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Homebuilder and Housing Stocks

At Least a Start on Housing’s Revival. “David Goldberg, UBS Securities: Less housing supply is hitting the marketplace… Goldberg: Toll Brothers (NYSE:TOL) “caters exclusively to the affluent buyer, [who] are often better able to withstand economic volatility... Toll’s biggest competitors are private builders, and they are experiencing capital restraints.” Goldberg [also likes] Centex Corporation (CTX) and KB Home (NYSE:KBH), though he feels that “their valuations are too expensive right now.” Paul Puryear, Raymond James Associates: Likes Toll, and… Ryland (NYSE:RYL), because it “doesn’t like to carry a lot of raw land — it likes to buy finished lots.” Ivy Zelman of Zelman & Associates: The Lennar Corporation (NYSE:LEN) has been an aggressive land seller.” (NY Times, May 25th)

Smaller Size Makes Houses More Affordable. Maryland: “Amid the toughest economy seen in quite awhile, at least seven or eight new houses have been sold this year in Kensington Villas, estimates Mary Anne Kowalewski. At Kensington, which began building on a 20-acre tract overlooking Hagerstown’s Eastern Boulevard three years ago, building smaller houses has been the answer. “Smaller” — 400-500-sf less than those built on the tract a year ago — translates to “more affordable,” said Kowalewski, VP of sales and marketing in this area for K. Hovnanian Homes (NYSE:HOV), which is building the houses.” (Herald Mail, May 25th)

Developer Plans 2,300 Homes On Storied Frederick Horse Farm. Maryland: A developer plans to build 2,300 environmentally friendly homes at Glade Valley Farms. The development of what was once one of Maryland's top thoroughbred breeding farms hinges on the city of Frederick's annexation of the land, which could occur within a year or two, and Frederick County's response to any request by Beazer Homes USA (NYSE:BZH) for a waiver from agricultural zoning on the 1,015-acre site. Beazer has a contract to buy the 890-acre Glade Valley Farms and a neighboring parcel covering 125 acres.” (Examiner.com, May 25th)

Financing Programs Offered Through Hovnanian Mortgage. NJ: “A new financing program currently available through K. Hovnanian Mortgage enables qualified buyers to purchase a home with just a 3% down payment that can be lowered to 0% down if combined with a second program — resulting in 100% financing. The new financing options — which are offered with traditional 30-year, fixed-rate mortgage plans — combine with today's interest rates to make purchasing new homes at select Matzel & Mumford communities more affordable than ever, according to Glenn Ward, VP of sales and marketing for The Matzel & Mumford Organization, a K. Hovnanian company.” (Asbury Park Press, May 25th)

Lennar Gets America Moving. Las Vegas: “Over the past several weeks Lennar, one of nation's largest home builders, has sold more than 100 homes with its national "Let's Get America Moving" campaign. The home builder will hold free Sunday picnics at four of its neighborhoods as part of its "Sell-A-Thon" promotional event… In partnership with Universal American Mortgage Co., Lennar is offering financing programs… during the "Sell-A-Thon" sales promotion… Lennar's "Sell-A-Thon" will be held all three days of Memorial Day weekend at select Lennar neighborhoods throughout the Las Vegas Valley.” (Las Vegas Review Journal, May 24th)

Making Nice In Housing Industry: Now That The Boom Is Over, Homebuilders, Real Estate Agents Try To Work Together. Arizona: “With home sales still in a slump, Valley builders and real estate agents are working to mend strained relationships between the two sides and boost business for everyone. During the boom -- when sales were nearly effortless -- some builders slashed commissions to agents who brought in clients. Others offered flat fees that were a fraction of a standard commission amount. Diane Byrne, VP of marketing for Cachet Homes recently joined a committee of builders and real estate agents focused on educating and opening communication between the two groups.” (Trading Markets, May 24th)

Fountain Park Brings 150 Homes to Polk City. Florida: “Centex is building 150 homes in the Fountain Park community. Carol-Ann Barody, director of marketing for Centex: It's about 35-45 minutes from both Tampa and Orlando, and three miles from Interstate 4. Fountain Park will have one and two-story homes with 3-6BR, two to four bathrooms, ranging from 1,433-3,514-sf. Prices range from $149,990 to $227,990. Barody: "The 3,514-sf plan that we have, given its price, comes out to be about $65/sf.” (The Ledger, May 24th)

Lennar To Host A Memorial Day Weekend Barbecue. NJ: “Lennar is throwing a Memorial Day weekend barbecue on Sunday, from 11:30 a.m. to 3:30 p.m. at most of its New Jersey communities. Guests can enjoy such traditional barbecue fare as hot dogs, hamburgers and assorted side dishes while also being tempted with a host of special incentives, including a buyer-assistance financing program.” (Asbury Park Press, May 23rd)

