Latest Homebuilding Trends [Housing Tracker]

Quote of the Day

 "They don't want to find themselves out in the street with everyone else bidding up the price of land.” - Vicki Bryan, senior analyst at Gimme Credit., about homebuilders starting to buy cheap land now before the downturn ends.  (DJ via CNN Money, June 17^th)

Homebuilding Trends

 Ailing Builders Getting Back Into Land Game.  “Builders are stockpiling cash, selling stock and negotiating with eager joint-venture partners as they look for bargain parcels… Residential land prices [have] declined by more than 25%... the sector [has] taken [land] impairment charges topping $24 billion and… more writedowns are expected. But builders need dirt, and lots are commanding pennies on the dollar - some finished lots even go for less than replacement cost....  [Still,] Housing conditions remain bleak - with elevated inventory, jittery buyers and builders stuck in a string of quarterly losses… Plus, [RREEF Research reports] troubled smaller builders are expected to return land [to lenders] in growing numbers.”  (DJ via CNN Money, June 17^th)

 Worst Of Both Worlds.  “U.S. Department of Commerce said U.S. housing starts dropped by 3.3%, to an annual pace of 975,000 units in May--the lowest since 1991. The data, which measures the construction of new homes and apartments, is a slightly lower drop than the annual rate of 985,000 units that economists polled by Thomson Financial had expected. Building permit applications fell 3.1%, to an annual rate of 969,000, which was roughly in-line with economists' expectations for an annual rate of 960,000 units. Building permits applications are a significant indicator of future construction activity.”  (Forbes, June 17^th)

 Avoiding A Lennar Meltdown.  “Sup. Chris Daly: San Francisco had quietly sought a $25 million grant from the state Department of Housing and Community Development to cover a projected loss in Lennar's (LEN) Hunters Point Shipyard project… Increased construction costs, trouble in the financial markets, and unforeseen environmental issues have eaten up all the money that Lennar and the city had made available for infrastructure improvements on the site. [Now] roads, water and… other basics… are no longer adequately funded… City officials: "Without the requested $25,021,079 Infill grant allocation, our infrastructure project faces a serious risk of being mothballed.” The state rejected the application last week.”  (San Francisco Bay Guardian, June 17^th)

 Chino Raises Developer Fees In Preserve.  California: “With the arrival of new homes in the city comes the need to provide adequate city services such as public safety and recreation for new residents. To save residents from supporting city services required for the large new Preserve community development, Chino requires developers there to take care of the financial burden themselves… The earlier homes built in The Preserve, including homes built by John Laing Homes, list a new service rate of $1,131/residential unit, and $4,525/acre of non-residential property. For the newer Meritage (MTH) and Brehm developments, the city lists $1,074/residential unit, and $4,297/acre of non-residential property.”  (Daily Bulletin, June 17^th)

 Housing Market Index Drops One Point.  “The NAHB/Wells Fargo Housing Market Index fell back to a level of 18, tying its record low set in December. The HMI is calculated on a scale of 0-100 [and] is a measure of how new-homebuilders feel about current sales volumes, projected sales over the next six months, and the current level of traffic of prospective buyers… NAHB CEO and EVP Jerry Howard pleaded for help from Congress, [saying] the U.S. economy has lost 324,000 jobs [over] five straight months. Howard also said that the value of home equity across the U.S. fell by $879 billion between Q1’07 and Q1’08.”  (Builder Online, June 16^th) 

Seeking Alpha's Housing Tracker is a collection of housing-related excerpts from various sources, grouped by topic. Feel free to post any interesting links on the subject in the comments section below.

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