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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 |
rffrydr
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rffrydr
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HenryTo
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| Posted: Wed Sep 17, 2008 1:35 pm Post subject: |
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| The negative construction spending effects on GDP is going to pretty much come off in the fourth quarter, even if housing starts continue to decline. |
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rffrydr
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| Posted: Wed Sep 17, 2008 8:20 am Post subject: |
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Amazing that its being reported as another "knock on GDP."
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HenryTo
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| Posted: Wed Sep 17, 2008 6:39 am Post subject: |
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Housing starts decline below 900,000 units (on an annualized basis) for the first time in the current housing cycle. We need more readings like this in order to work off our outsized housing inventory. From briefing.com:
| Quote: | | The number of August housing starts slipped 59,000 to 895,000 on an seasonally adjusted annual rate, compared to the consensus estimate of 950,000. Building permits fell 83,000 to 854,000, versus the 928,000 consensus. |
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rffrydr
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| Posted: Thu Sep 04, 2008 9:35 pm Post subject: |
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https://research.mfglobal.com/Dailyres/Financial/Equities/stocks_files/image008.gif
HOV said that there is no evidence as of yet that the overall housing market has bottom. However, there are a few signs that individual markets are improving. It indicated that it had cut prices by 26% in California since January and reduced prices by 14% Arizona since February. It said that the months supply of homes fell in Northern Virginia, and the unsold inventory is falling in Stockton California.
· TOL said it sees a recovery in housing after foreclosed inventory is exhausted. It could not predict when the housing market would recovery. Cancellations were 195 units in the quarter, the lowest in over two years.
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HenryTo
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| Posted: Sat Aug 23, 2008 11:40 am Post subject: |
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Vandalism and pure neglect exaggering the price declines in the national housing price statistics:
http://money.cnn.com/2008/08/20/real_estate/subprime_homes_lead_downward_charge/index.htm?postversion=2008082210
| Quote: | It's not just the subprime mortgage crisis that's to blame for plummeting home prices. A flood of squalid properties on the market is helping to exaggerate the post-bubble price declines.
"Part of the reason home prices are declining is a fundamental deterioration in the housing stock," said Glenn Kelman, CEO of the online, discount broker Redfin. "During the boom, nine out of 10 houses for sale in many markets were in prime condition. Now, for every 10 houses, at least three are dogs."
Most of these mutts are foreclosed properties that have been permitted to fall into disrepair by lenders overwhelmed with thousands of vacant homes. If these houses sell at all, they're going for bargain basement prices that are hurting home values throughout the neighborhood. |
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rffrydr
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| Posted: Fri Aug 22, 2008 4:59 pm Post subject: |
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"Time is our friend," wise old words from the Madman:
The Road Map to a Housing Bottom
| Quote: | By Jim Cramer
RealMoney.com Columnist
8/22/2008 9:51 AM EDT
Click here for more stories by Jim Cramer Try Jim Cramer's Action Alerts PLUS
CLICK HERE NOW
I am kind of amazed at some of the things that no one seems to care about. When the FDIC seized IndyMac, it was a godsend -- get that crummy lender out of the picture. Then the FDIC announces a radical plan to allow homeowners who borrowed from them to get off the toxic 2-and-28s and teasers and go into fixed-rate loans with some forbearance. We got that this week. No one cared! No one!
How can that be? The FDIC is offering us a plan that would make it so we can root against Washington Mutual (WM) and know if that scourge of all lenders went under, we would have far fewer foreclosures because of the FDIC takeover. Also, once the loans are all under fixed rates or sent to the FHA for rehab -- as the housing legislation makes clear will happen -- we are going to see a dramatic decline in the rate of foreclosures.
Now, right now, when we see this, we are skeptical. When Wells Fargo (WFC) decided to give its borrowers more grace -- the same grace that other banks give -- we immediately figured it was a canard to mask things. But John Stumpf, the CEO, said it seemed like the right thing to do, and the bank would do better trying to work things out with lenders than throw them out on their butts. Instead, of course, the rate of foreclosures went down, and I bet ultimately the number of foreclosures will go lower.
We need time. We need time to solve the housing depression. The elements of time play out positively, because we are a growth nation that cannot have as few homes built and as few homes bought as in 1991, when we had 248 million people in this country. We now have about 310 million people. We have more than 60 million more people in this country, and we are buying as many homes as we did back then? How long can that last?
