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Trouble on the Home Front |
HenryTo
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 Posted: Wed Jan 25, 2006 9:14 am Post subject: Trouble on the Home Front |
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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.
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Trouble on the Home Front Replies |
HenryTo
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| Posted: Fri Feb 19, 2010 2:19 pm Post subject: |
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Footnoted.org on Pulte's founder's send-off package:
| Quote: | Thursdays are my current events days. For people in the working world, this might seem strange, but it’s common lingo used among us nerdy Northwestern journalism students. Without a doubt, every Thursday our professors begin class with an extensive current events quiz, and I must admit that while I usually do well on these, yesterday wasn’t my best performance.
So what’s the point of me sharing my current event shortcomings with all of you? Well, this week the one question I missed was on Chicago’s soaring home foreclosures in the fourth quarter – a point I’m still kicking myself for missing considering hot topics in this week’s batch of filings.
I opened my inbox Tuesday morning to find this proxy filed by Pulte Homes (PHM). Earlier this week, the company put out this press release to announce company founder William Pulte’s retirement. But the proxy included something more – what Pulte will collect as he bids farewell after spending 60 years in the building business. The first check he can cash is more than $3 million in severance payments. The second is compensation for his consulting agreement with the company beginning April 1, 2010 and extending to March 31, 2012. Over the course of this two-year agreement, Pulte will pocket $3 million in total, or $1.5 million per year.
The company also promised Pulte an office, administrative assistance, and reimbursement for all expenses related to the job. Now, granted, this may not seem like a huge amount considering the company’s $4 billion market cap, but after taking a closer glance at the agreement, it seems like a lot of money for very little work. Here’s a key section:
Consultant shall not devote more than 75 hours during any calendar quarter during the Consulting Period to the performance of such consulting services, which the parties acknowledge and agree is less than 20% of the average level of services performed by the Consultant for the Company during the 36-month period prior to April 1, 2010.
Pulte’s send-off comes in the midst of one of the worst housing cycles the country has ever witnessed. Last week, the company issued this press release citing a net loss of $117 million in the fourth quarter of 2009, including significant charges totaling $925 million. And, due to high home foreclosures, like those happening in Chicago Pulte Homes’ net loss was $1.2 billion for the year ending Dec. 31, 2009. |
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Ven
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Joined: 30 Dec 2009
Posts: 115
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| Posted: Mon Jan 04, 2010 12:31 pm Post subject: |
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Actually, the PPIP is no different than the illegal pools from the 1920's.
And the ending will be just as bad. |
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rffrydr
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| Posted: Mon Jan 04, 2010 8:46 am Post subject: |
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Banks, far from disgorging mortgage assets were sweeping them up last spring--and this is a bad thing?!
http://www.bloomberg.com/apps/news?pid=20601087&sid=aOU4QAVClHXI&pos=3
Again, this is not your father's Resolution Trust--the easy pickings are staying right where we need them, in the banks themselves. Combine this with the fact that Banks have taken up their new role as the largest property management firms in the country and we've got an institution leveraged to recovery.
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rffrydr
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| Posted: Thu Nov 12, 2009 8:52 am Post subject: |
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Proceeding apace:
| Quote: | The Mortgage Bankers Association (MBA) Market Composite Index, a measure of mortgage loan application volume, increased 3.2% on a seasonally adjusted basis in the week to November 6 from one week earlier. On an unadjusted basis, the Index increased 2.8% compared with the previous week.
The Refinance Index increased 11.3% from the previous week and the seasonally adjusted Purchase Index decreased 11.7% from one week earlier. The seasonally adjusted Purchase Index is at its lowest level since December 2000. The unadjusted Purchase Index decreased 13.7% compared with the previous week and was 21.6% lower than the same week one year ago. |
I suspect as solid mortgage holders stay put (no place to run in this economy anyway) the foreclosure skew is especially strong. Banks are only dribbling out inventory however and maybe.....
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rffrydr
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| Posted: Mon Oct 26, 2009 10:23 am Post subject: |
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The Detroit house auction successful failure. The question arises again: is it even possible to sell tops or buy bottoms?
