Thursday, November 29, 2007

RW Hertel and Sons - California Builder - Fraud and more

Anyone have any solid info on this..most of what I see is consumer complaints, etc. Not alot from reputable sources. Sounds like they have done some covering up, etc.

From The Central Coast Housing Bubble Blog:
Comments include:
"Here is a SLO case # CV 050606 against RW Hertel for Fraud, Grand Theft, etc... he first tried to sue his own buyers for reporting the homes Leak and Have MOLD the judge ruled under the Anti-SLAPP against Hertel now Hertel is facing not only massive civil judgments for Fraud and Theft but trying to cover up defective homes and lying about it a story is being written in a Major Magazine on Hertel later this summer I got interviewed recently and it is going to be very revealing against Hertel many of his former and two current employee's have been interviewed the two current ones are quitting just before the story goes to Print and the State is again investigating him for FRAUD and LOAN SCAMS."

"Hertel going Bankrupt will NOT protect his or his partners assets he is now investing in Eagle Point Oregon and the Authorities in Oregon and Utah and elsewhere are working with State Contractors Board investigator and the IRS on his many scams. Sorry to learn so many got screwed by Hertel's cheap and Crappy homes but hang tough help is on the horizon and it will take some time but I suspect Federal Prison is in his future."

"Sounds like the same as RW Hertel & Sons who has built the most defective homes in SLO in the cities History I am told Hertel is on the Bankrupt track as well. As a well known Fraud Builder Hertel is doomed"

"Home Builder, RW Hertel & Sons of san Luis Obispo, CA built our home in the rancho Obispo Development today I learned most the homes have massive defects with Leaks, and TOXIC MOLD, my neighbor at 1720 Singletree Ct has Smith & Sons MOLD people at her home all day I asked what for and..."

"RW Hertel has been a lying crook for the last 5 years I have know him and his company. He has always cheated the buyer's SO BUYER BEWARE if you get a RW Hertel Home they are a Horrible Mess every project and home in Rancho Obispo is a total mess. The State Inspectors said they are the ..."

"RW Hertel what a fraud and lying scamer, MOLD again in Rancho Obispo this morning I noticed many and I mean many MOLD Trucks from SERVPO at 1708 Farrier Ct. when I asked what is happening, knowing the development has been declared a disaster zone from defective homes.."

"RW Hertel SCAMS Low income owners, more defective homes, more criminal investigations FRAUD, CON ARTIST, Housing RIP OFFS, SCAMS now i learned up in Dublin, CA at the Low Income housing of ARROYO VISTA RW Hertel tried to sneak into building low income homes but HUD discovered Hertel has lied and cheated far too many owners. That all the low income homes built in RANCHO OBISPO, down in San Luis Obispo are leaking have Mold and are NOT built to code so once more development he is a major suspect in trying to Fraud the Government and the poor low income people."

It goes on and on...someone let me know if they have info.

Wednesday, November 28, 2007

Building Market is Rough - Homebuilder (Global Homes) in Port St. Lucie Turns to Drugs and Kiddie Porn

PORT ST. LUCIE — A Port St. Lucie home building company (Global Home) sits at the center of a marijuana grow house investigation that led authorities to raid 18 St. Lucie County homes this morning and seize 420 pounds of marijuana and 400 plants, officials announced in a press conference.

Authorities arrested 10 people, including the owner of Global Homes, and uncovered 10 indoor marijuana farms during pre-dawn raids Tuesday morning, officials said.

They also said they confiscated $57,000 cash, 38 grams of cocaine, 4 guns, 9 cars and a boat.
Authorities said Global Homes had an interest in several of the homes raided Tuesday morning, although they would not elaborate on the home builder's involvement.

Officials said only that the arrangement bore similarities to previous busts in which immigrants were offered homes on the condition that they operate an indoor pot farm for some period of time. The investigation began in September and involved eight agencies - state, local and federal, officials said.