Here's How You Make A Dollar Sign. Florida: “It’s no surprise that problems have arisen at Venetian Golf and River Club. [The] developer built $500,000 homes next to a rock mine, a commercial park and a county landfill with one road in and out. Residents complain about noise, dust and lights [and are] bewildered that any local government could have approved this… In 2000, when WCI Communities (WCI) wanted to turn the Henry Ranch into a 1,599-unit golf course development, it [approached] the city of Venice [because] it knew the county government would make many demands and refuse to grant the developer the density it wanted... Eventually, company reps… talked the city into annexing the land.” (Sarasota Herald Tribune, May 23rd)

S&P Cuts WCI Rating, Fears Insolvency. “Standard & Poor's has lowered WCI Communities' corporate credit rating from a CCC to a CC and some of its debt from CC to C on concerns it won't be able to repay $125 million of the $650M that could come due in August.” (Big Builder Online, May 23rd)

Ceilings Come Down to Earth. “Pulte Homes (NYSE:PHM), Toll Brothers and K. Hovnanian say more buyers are looking for the maximum number of rooms and square footage for their money, so they're opting to have a loft, bedroom or playroom built in the air space where the plans call for a double-height ceiling… KB Home has stopped offering double-height great rooms in response to falling demand… U.S. Census: Expenditures on interior restructuring of homes rose about 40% to $13 billion from 2005 to 2007... But spending on new-room additions fell 57% to $4.8 billion over the same period. Andy Hait, a survey statistician with the Census Bureau: These figures indicate that homeowners are spending more to reconfigure existing space… and much less to expand a house's footprint.” (Wall St. Journal, May 23rd)

NVR Chairman Sells 36,329 Shares Of Common Stock. “The chairman of homebuilder and mortgage banker NVR Inc. (NYSE:NVR) sold 36,329 shares of common stock, according to a SEC filing. In a Form 4 filed with the SEC Thursday, Dwight C. Schar reported selling the shares on Tuesday and Wednesday for $560.32 to $573.63 apiece. Insiders file Form 4s with the SEC to report transactions in their companies' shares. Open market purchases and sales must be reported within two business days of the transaction.” Note: This is NVR Chairman Dwight C. Schar’s second sale this month. – Ed. (Forbes, May 23rd)

Rising Inventories Pressure Lennar, D.R. Horton, KB Home, Toll Brothers. “Surprisingly, sentiment is somewhat optimistic toward KBH. The Schaeffer's put/call open interest ratio for the stock sits at 1.23, which is lower than three-quarters of all the readings taken during the past year. In other words, options players have been more optimistically aligned toward KBH only 25% of the time during the past 12 months. Meanwhile, the shares of TOL are poised to finish their first week below their 10-week and 20-week moving averages since late March. During the past several weeks, these trendlines had acted as key support, holding Toll Brothers above the 20 level.” (Schaeffer’s Research, May 23rd)

Struggling Home Builders Find Unexpected Saviors. “Hedge funds, private investors and even larger cash-flush homebuilders are eyeing valuable swathes of land held by troubled companies, according to bankruptcy attorneys and restructuring specialists… Restructuring specialists Alvarez & Marsal recently formed a group focused on homebuilders and their constituents and company directors say their focus is on helping companies find alternatives to bankruptcy. The group has received a slew of calls from hedge funds and other investors… Hedge fund Tiger Global Management LLC has taken a 3.55 million share stake in Standard Pacific Corp (NYSE:SPF), making it the fifth-largest institutional shareholder.” (Reuters, May 23rd)

Levitt Corp. Drops Levitt Name. “Levitt Corp. shareholders at the company's annual meeting on Tuesday, May 20 approved a company name change. The Levitt name was replaced with Woodbridge Holdings Corp. (WDG), a move executives said reflected management's intention to expand its portfolio beyond real estate holdings… While the name change may signal a shift in corporate investment philosophy, it also severs remaining namesake ties to its bankrupt home building subsidiary, Levitt & Sons.” (Big Builder Online, May 22nd)

Builders Tout No-Money Down, Adjustable Mortgages. “This weekend, Lennar Corp. will start interest rates at 2.88% for the first year - 3.88% for the second - before a slightly higher rate locks "for life." In some markets, Ryland Group Inc. will cover the down payment and closing costs, while KB Home has zero-down deals. Hovnanian Enterprises Inc., meanwhile, also is helping buyers secure down payments, and its mortgage subsidiary eliminated loan closing fees. Builders, currently trying to survive the worst downturn since the depression, must move inventory quickly to bring in cash: Stung by eroding land and house values that show no sign of stabilizing, the nation's top builders have racked up more than $24 billion in impairment charges, according to Standard & Poor's.” (Dow Jones, May 22nd)



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Source: Desperate Homebuilders Bringing Back Bubble-Era Financing - Housing Tracker