Homebuilders Downsize Everything [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.

Homebuilders Reduce Land, Headcount, House Size, Etc.

Home Front: 'Anti-Sprawl' Law Unlikely to Radically Alter Sacramento Trends. “California Gov. Arnold Schwarzenegger signed a major "anti-sprawl" bill this week… But don't look for an end to suburbs and single-family homes in popular school districts. While the thrust of SB 375 is toward "infill" housing in bypassed urban corridors, suburban real estate will still be king, says… Dennis Rogers, VP, North State Building Industry Association. Rogers said building trends might change some in suburbs. But the population will still grow and the number of households will, too... Homebuilders supported the bill, which has the reduction of traffic to curb greenhouse gases as one of its major goals.” (SacBee via Builder Online, Oct. 3) 

Developer Sells Land Dirt Cheap To Reap Tax Benefits. “Homebuilder D.R. Horton (DHI) is unloading land… in far-flung areas… across California at big discounts… partly to reap the tax benefits from selling property at a loss… Land buyers and brokers expect more such tax-motivated fire sales of undeveloped land this year… The sales also could indicate a shift for big builders: from developing huge swaths of land in the exurbs, to building smaller developments closer to metropolitan areas. Horton two weeks ago sold about 2,000 house lots in Desert Hot Springs… for $7.8 million. [Some] estimate Horton paid about $110M for the land… Horton told investors in June that it expects to receive a tax refund of $519 million over the next two years.” (WSJ, Oct. 3) 

Designers, Buyers Get Creative As Space Shrinks. “Living rooms are emerging from the housing bubble leaner. The shrinkage has been caused, in part, by declining home values and plummeting sales, encouraging builders to scale back, as well as a revolt against the era of McMansions. Heating two-story entryways and the unused fifth bedroom has fallen out of favor as homeowners opt instead for cozy and functional, architects and builders said… The days of formal living rooms may be numbered, architects and designers said. A recent Beazer Homes (BZH) survey found that 74% of homebuyers said they would prefer a home office over a formal living room in their next home.” (Washington Post via Edmond Sun, Oct. 3) 

Fischer Homes Buys Lots In Central Ohio. “Fischer Homes this week completed the purchase of lots left when Beazer Homes exited the market in February. Financial terms were not disclosed. In January Fischer [bought] assets from Centex Homes (CTX), another company that pulled out of central Ohio in the current housing downturn. The central Ohio acquisition involved 611 undeveloped and 128 developed lots in nine communities, said Jon Jasper, Fischer's Columbus division manager. Fischer also picked up Beazer's leftover land in Cincinnati and Dayton, a total of 577 lots. Fischer Homes is the [third largest homebuilder in central Ohio, after] M/I Homes (MHO) and Dominion Homes (DHOM).” (Columbus Dispatch, Oct. 3)

WestPark Housing Plan Faces Delay. California: “A proposal to add 215 housing units to Roseville's WestPark community likely will be delayed until at least November, after the city received an outpouring of concerns from nearby residents at a neighborhood meeting last week… The proposal by Pulte Homes (PHM), Lennar Corp.(LEN) and Centex Homes also would add more single-family homes, boosting the density from three or four units per acre to five. Home lots would decrease from about 7,000-sf to 4,500 to 5,000-sf.” (Sacramento Bee, Oct. 2)

Lennar Corporation F3Q08 (Qtr End 08/31/08) Earnings Call Transcript. “Bill Gross, VP, CFO: “During the quarter we expensed approximately $15 million of non-recurring severance and lease termination costs as a result of additional division consolidations. We have made significant progress in reducing SG&A costs however our volume has fallen at a faster pace. As a result of these additional division consolidations, we have now reduced both our divisions and our headcount by approximately two-thirds since our peak in 2006. These measures taken should enable us to see significant reductions in our SG&A percent going forward.” (Seeking Alpha, Sept. 23)

                              

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Comments

[notsosmart:]

smaller houses, no living rooms,wow theres the answer to the realty crisis.would not invest here & now.

2008 Oct 06 12:34 PM

[billp37:]

Look at steve martin FOILS 1, 2 3, and 4 for the peak demand problem and solution.

home.comcast.net/~bpayne37/pnmelectric...

Limit new construction.

Brutal.

2008 Oct 06 10:09 PM