Trouble on the Home Front

HenryTo · Posted: Wed Jan 25, 2006 9:14 am Post subject: Trouble on the Home Front

FYI:
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Trouble on the Home Front
By Nicholas Yulico
TheStreet.com Staff Reporter
1/25/2006 9:48 AM EST
URL: http://www.thestreet.com/markets/realestate/10263958.html

Homebuilders Centex (CTX:NYSE) and Ryland (RYL:NYSE) both reported strong quarterly earnings, but their new-order numbers, which will drive future growth, look dismal.

Calabasas, Calif.-based Ryland said its net income rose 49% to $162 million, or $3.32 per share, compared to $108.7 million, or $2.17 per share, a year earlier. The results handily beat the consensus $3.12 estimate on First Call.

But Ryland's unit orders fell 5% year-over-year for its latest quarter. The lackluster performance led A.G. Edwards analyst Greg Gieber to cut his rating on Ryland to sell. He also dropped his 2006 EPS estimate to $10.25 from $10.90. In a research note Wednesday morning, Gieber noted that the only area of strength in Ryland's orders came from Texas, where unit sales were up 27%. However, the average selling price in Texas is 36% below the company's average, with equally low gross margins, he said.

"Using our new 2006 EPS estimate, Ryland currently trades at a 7.3 times multiple. That is a 12% premium to the group's current average 2006 multiple of 6.5 times. We don't believe Ryland warrants any premium to the group," Gieber wrote.

Centex, which reported a 30% increase in its quarterly earnings, reported order growth, but it was weaker than analysts expected.

The Dallas-based builder said its new orders rose 4% to 8,128 homes. Sales were strongest in the Southwest, where orders spiked 28% year over year. On the West Coast, orders rose 10%. But orders fell 15% in the Southeast, 8% in the mid-Atlantic and 3% in the Midwest.

"This is not particularly positive to hit only 4%, though we don't know all the details behind it," says Gieber, who was expecting nearly 11% order growth.

Centex said net income rose to $329.3 million, or $2.49 a share, for its fiscal third quarter ending Dec. 31, up from $253.8 million, or $1.91 a share, a year earlier. Excluding discontinued items, Centex posted earnings of $332.7 million, or $2.52 a share. Analysts expected earnings of $2.48 a share, according to Thomson First Call.

Revenue rose 25% to $3.74 billion, shy of analysts forecast of $3.81 billion.

Centex's earnings growth came amid an 18% increase in home closings, which rose to 9,504 units from 8,047, and a 130-basis-point jump in operating margin.

The weak orders will likely be a focus on both companies' conference calls Wednesday morning. Homebuilder Meritage (MTH:NYSE) will also report earnings today at an unspecified time.

The existing home sales data comes out at 10 a.m. EST from the National Association of Realtors.

rffrydr · Posted: Thu Dec 27, 2007 9:48 am Post subject:

Thy neighbor's keeper:

http://www.cnbc.com/id/22398678
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Today is the Tomorrow you worried about Yesterday!

rffrydr · Posted: Mon Dec 24, 2007 8:59 pm Post subject:

It's a crime:

http://www.nytimes.com/2007/12/25/us/25fraud.html?pagewanted=2&_r=1
_________________
Today is the Tomorrow you worried about Yesterday!

rffrydr · Posted: Sun Dec 23, 2007 8:29 pm Post subject:

But the prop tax remains:

http://biz.yahoo.com/ap/071223/taxed_out.html
_________________
Today is the Tomorrow you worried about Yesterday!

rffrydr · Posted: Sun Dec 23, 2007 10:39 am Post subject:

The spillover effect:

http://www.sacbee.com/103/story/586093.html
_________________
Today is the Tomorrow you worried about Yesterday!

HenryTo · Posted: Tue Dec 11, 2007 10:54 am Post subject:

Freddie sees more losses over the next few years. Look for liquidity in the mortgage market to contract significantly over the next few months, as the additional fees and other "cautionary" measures start to kick in.
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Freddie Sees $5.5B-$12B More Losses
Tuesday December 11, 11:45 am ET
By Marcy Gordon, AP Business Writer
Freddie Mac Chief Says Business Will 'Get Tougher Before It Gets Better' As Defaults Rise

WASHINGTON (AP) -- The chief executive of Freddie Mac estimated Tuesday the mortgage finance company will lose an additional $5.5 billion to $7.5 billion over the next few years as the housing crisis worsens and home-loan defaults rise.