Port St. Lucie police seized 420 pounds of marijuana and 400 marijuana plants during an 18 home grow house raid in St. Lucie County Tuesday morning.
Investigators arrested 10 people in the raid, including the owner of Global Homes, a home building company that police said has connections to several houses in the case.

Detectives would not comment on what they believe the company's involvement was with the grow houses, but they did say that the case was similar to previous busts in which immigrants were offered homes as long as they operated an indoor marijuana farm for a period of time.
"We believe that there is a connection between Global Homes and Global Homes employees and these grow operations," said Deputy Chief Garry Wilson with the St. Lucie County Sheriff's Office.

Wilson said police seized about $57,000, 38 grams of cocaine, nine cars, four guns and a boat during the raids. Police said the investigation began in September and involved 80 law enforement officers spanning eight different agencies including state, local and federal departments. Authorities said that the case is still under investigation and that the charges being considered are much more than just drug charges.

"Besides mortgage fraud, we're looking at potential child pornography charges and a number of other issues," said Chief John Skinner with the Port St. Lucie Police Department.

Ooops, I would say between Global Homes drug bust, kiddie porn and mortgage fraud they might be in just a wee-tiny bit of trouble!!

Monday, November 26, 2007

Homebuilders DownFall Hurts Commercial Real Estate Too - WCI, Divosta Empty Offices

Woes touch commercial real estate (From Palm Beach Post Staff Writer By Jeff Ostrowski)

The commercial real estate market largely has shrugged off the housing market's woes, but that happy trend might not last forever.
With builders and mortgage companies downsizing and in some cases going broke, there's suddenly a lot of empty office and industrial space coming on the market.

For instance, DiVosta Building Corp.'s former industrial complex in Palm Beach Gardens now is available for lease. The downsizing company last week sold five buildings totaling nearly 100,000 square feet, and Asset Specialists Inc. of West Palm Beach is marketing the space.

DiVosta isn't the only builder adding space to the market. Bonita Springs-based WCI Communities has announced layoffs, and Grubb & Ellis is subleasing about 26,000 square feet of offices in Broward and Palm Beach Counties that WCI no longer needs. That includes 3,800 square feet in Palm Beach County, said Owen Sagar, senior vice president at Grubb & Ellis in Boca Raton.

And Mercedes Homes is selling a 5-acre truss-manufacturing plant in Delray Beach. Sagar sees such sales as evidence that the residential downturn is hurting the commercial market.

"We're definitely starting to see the slowdown," Sagar says.
It's not just the builders that are adding space to the market. HomeBanc Mortgage Corp. went broke this year, and First NLC Financial Services announced layoffs soon after moving from Deerfield Beach to Boca Raton - and before it found a taker for its Deerfield offices.
With the dollar marked down to fire-sale prices, foreign investors should be swooping in to buy Palm Beach County's commercial properties on the cheap, right? Not exactly.
Foreign investors have been selling more than they've been buying, even as the greenback has plummeted in value against the pound, the euro and the Canadian loonie.

True, GLL Real Estate Partners of Munich, Germany, in September paid $180.2 million for the Legacy Place shopping center in Palm Beach Gardens, and a German group in August paid $37.25 million for Wellington Green Square on Forest Hill Boulevard.
But GLL in May sold the office building at 3601 PGA Blvd. for $21 million to an American investor.

Other foreign sellers: Hans Vogler, a German who in June sold 537 acres at Florida Research Park for $162 million; Siemens AG, the German telecom giant that in July sold land and offices in Boca Raton for $37 million; and Canadian investor Murray Dalfen, who got $37.7 million for the Boynton Commerce Center last month.

All three sales were to American investors. But Manuel de Zárraga, executive managing director at Holliday Fenoglio Fowler in Coral Gables, reads nothing more into those sales than simple profit-taking.

"They're harvesting some pretty big gains," he said.
While foreign investors have been flocking to Florida to buy vacation homes and iPods, buyers of commercial real estate tend to focus on a property's income stream, not on the discount provided by a weak yield, said Bob Sullivan of RJS Realty in West Palm Beach.