http://www.cnbc.com/id/33474587
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HenryTo
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| Posted: Fri Oct 16, 2009 9:58 pm Post subject: |
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Morningstar asserts that the housing bear is nearly over:
http://news.morningstar.com/articlenet/article.aspx?id=311235&pgid=stockarticle
| Quote: | More appropriately, it's likely the foreclosure inventory represents beginnings of a mix shift as many former owners become renters while some former renters become owners. But at what price are these transactions likely to occur? We've maintained for a while that home prices will find support at levels where investors can purchase the foreclosed properties and rent them back to the people who used to be owners at attractive returns. Prices in many markets are already there. The "15 times annual rent" rule is a back-of-the-envelope method for determining fair home prices based upon the area's rental rates. By this admittedly simple metric, homes look cheap in many regions. For example, the U.S. department of Housing and Urban Development (HUD) tells us that the median rent for a three-bedroom property is currently $1,697 per month in Riverside, CA. This translates into a fair value of roughly $305,000, or almost 30% higher than that area's $235,000 current median listing price according to Housingtracker.net. This calculation also resonates with first-time buyers. Cheap prices, combined with some help from Uncle Sam in the form of an $8,000 tax credit, have revved up the lower end of the market where these buyers are active. Of course, if the credit goes away and rates climb significantly, the math gets more difficult. But rates would have to climb considerably for payments to appear expensive on a historical basis at today's prices.
To be clear, I'm not calling for rapid and continued price increases anytime soon, but I do think stabilization is definitely possible. It's true that rents are going to be pressured for as long as the employment base shrinks and there are more housing units than households. And we agree with the pessimists that the combined housing market (both owned and rental) is currently oversupplied. However, it may not be by as much as many think. In truth, nobody really knows how big the glut is, but it's important to note that the overbuilding that erupted in the 2000-05 time period was contained to the "owner" market. Production in the rental market was fairly subdued throughout that period. As a result, the overall amount of housing put in place (both owned and rental) wasn't as far out of line as some think. We estimate there were as many as 1.8 million excess housing units in place as late as 2006, but the market has been undershooting potential demand by quite a lot this year and likely next year as well. Even assuming lackluster household formation due to economic conditions persists for the next quarter or two, it's very possible the excess number of homes could be soaked up by the end of next year if the employment base stops shrinking.
Of course, prices will firm well before the housing glut is completely absorbed, which is what may have happened earlier this year. Places like California have actually overshot inventory equilibrium as buyers' thirst for distressed properties hasn't been near quenched. Surprisingly, several cities in that state now boast of an undersupply. |
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rffrydr
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| Posted: Wed Oct 07, 2009 8:36 am Post subject: |
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Real Estate owned fell 10,966 to 127,385 in August. The trend is still higher, but a few more months of this would be a bullish sign for the banking system and housing market.
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HenryTo
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| Posted: Fri Sep 25, 2009 6:21 pm Post subject: |
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http://www.chartoftheday.com/20090925.htm?T
| Quote: | | Today, it was reported that the median price of a single-family home dropped 2.3% in August. The stock market sold off on the news. For some perspective into the all-important US real estate market, today's chart illustrates the US median price of a single-family home over the past 39 years. Not only did housing prices increase at a rapid rate from 1991 to 2005, the rate at which housing prices increased – increased. That brings us to today's chart which illustrates how housing prices are currently 30% off their 2005 peak. In fact, a home buyer who bought the median priced single-family home at the 1979 peak has seen that home appreciate by a mere 4%. Not an impressive performance considering that three decades have passed. Over the past two months, single-family home prices have resumed their decline and remain (until proven otherwise) in an accelerated downtrend. |
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rffrydr
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rffrydr
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| Posted: Fri Jul 31, 2009 6:57 am Post subject: |
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Internet changes everything in the house-hunt except that which needs changing most--the agent:
http://www.sacbee.com/business/story/2067432.html
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rffrydr
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rffrydr
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rffrydr
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| Posted: Tue Jun 23, 2009 2:27 pm Post subject: |
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Here's our recovery--hidden from plain view:
| Quote: | | In the West, where foreclosures abound and prices have fallen more sharply than in the rest of the nation, the number of homes sold rose 8.7% in May over the previous year. Those gains were offset by double-digit declines in the South and Northeast and an 8.5% drop in the Midwest. |
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rffrydr
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| Posted: Wed Jun 10, 2009 7:29 am Post subject: |
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'89 prices in SoCal?! Location, location location: this is most decidedly NOT the case within LA proper.
http://www.latimes.com/business/la-fi-cheaphomes10-2009jun10,0,4802553.story
Why the adjustment may be less than Wall St. calculates:
"......If neighborhood property values fall further, so be it, Rossi figured. The improvement in his quality of life is gain enough.
"I did not buy a slot machine," he said. "I am not an investor.
"That's what got us into this mess -- greed," he said of the housing crash.
"Greed messed everything up.""
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rffrydr
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| Posted: Sat Jun 06, 2009 12:35 am Post subject: |
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Rotated another 5% into MBB today out of High Yield, that'll be the last regardless. Let's see if this is true:
http://ftalphaville.ft.com/blog/2009/06/03/56591/maximum-negative-convexity/
If it is. And it fails. And Geithner's pitching 4% custom treasuries to the chinese then we've got problems.
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