The government-sponsored company has already logged about $4.5 billion in projected losses during the first nine months of this year.

"I honestly think it's going to get tougher before it gets better," Richard Syron, the company's chairman and CEO, said in a discussion with financial analysts in New York.

Freddie's shares fell $1.80, or more than 5 percent, to $33.24 in morning trading.

While the mortgage crisis has brought a rising wave of foreclosure notices into public view, less evident have been "pictures of people standing with furniture on the lawn" after being forcibly evicted from their homes, Syron said. "As that begins to happen, and it will happen, I am afraid of the impact that this has."

Syron's remarks came a day after Freddie Mac and its larger government-sponsored rival Fannie Mae said they are changing their criteria for purchasing delinquent home loans they've guaranteed, in order to reduce the number they buy from investors.

On Tuesday, Freddie Mac announced it was imposing a 0.25 percent fee on all new home loans it buys or guarantees with settlement dates starting March 9, matching an earlier move by Fannie Mae.

The two companies, which together own or guarantee around two-fifths of U.S. home-mortgage debt, have cut their dividends and sold billions of dollars of special stock recently to buttress their finances after posting stunning third-quarter losses. They have been forced to set aside billions of extra dollars to account for bad home loans, eroding their profits at a time when home prices are falling and defaults are spiking on high-risk mortgages made to borrowers with weak credit histories.

Fannie's shares declined $1.85, or 5 percent, to $35.06.

HenryTo · Posted: Mon Dec 10, 2007 8:29 pm Post subject:

Fannie and Freddie adding fuel to the fire, as they quietly add a new 0.25% upfront fee on all new mortgages that it buys or guarantees:

http://online.wsj.com/article/SB119733436109620199.html?mod=yahoo_hs&ru=yahoo

dknoester

"The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process."

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/12/09/IN5BTNJ2V.DTL

DK

rffrydr · Posted: Mon Dec 10, 2007 12:30 pm Post subject:

Our good friend the Realtors are calling a (data) bottom...again:

http://www.marketwatch.com/news/story/pending-home-sales-index-rises/story.aspx?guid=%7BF169379B-F26A-45FA-BC8D-EE2125E78898%7D
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Today is the Tomorrow you worried about Yesterday!

rffrydr · Posted: Fri Dec 07, 2007 3:36 pm Post subject:

More whining from the "free market":

rffrydr · Posted: Thu Dec 06, 2007 11:33 pm Post subject:

Global property indicies:

http://economist.com/daily/chartgallery/displaystory.cfm?story_id=10241827
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Today is the Tomorrow you worried about Yesterday!

rffrydr · Posted: Wed Dec 05, 2007 10:07 am Post subject:

FNE sees 12% max downside:
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Today is the Tomorrow you worried about Yesterday!

HenryTo · Posted: Wed Dec 05, 2007 12:03 am Post subject:

Motley Fool on the Lennar-Morgan Stanley joint venture that was just announced on Monday (the venture which involves Lennar taking a 60% write-down):

Lennar's Sensible Fire Sale

http://www.fool.com/investing/general/2007/12/04/lennars-sensible-fire-sale.aspx

HenryTo · Posted: Fri Nov 30, 2007 8:35 pm Post subject:

Various predictions on home price declines in Southern California by noted economists, courtesy of the LA Times:

http://www.latimes.com/business/la-fi-howlowbox27nov27,1,5234984.story?coll=la-headlines-business

rffrydr · Posted: Mon Nov 26, 2007 9:07 pm Post subject:

ARM reset? Not in California (Redwood Trust a buy?):

http://www.msnbc.msn.com/id/21964048/
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Today is the Tomorrow you worried about Yesterday!

rffrydr · Posted: Sun Nov 25, 2007 10:57 am Post subject:

The best this has to say is that there is one spike behind us:

http://www.google.com/trends?q=foreclosure

Top four geographical zones in FL.
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Today is the Tomorrow you worried about Yesterday!