"Real estate is a very different commodity," Sullivan said. "You're buying a yield."

Friday, November 23, 2007

Bottom Line for Hombuyers is Price - KNOCK OFF THE PROMOTIONS!

Raffles, festive balloons, open houses, car giveaways. Will any of these incentives sell houses? Not at the moment.

You don't have to be particularly creative in a market glutted with homes. The painful reality is that homes are commodities. There are more than 4 million of them out there unsold and more coming on the market every day due to foreclosures. If you really need to sell, price is the one lever that will move a property.

Buyers are waiting for prices to fall even more. US existing-home prices are expected to drop almost 2 percent this year nationally, according to the National Association of Realtors, and are likely to fall further in areas saturated with homes for sale.

"Buyers just want price," says Mike Morgan, a Stuart, Fla.-based lawyer, real estate broker, and consultant who researches property markets for hedge funds and financial institutions. "Buyers have become educated, and they can easily cut through the fluffy incentives."
Morgan doesn't see any national rebound until at least 2010; maybe longer if builders keep constructing homes, and if banks continue dumping foreclosed properties on the market.

About 2 million properties may be foreclosed (more foreclosure stats) on in the coming year alone, resulting in an estimated loss of $223 billion in US home equity, particularly in California, New York, Florida, and Illinois, according to the Center for Responsible Lending, a North Carolina-based nonprofit.

Living near a foreclosed home may even trim as much as $5,000 from your home's market value, the center says. Some 44 million households will be affected, or about a third of all US housing units.

Selling has become a trying proposition in this dour market. Morgan has found that traditional deal-sweeteners such as paying broker bonuses and giving cash back on closing to the buyer aren't working as well as price cuts.

"On one $429,000 home a client wanted me to sell, the seller wanted to give the broker a $30,000 bonus on top of the commission. I told him it wouldn't help. I told him to just drop the price."

Because the market is so price-sensitive - buyers want bargains and sellers want to get prices they saw at the market's peak - you have to be flexible when advertising your home.
Morgan suggests you sell exclusively through Internet-based property sites and local Multiple Listing Services. He says newspaper ads, signs, and open houses don't work as well as the Internet.

When you price your property, you need to employ a strategy that can run counter to your emotional perception of the home's value - sometimes listing at a price far below what you hoped for.

Like any commodity, a home's price will follow supply-and-demand trends. In theory, custom homes in desirable neighborhoods should hold their value. Other properties should be discounted depending on how many similar homes or condos are on the market. Every market is different, though.

"If you don't get any calls on your listing price after a week, drop your price $10,000 or about 2 percent of your original asking price," Morgan says.

"The market will tell you what the price of your home is. You better be priced 10 percent under your competition - and then be prepared to think about accepting offers under that."
Selling in Miami? You are up against almost 80,000 listed condos and single-family homes, according to ZipRealty, an online brokerage service.

There are almost 30,000 units in Las Vegas; 42,000 in Boston; 35,000 in Seattle; and 110,000 in Los Angeles. Those inventories are through October.

Price-cutting is the order of business in most major markets. The service's price-reduction index, for example, shows that more than half the listings surveyed in Boston and Orange County and Sacramento, California, are discounted.

"People were telling me Boston and Seattle were OK," said Morgan, who recently visited both cities. "I've got news for those folks. They aren't OK." Is now the time to buy a home?

Wednesday, November 21, 2007

Levitt and Sons - Screwed and Screwing People - Levitt's Future Uncertain

From the Orlando Sentinel (today). Wow, I feel bad for these people. Message on Levitt Homepage reads: On November 9, 2007, Levitt and Sons filed for Chapter 11. We deeply regret the impact this will have on homeowners, customers, vendors and employees. Existing customers are welcome to call the customer hotline at 877-538-4889. Existing vendors are welcome to call 888-538-4893. Additional information is available at the following link:Chapter 11 Information. Article follows:

The financial collapse of one of America's legendary home builders has left people throughout Central Florida stuck with unfinished houses, liens against their properties, unopened clubhouses and community pools, and warranties that could be worthless.

