Housing Market Tracker - Age-Restricted Housing Still Homebuilder Boon

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Includes: BZH, CTX, DHI, HOV, ITB, LEN, MDC, PHM, TOL, WY, XHB
by: Judy Weil

Homebuilder and Housing Stocks

LACMA Land Grab Underscores Controversy. "The Los Angeles County Museum of Art [has a] newly acquired piece of land, across Wilshire Boulevard from the LACMA campus... It already owns a sizable parcel of land... at Wilshire and Spaulding Avenue... Likely it means... the museum board sees the current market downturn as an opportune moment to add to the museum's real-estate portfolio, setting the table for future initiatives on the far side of the boulevard. Indeed, the museum was able to purchase the property at Wilshire and Ogden only because its current owner, Miami-based developer Lennar Corp., abandoned plans to build lofts there." (LA Times, Mar. 14th)

Homebuilders Rally On Proposed Plan To Stem Rise In Foreclosures. "Shares of major homebuilders rose sharply Thursday after the government unveiled a new plan to stem the significant rise in mortgage foreclosures.' The iShares Dow Jones U.S. Home Construction ETF (BATS:ITB) rose... 4% to $17.75. The S&P Homebuilders SPDR (NYSEARCA:XHB) traded up 4% to $19.97... House Financial Services Committee Chairman Barney Frank announced a proposal for legislation Thursday to allow the Federal Housing Administration to insure and guarantee refinanced mortgages that have been significantly written down by mortgage holders and lenders. The program would permit FHA to provide up to $300 billion in new guarantees that would help to refinance at-risk borrowers into viable mortgages." (Thomson Financial via CNN Money, Mar. 13th)

Builders Group Stages Rapid, 3-Week Rise. "Homebuilders stormed from No. 112 to the No. 18 position (Wednesday) in just three weeks. It has climbed about 7% so far this year. By comparison, the 19 other top-ranked groups have declined 0.5%. In terms of market capital, the segment is ruled by national homebuilders such as D.R. Horton (NYSE:DHI) DHR, Pulte Homes (NYSE:PHM) PHM and Toll Brothers (NYSE:TOL) TOL. Nearly all stocks in the group are deep into corrections... But shares of those top three plays have climbed an average 38% since Jan. 9. The upturns gave the group a massive boost, especially while most other groups struggled." (CNN Money, Mar. 13th)

MDC Holdings Execs' Compensation Drops By Half. "Homebuilder MDC Holdings Inc. (NYSE:MDC) SEC filing: Chairman and CEO Larry Mizel owns 16.3% of MDC's stock. [His] total compensation fell to $7.25 million in 2007 from $15.3M the year before. His base salary remained the same at $1M for both years. He pocketed a $2M bonus in 2007... Mizel in 2006 received incentive plan pay of $9.6M... President and COO David Mandarich owns 7.8% of the company's stock. His base salary remained $830,000, but his total compensation dropped to $6.8M from $14.8M in 2006. Mandarich also received a $2M bonus last year, which he [like Mizel,] didn't get in 2006, but in 2006 pocketed $9.6M in incentive pay. He didn't receive any incentive compensation last year." (Denver Business Journal, Mar. 13th)

Developer Argues Its Case Against Borough. New Jersey: "The continuing dispute between Beazer Homes (NYSE:BZH) and the borough led to a heated cross-examination at the Feb. 27 special hearings... Kenneth Nelson, planner for Andover Borough, noted that although the Beazer Homes’ general development plan was approved in the late 1980s, the project had yet to reach fruition... Counsel for Beazer Homes emphasized the depth of its commitment to build in Andover Borough. Beazer presented several concept plans to the Andover Borough Planning Board Subcommittee." (Township Journal News, Mar. 13th)

Restricted-Age Housing Thriving. "Many age-restricted communities aren't feeling the crunch of the [housing] downturn: Buyers often have been saving up for quite some time... toward a retirement home. Buyers who need to sell an existing home in order to buy into an age-restricted community, even if they don't get what they want for their home, often have paid off that first home... K. Hovnanian Homes (NYSE:HOV) last month opened Four Seasons at Rancho del Lago, a senior neighborhood in Vail. And existing senior communities throughout the Tucson area continue to sell new homes. The Del Webb [Pulte Homes (PHM)] development Sonora recently sold the last of its 428 units in Rancho Sahuarita." (Arizona Daily Star, Mar. 13th)

Weyerhaeuser Closing Honolulu Plant. Hawaii: "Weyerhaeuser Co. said it will close its corrugated packaging facility in Honolulu, putting 85 employees out of work. The timber giant (NYSE:WY) has been operating the plant on Nimitz Highway for 50 years. The plant makes cardboard boxes and other packaging materials. "The decision was made to improve financial returns and enhance business competitiveness," said Ed Carter, Weyerhaeuser container-board packaging and recycling sales VP." (Pacific Business News, Mar. 13th)

Toll Shareholders Approve CEO Bonus. "Toll Brothers (TOL) shareholders on Wednesday approved a controversial bonus plan for CEO Robert Toll as well as reelecting Robert Toll, Bruce Toll and CFO Joel Rassman to the board of directors... The bonus plan will guarantee CEO Toll an annual payout equal to 2% of the company's pre-tax income plus a performance bonus determined by the board but not to exceed $5.2 million or 0.1% of gross revenue. The payout would be capped at $25 million. Under the previous compensation package, Toll did not receive a bonus for the first time in 16 during fiscal 2007 due to the company's first quarterly losses ever." (Big Builder Online, Mar. 12th)

John Wieland Homes Cuts Prices, Adds Warranty, Doubles Sales. "A sales campaign featuring a combination of price reductions and lifetime warranties on its homes helped double John Wieland Homes and Neighborhoods' sales in January and February. The Atlanta-based builder... sold 89 homes during the event ran from Jan. 25-Feb. 17. The sale brought in $50 million in revenue. The company offered price incentives of between $10,000-$100,000 on every home, not just inventory homes, and a lifetime structural warranty on every house. Typically, the builder offers a 20-year warranty on its structures." (Big Builder Online, Mar. 12th)

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