Latest Homebuilder Trends [Housing Tracker]

Quote Of The Day 

"I can just tell you, anecdotally, the last couple of weeks have been a little bit stronger. Now, is part of that related to the housing stimulus bill that was recently passed, and buyers are feeling a little bit more optimistic, because they stand to get a $7,500 tax credit?  That could be." – Ara Hovnanian, CEO Hovnanian Enterprises. (CNBC, Aug. 6) 

Homebuilder Trends

Homebuilder Shares Catch Beazer's Breeze. “Shares of Beazer Homes (BZH) rose Friday on better-than-expected sales and a narrowed loss. It didn't seem to matter that the loss was wider than expected or that quarterly sales fell 40.0% -- the glints of good news implied that the company found a way to navigate through the housing market's rubble. Investors seem to be hoping that other homebuilders will take Beazer's lead by scaling back investments, selling land options and keeping house prices low enough to attract buyers. Shares of homebuilders closed higher across the board on Friday and the S&P Homebuilder SPDR (XHB) ETF surged ahead by 7.0%.” (Forbes, Aug. 9)

Developer Has Plans For Ryland Property. Florida: “They got the property annexed into the city last year, with plans to construct a gated community of 500 condominiums overlooking the Gulf of Mexico. Then the real estate market went belly-up, and Ryland Homes (RYL) scrapped the project. Three years after the national homebuilder walked away from the venture, a Phoenix-based developer is planning to pick up where they left off, but not with condos. Alliance Residential Co., which builds upscale apartment complexes across the country, has approached city officials with a request to rezone the 30-acre property in the Gulf Harbors area to allow for 388 apartments in several buildings.” (Tampa Bay Online, Aug. 8)

Homebuilders: When Will Things Turn Around? “S&P Ratings: “Heading into this cycle the conventional wisdom was that the large production builders would shut down land purchases, liquidate inventory, generate cash, and pay down debt. In practice, very few did. In fact, many companies continued to invest in real estate as the markets slowed… Most eventually faced pressures on covenants in their debt agreements when they were forced to take impairment charges on overpriced land holdings, or they experienced canceled sales [and rising] inventory [writedowns]… Looking forward, large on-balance-sheet land and inventory positions will likely negatively affect creditworthiness. We continue to believe that the more lowly leveraged companies, and those with modest exposure to off-balance-sheet joint ventures, are likely to perform better than their peers in these market conditions.” (BusinessWeek, Aug. 7)

Carolina Builder Closes Up Shop. “In 2004, Pierce Homes of Carolina spent $6.3 million to secure six land parcels in North Carolina's Piedmont Triad, a move that company executives believed secured a solid growth trajectory for the Greensboro-based company… However, just shy of four years later, the company is closing its doors…  Pierce [cited] “the ongoing crisis in the housing and financial industries.” (Big Builder Online, Aug. 7)

Landsource Taps Hogan, Webb for Restructuring. “LandSource Communities… has asked a bankruptcy court judge to appoint Timothy P. Hogan, former CEO of Warmington, and H. Lawrence (Larry) Webb, once CEO [of] John Laing, as co-chief restructuring officers. The company's creditors' steering committee had asked to hire experienced managers, who are independent of the current debtor's managers from Lennar Homes (LEN) and LNR Property Corp. and from the creditors.” (Big Builder Online, Aug. 6)

Builders FirstSource Looks To Mothball Units, Raise Margins. “ProSales magazine is reporting that Builders FirstSource executives told analysts today it is looking at mothballing facilities in the Midwest and Florida but has no plans at present to exit any markets. It also said it will seek to push through price increases on lumber and sheet goods that it pulled back from imposing in Q2.” (Builder Online, Aug. 4)

 

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Comments

[msoori:]

The "tax credit" is actually more like an interest free loan that is payable over a period of 15 years. Its better than nothing at at all because at least you get an interest free loan which you can use to pay off other debt or put to good use.

2008 Aug 11 09:17 AM