Many of the victims, scattered throughout the Southeastern United States, don't know whether their houses will ever be finished." We're just kind of in limbo here and waiting to hear," said Vincent Santanelli, a resident of Cascades at Groveland who helped his elderly father-in-law with a $20,000 down payment on an unfinished house in the Lake County community.

"We haven't even heard a word from Levitt. "In Central Florida alone, several hundred families purchased lots and homes in communities from St. Cloud to Winter Springs that remain unfinished. Levitt and Sons hasn't offered them much reassurance.

A company Web site says Levitt's future is uncertain, the status of homeowners associations that it previously ran is "not yet clear" and it can no longer honor home warranties.Homeowners seeking work under warranty would have to go directly to vendors who provided items such as flooring. With only 72 employees left out of about 500, Levitt and Sons "just does not have the resources to continue to serve as intermediary," said Paul Singerman, lead bankruptcy counsel for the builder. Levitt filed for Chapter 11 bankruptcy protection Nov. 9, citing excess housing supply, reduction in demand resulting from less credit availability and falling prices.

The company listed assets of less than $1 million and debts of more than $100 million.Residents say they never expected this from the builder that pioneered the suburban planned community with Levittown on Long Island in 1949."They had a good reputation," said Kerri Day, who, with husband Robert Walker, bought a $450,000 home in Turtle Creek in St. Cloud. Their home is finished, along with about 20 others in the community planned for more than 400 homes.

Though relatively small when compared to today's home-building companies, "the Levitt name carries a lot of weight in the industry," said Mike Larson, a real-estate analyst with Weiss Research in Jupiter. "It's a sign of the times that even a company like that could get to this level of stress."Other smaller builders have filed for bankruptcy, and TOUSA, whose home-building companies include Engle Homes, is considering a possible Chapter 11 filing. Levitt and Sons' unfinished communities in Central Florida include Jesup's Reserve in Winter Springs and Cascades at Groveland.What happens to the homeowners associations and common areas in those communities will be "decisions that the lender makes . . . who's got mortgage liens on the property," Singerman said.

Levitt is going to try to reach an agreement with lenders to sell partly completed developments to other investors, he said. Levitt already has received permission to return deposits made by customers after Aug. 29 on homes that remain substantially incomplete. On other homes, it would be up to lenders to decide whether to return other deposits or try to finish the work.Concepts in Greenery, an Orlando landscaping company, has filed liens against common areas where it had done work. The company had to lay off 20 of its employees -- about half its staff -- as a result of not getting paid by Levitt, said

Steve Brownley, Concepts in Greenery's vice president .Levitt, he said, owes the company about $700,000. "We definitely have scaled back our operations, which we have never done in 30 years of being in business," Brownley said. "We have never laid anybody off, ever."Singerman said he did not know Tuesday how many liens had been filed against Levitt and Sons. Some of them have been filed against individual homeowners' properties. Residents and vendors working with Levit said they began to get an inkling a few weeks before the bankruptcy filing of just how bad things were getting.

"Work seemed to be slowing down," Santanelli said.Monday night, about 200 Cascades residents appeared in front of the Groveland City Council requesting financial relief -- primarily a break on water bills so they can water the landscaping in common areas. At least 40 customers have put down deposits but don't yet have houses completed, resident Eric Sorkin said.At Jesup's Reserve, the pool and cabana are off-limits because construction is incomplete. A "No trespassing" sign warns residents that the area is a construction site and that entering it without permission is a felony.

Resident Maggie Martin fears a closed cabana and pool will be "a tremendous drain" on property values. With almost 70 units of a planned 161 complete, there should be enough money coming in from association dues to keep things running for a while. "I think they can limp along" and raise enough money to pay for maintenance of common areas, said Matt Jordan, a property manager with Specialty Management"We want to at least maintain the bare minimum," Martin said.

