry supporters and partners committed to resources-efficient home construction. The program has established a climate-specific protocol that addresses six categories of construction including jobsite management, water efficiency, indoor air quality, energy efficiency, material usage and homeowner education.” (Press Release, Apr. 21st)

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