Trouble on the Home Front

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

FYI:
--------------------------------------------------------------------------------
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.

nodoodahs · Moderator Joined: 06 May 2005 Posts: 2408

dknoester · Posted: Thu Nov 15, 2007 1:26 pm Post subject: Stern Words From Wells Fargo

From Briefing.com today:

Reuters reports that at the Merrill conference the CEO of Wells Fargo (WFC 32.37, -0.8 Cool

said "We have not seen a nationwide decline in housing like this since the Great Depression."

DK

nodoodahs · Moderator Joined: 06 May 2005 Posts: 2408

C-S gets my goat, too. 10 cities? Come on! Cap-weighted? Please! Yet, that's what everybody cites ...

OFHEO isn't perfect, the lack of jumbos is the problem there, but in terms of coverage and weighting (unit not capitalization) it's a far more accurate presentation of price trends.

This whole discussion is similar to my dollar rant, there is a trading index that is Euro-centric and it is cited, often for ECONOMIC impact! But the broad trade-based index is almost never used in discussion, despite the fact that is is actually germane to the economic discussion, i.e. it includes Mexico, China, etc.
_________________
I haven’t seen a beatin’ like that since somebody stuck a banana in my pants and turned a monkey loose.

HenryTo · Posted: Tue Nov 13, 2007 4:15 pm Post subject:

Bill, I noticed that too.

Not sure why - but my guess is that once their clients (hedge funds, "market makers, " etc,) demand a certain market, they will create it. The main point is that these contracts - for the first time ever - are start to get attention from hedge funds and prop trading desks alike, not to mention trading liquidity that the Case-Shiller Indices can never match. Still too early to tell but this shows promise.

P.S. I just emailed them and asked your question.

nodoodahs · Moderator Joined: 06 May 2005 Posts: 2408

I'm calling BS on their report, right here and right now.

Click it, and tell me who's missing from their 25 metro areas.

No TEXAS metro on their list, despite
http://en.wikipedia.org/wiki/List_of_United_States_metropolitan_areas
D/FW and Houston metro being 4 and 6 on the list of largest metro areas in the U.S.

Pretty darn glaring error to leave out two of the top six, in a list of twenty-five. People pay money for this????
_________________
I haven’t seen a beatin’ like that since somebody stuck a banana in my pants and turned a monkey loose.

HenryTo · Posted: Tue Nov 13, 2007 3:17 pm Post subject:

Latest "Housing Market Report" from Radar Logic:

http://www.radarlogic.com/research/RPXMonthlyHousingMarketReportforAugust2007.pdf

HenryTo · Posted: Tue Nov 13, 2007 3:10 pm Post subject:

A new kind of housing derivatives, based on Radar Logic's Residential Property Index is now getting a lot of transaction:

http://www.msnbc.msn.com/id/21762164/

Folks can download historical data by directly going to Radar Logic's website:

http://analytics.radarlogic.com/radar-logic-home/historical-data.aspx

thestreet.com has a good article about the recent market action:

http://www.thestreet.com/s/housing-cant-get-leg-up-during-dog-days/newsanalysis/realestate/10389413.html?puc=googlefi

rffrydr · Posted: Wed Oct 24, 2007 1:46 pm Post subject:

How big is 4%? 500,000 homes from last quarter:

http://www.businessweek.com/bwdaily/dnflash/content/oct2007/db20071019_946332.htm?campaign_id=rss_daily
_________________
Today is the Tomorrow you worried about Yesterday!

rffrydr · Posted: Mon Oct 22, 2007 9:21 am Post subject:

Slow burn means sloooowwwwwwwwwwwwwww:

http://www.nytimes.com/2007/10/22/business/22market.html?_r=1&ref=business&oref=slogin
_________________
Today is the Tomorrow you worried about Yesterday!

rffrydr · Posted: Sat Oct 20, 2007 5:33 am Post subject:

Here lies the true margins of the housing market:

http://www.latimes.com/business/la-fi-retirelatam-sp,0,1885714.special?coll=la-home-center

They're not talking about holing up in an apartment in Mexico City. These are full housing tracts carved from nature, built up in fine Orange County style anf fully occupied by gringos. With their own cars.

15K for a "Flight to Life" trip to Miami for emergency medical and the "savings" soon evaporate. Costa Rica was the role model and became priced like anywhere here in the US. Prices I remember in one of these tracts in Panama were running about $250,000 in '04. It'll be interesting to watch.
_________________
Today is the Tomorrow you worried about Yesterday!

rffrydr · Posted: Sat Oct 20, 2007 5:25 am Post subject:

Note the site financing:

HenryTo · Posted: Sat Oct 20, 2007 4:48 am Post subject:

300 homes in Minnesota may be a small number but it is no laughing matter, given that houses (just like everything else) are priced at the margin. Of course, it one home in a 10,000 unit neighborhood sells for 75% of where it sold at a year ago, it could be classified as an anomaly, but if it was a house that was sold right next door - then, that's a different story:

http://www.startribune.com/462/story/1496691.html

rffrydr · Posted: Wed Oct 10, 2007 11:18 pm Post subject:

Paulson's "directive":

http://www.cnbc.com/id/15840232?video=553819520&play=1
_________________
Today is the Tomorrow you worried about Yesterday!

rffrydr · Posted: Wed Oct 10, 2007 8:45 am Post subject:

Follow the slashmarks:

http://www.streamfx.com/CW/9-26-2007/REO-California.html
_________________
Today is the Tomorrow you worried about Yesterday!

rffrydr · Posted: Fri Oct 05, 2007 8:02 am Post subject:

I read that this morning and the part breaking down the imput costs on an average home was notable--not just for the discounts in the auctions but on an absolute basis. $450,000, without appreciation is gonna keep average families OUT of the american dream by mathematics alone. --Ah the condo, home sweet home.
_________________
Today is the Tomorrow you worried about Yesterday!