But the situation is more precarious in Turtle Creek, with only a few homeowners around to pay the bills through their monthly assessments. The budget calls for $18,000 a month to be spent on landscape maintenance.Jordan said he's not "getting the direction I'd like" from Levitt and residents are "scared to death."

Tuesday, November 20, 2007

Lotsa Layoffs - WCI Layoffs - Mostly Due to Issues in Florida

Wow, Southwest Florida seems to be getting hit particularly hard with the layoffs. WCI, Centex, Lennar Bonita Bay Group all announce major layoffs and restructuring...Stories of more homebuilder layoffs follow:

Bonita Springs-based builder WCI Communities Inc. has eliminated 575 jobs as part of a restructuring plan announced last week amid the continued housing slump. About 80 percent of the cuts are due to restructuring in Florida — the core of the company's operations — and the rest come from changes to operations in the Mid-Atlantic states and the Northeast, said Jim Dietz, chief financial officer."In Florida, we've combined our tower and traditional homebuilding teams," Dietz said.

Many of the jobs cut were division leaders and managers whose jobs were redundant when the two operations merged, Dietz said.The move will cut the company's work force to about 2,100 jobs — down about 46 percent from a 2006 peak of 3,889 — and generate annual savings of about $46 million in salaries and benefits. One-time costs of the restructuring, including severance, are about $5.4 million.

"This prolonged downturn requires that we continue to assess our overhead and make reductions in order to remain viable through the trough of this cycle," President and Chief Executive Jerry Starkey said in a statement.The cuts are the latest in a wave of job losses that have hit the home-building industry in Southwest Florida since the real-estate boom fizzled:• First Home Builders in Fort Myers, which two years ago was Lee County's biggest residential contractor with almost 1,200 employees, will be down to about 50 following its layoff — announced Oct. 29 — of 200 workers effective Dec. 28.

• The Bonita Bay Group, based in Bonita Springs, has trimmed about 60 jobs since May.

• On Sept. 4, Lennar Homes announced the layoff of 72 people from its Southwest Florida division, from Naples to Manatee County.

• In March, Centex Homes laid off 141 employees from Naples to Sarasota.WCI reported a net loss of $33.2 million in the quarter ended June 30 and is expected to announce quarterly results today. Alex Perez, an advertising director in the marketing department, was among those let go. Perez said he was notified when he got to work."They give you a severance package you can take and they are paying for the week, but they basically tell you to gather your things and leave," Perez said. Perez, 42, had been with the company for about 18 months. He said his severance package offers six weeks pay and some extended medical coverage."I came just after the last cuts and you kind of wonder if that is it," Perez said.WCI cut about 600 jobs in July 2006, citing the slowdown in construction.

The company also announced David Fry will assume the post of chief operating officer and will be responsible for WCI's Florida tower homebuilding in addition to his previous responsibilities for the company's traditional homebuilding, real estate services and amenities lines of business. In the new organizational structure, the Northeast and Mid-Atlantic traditional homebuilding regions will be combined, reporting to Fry. The Northeast and Mid-Atlantic Tower
Homebuilding divisions also will be combined and will report directly to Starkey.

The company's board also announced that seven members will take no compensation for the rest of 2007 and all of 2008 and the remaining two members — Hilliard M. Eure III, chairman of the audit committee, and Jonathan Macey — will accept reduced compensation of $50,000 each.

Board members earned between $140,000 and $180,000 in 2006.The move will save the company about $1 million, Dietz said. Billionaire investor Carl Icahn was elected to the board of directors in August and then was named chairman, ending months of a proxy fight for control of the company. In March, Icahn had offered $22 per share for the company, but the move was blocked by the board at the time.

