Homebuilder Rally: Are Their Troubles Over? [Housing Tracker]

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.

Homebuilder Stocks

Lennar, Meritage, KB Home, Centex Stocks Up. “Shares of U.S. homebuilders rose the most since January after the federal government agreed to take over Fannie Mae and Freddie Mac. Miami-based Lennar (LEN) gained 10.3% to close at $14.95. Goldman Sachs: The bailout plan may stabilize the mortgage market and lower home loan rates… For longer term investors, we continue to recommend buying home-builder stocks today as several traditional buy signals have been triggered -- most notably new home sales as a percentage of households are near 40-year lows." Other home builders that rose include Meritage (MTH), up 18%; KB Home (KBH) 14% and Centex (CTX) 10%.” (Bradenton Herald, Sept. 8) 

Bear Market Rally Or The Start Of An Equities Recovery? “Today’s rally suggests that the [homebuilding] sector may now be poised to break out to the upside… [But is] this rally another dead cat bounce or the start of something new… So far, this rally appears to have… clawed back some of last week’s losses. Indices, however, remain well short of resistance levels where rallies failed, such as 11,800 for the Dow and 1,300 for the S&P 500 (SPX500 CFD). Should resistance continue near these levels, it would suggest that investors may still be concerned about… the problems in the banking system that led to this bailout.” (Stockhouse.com, Sept. 8) 

More Troubles For City In The Hills Developer. California: “A lawsuit has been filed by Global Investment & Development LLC… [buyer of] one of developer Mountain View Bravo LLC’s now-defaulted loans… In June, Global took over from Indymac Bank what remained of a $49.5 million construction loan for the Juliana’s Garden neighborhood in City in the Hills. The loan defaulted in July. A subsidiary of Global Investment, Juliana’s Garden LLC, filed suit against one of the developer’s subsidiaries, MVB Ventures LLC, shortly before the loan defaulted. Separately, Global Investment in July bought 20 acres slated for 84 homes near Highway 178 and Comanche Drive at a fire-sale price from homebuilder KB Home.” (Bakersfield California, Sept. 7) 

Water Flow Altered In Bonita Springs Community. Florida: “Missing ditches and culverts around the Hawthorne community may have contributed to flooding problems in northern Bonita Springs, the South Florida Water Management District determined Friday. The agency sent a notice of non-compliance to Centex Homes, which is developing the 396-home community, for altering water flow patterns in Bonita. As a result, Shangri La Road and portions of some yards were flooded after Tropical Storm Fay, while Bonita Lake RV Resort and Bonita Springs Village saw excess water from Hawthorne drain onto their properties.” (News Press, Sept. 6)

Letters To The Editor. Rio Rancho, New Mexico: “When we bought our home two years ago, we were told that D.R. Horton’s (DHI) policy is to ‘discourage’ investment purchasers by tacking on extra fees for individuals who do not live in the homes but instead rent them out. This never bothered us because we were buying as a primary residence. Now, we are only one of two homes on the street that is owner-occupied. We have seven rentals on our side of the street, and the majority of landlords live out of state.” (The Observer, Sept. 6)

Toll Brothers Slips Again, But Positive Signs Detected. “Toll (TOL) received the most revenue in the quarter from the region that includes Illinois, New York and New Jersey. It sold the most homes in the quarter in Delaware, Maryland, Virginia, Pennsylvania and West Virginia. Sales have declined and foreclosures increased in the more than 20 states in which Toll offers homes, including California, Florida, Nevada and Arizona. The builder lost $29.3 million, or $0.18/share, for FQ3... [Down from] a profit of $26.5M, or $0.16/share, in FQ3’07. Toll absorbed $84.3M in after-tax write-downs in FQ3. Excluding the charges, earnings were $55M, or $0.35/share, in line with Wall Street estimates.” (Chicago Tribune, Sept. 5)

Beazer Homes USA's IDR Cut To 'B-'; Outlook Negative – Fitch. “Fitch Ratings said it downgraded Beazer Homes USA Inc.'s (BZH) issuer default rating and outstanding debt ratings to 'B-' from 'B', reflecting the current difficult housing environment and Fitch's view that it will remain difficult for the remainder of the year and that new home activity will still be on the decline well into 2009. The rating downgrades also reflect negative trends in Beazer's operating margins, further deterioration in credit metrics and erosion in tangible net worth from non-cash real estate charges, Fitch added.  The ratings were removed from negative watch. The rating outlook is negative.” (Forbes, Sept. 5) 

Building Up For Toll Brothers. “All in all, it was an OK quarter for Toll Brothers. I continue to believe that the company's luxury builder status will propel it to the head of the class whenever a real housing recovery manifests itself. I'd also look for it to be followed by KB Home which avoids speculative building, and perhaps by Centex, which has been especially brutal in writing down the values of its land and other assets carried on its balance sheet.”  (Motley Fool, Sept. 5)

Comstock Homebuilding Companies, Inc. to Eliminate $5.3 Million of Debt With Regions Bank. “Comstock Homebuilding Companies, Inc. (CHCI) and certain of its subsidiaries  today announced that it had entered into a forbearance and conditional release agreement with Regions Bank with respect to approximately $5.3 million of the Company's $144.0M of secured debt as of June 30, 2008. Under the terms of the Agreement, the Company agreed to cooperate with Regions with respect to its foreclosure on certain of the Company's real estate assets in Georgia and Regions agreed to provide the Company a full release from its obligations with no deficiency liability post-foreclosure. The foreclosure agreement covers three properties in Atlanta, Georgia.” (MarketWatch, Sept. 4)

                                              

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