The answer, of course, is that given the dramatic overbuilding and the foreclosed homes, the oversupply will take months to burn off. But not years. The trick is to restrict supply, which wasn't being done by the homebuilders until last year, when they finally cut back the numbers -- they are now building about half the homes they did in 2006. Then we need to make it easier for people who bought homes to stay in them, so far the hardest part of the equation. Given that 14 million people bought homes between 2005 and 2007, and half took exotic mortgages to pay them, I figured there was no way that more than 3.5 million people could lose their homes (half of the half that took the 2-and-28s and the pick-a-pays and all the other nonsense). That was wrong. I am now thinking that all -- that's right, 100% -- of the people who bought homes between 2005 and 2007 are going to default. All of them! It makes too much sense not to given the home price declines.
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HenryTo
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HenryTo
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| Posted: Tue Aug 12, 2008 1:11 pm Post subject: |
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Also says that 45% of new homes that were bought last year are now under water. I would've thought the number was greater, but I guess some people did believe in actually putting 10% or 20% down.
Thanks for posting, DK. |
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dknoester
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rffrydr
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| Posted: Wed Aug 06, 2008 11:12 am Post subject: |
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Refunding (implicitly the national debt) driving rates higher. Last time found good buying 4.5-4.6. We need that buying.
Morgan Stanley cuts high-net worth individuals HELOCs.
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HenryTo
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HenryTo
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| Posted: Thu Jul 31, 2008 9:23 am Post subject: |
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Starting to see some light at the end of the tunnel in Stockton, CA. Even Chris Thornburg is now getting somewhat more optimistic about California housing prices/demand:
http://www.bloomberg.com/apps/news?pid=20601109&sid=aAL047pyn7t4&refer=home
| Quote: | "California is having a wrenching decline in wealth, but this is a cathartic event that will lay the foundation for a recovery,'' said Mark Zandi, chief economist at Moody's Economy.com in West Chester, Pennsylvania, in an interview. ``This signals the beginning of the end.''
Almost $1.3 trillion of homeowner equity was lost in California since home prices peaked in December 2005, Zandi said. Discounts of as much as 50 percent will extend into 2010, helping clear a glut of foreclosures and leading to a more balanced housing market, said Ryan Ratcliff, an economist at the Anderson Forecast at the University of California in Los Angeles, and Christopher Thornberg, principal of Beacon Economics LLC in Los Angeles.
``Half off in a decent neighborhood is close to the bottom,'' said Bill Gross, co-chief investment officer of Newport Beach, California-based Pacific Investment Management Co., manager of the world's biggest bond fund. Property markdowns of 30 percent to 40 percent give the market ``price illumination if not sunshine,'' he said.
.....
California led the U.S. in default notices and bank seizures for the 18th straight month in June and had seven of the 10 metro areas with the highest foreclosure rates, according to Irvine, California-based RealtyTrac Inc., which sells default data. That drove down prices and led to ``discounted distressed sales,'' with two-thirds of transactions under $500,000, compared with 40 percent a year earlier, the California Association of Realtors said.
The amount of time it would take to deplete the supply of homes decreased to 7.7 months from 10.2 months a year earlier, and the median price fell 38 percent to $368,250 last month, according to the Realtors.
.....
About 1 million U.S. homes will be in some stage of foreclosure by the end of the year, and properties seized by banks will eventually sell at an average discount of 30 percent to 33 percent, said Rick Sharga, executive vice president for marketing at RealtyTrac.
Discounts will be higher in areas such as Stockton, about 80 miles east of San Francisco in California's agricultural Central Valley, and Riverside, 50 miles east of Los Angeles, that experienced above-average levels of new construction at the peak of the housing boom and where lenders made a disproportionate number of subprime loans, Sharga said.
PMZ, the Stockton-based brokerage, closed 1,707 home transactions in the second quarter, about 80 percent of them foreclosure sales, said Michael Zagaris, the company's president. Foreclosed homes are now getting multiple bids and the supply of homes for sale in San Joaquin and Stanislaus counties shrank to 4.9 months in June from 18.2 months a year earlier, he said.
``We've found the bottom,'' Zagaris said. ``The financial institutions have seen the light and are allowing the market to find its own level.'' |
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HenryTo
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