WCI Layoffs, Centex Layoffs, Lennar Lay offs, Bonita Bay Group Layoffs

Meritage Homes Closes Sacramento Office - More Meritage Layoffs

Meritage Homes lays off 12 or so employees:

Meritage Homes, the nation's 12th-largest homebuilder, is the latest to cut costs in Sacramento by consolidating operations.

The company has closed its Sacramento office, laid off about a dozen employees and called others back to its Concord office, including Sacramento division president Mike Heim.
The company plans to continue sales and construction at its eight new-home projects around Sacramento, regional president Dennis Welsch said.

"We had support staff there (in Sacramento)," he said from the Concord office. "It didn't really make sense to keep operating in multiple locations. We're consolidating those support functions, brought a few people here, and unfortunately we've had some layoffs."

Monday, November 19, 2007

Palm Beach County Real Estate Statistics

Numbers dismal but better balanced
By Linda Rawls
Palm Beach Post Staff Writer
Monday, November 05, 2007
In Palm Beach County's new-home developments there is evidence that supply is working its way toward a better balance with demand, according to a study released last week.
There were 755 single-family move-ins during the third quarter of this year - the fewest in more than a decade, according to MetroStudy, a West Palm Beach-based housing consultant.

That's also 52 percent fewer than the same quarter last year, when there were 1,585 move-ins. There were 1,135 move-ins in the second quarter of this year.

There were 486 single-family home starts in Palm Beach County developments in the third quarter of this year, MetroStudy said, a 52 percent drop from the third quarter of 2006, when there were 1,017 starts. There were 408 in the second quarter of this year.
In the peak construction year of 2003, MetroStudy noted, starts averaged more than 2,600 a quarter as builders throughout the county feverishly pounded nails to feed the boom.

Brad Hunter, an analyst at MetroStudy, said the move-in pace (755) was greater than the starts pace (486) in the third quarter of 2007. That's a healthy situation, he says.
Another good sign, Hunter said, is that total new-home inventory in Palm Beach County dropped to 2,989 units in the third quarter from 3,258 units in the second quarter.
The number of units under construction fell to 1,464 units in the third quarter from 1,776 in the second quarter.

Here's some good news for Port St. Lucie house hunters, especially first-time buyers.
Mercedes Homes' Treasure Coast Division, reacting to the still-slumping housing market, has introduced The Cottage Series, with two designs that can be built on your lot or on a Mercedes Homes lot.

The Paige, a three-bedroom, one-bath home, has 1,212 square feet of living space and starts at $103,990, the builder says. The Nicole Deluxe has 1,404 square feet and starts at $109,900. It has three bedrooms and two full baths.

Both have two-car garages and open kitchens that flow into "great rooms."
Got more money? There are plenty of options.

"I believe we've got the lowest prices in town," said Robert Smithwick, division president.
Log on to if you don't believe him. Or even if you do.
Many other local builders are offering incentives to attract buyers in what has become the worst housing slump in 16 years.

Some of them are impressive indeed, although to date Mercedes takes the prize for most affordable. Truth be told, we don't have room to list them all in this column.
We see news releases from CentexHomes and DiVostaHomes on our desk, for instance. It's a trend we expect to continue well into next year as builders seek to work off their bulging inventories homes and condos.

Linda Rawls writes about residential real estate. Contact her at The Palm Beach Post, 2751 S. Dixie Highway, West Palm Beach, Fla. 33416-4700; (561) 820-4722; e-mail:

Love Homebuilder Postioning amd Marketing - Frey Homes and Mercedes Homes

Gotta love this one. Perfect example of two marketing strategies at work. The first one is not bad..someone seems to have done research and knows what homebuyers want. The other is typically pompous. Oooooh Mercedes Homes has a new designer showroom by appoinment only. Builders would throw a ticker-tape parade to have someone show up in their design center (wait, they can't afford it!) yet they position it as by appointment only. The only way that is true is if they don't have staff in the design center and need to call them in for the appointment.

Kati Trisler, director of marketing for America's First Home, an active builder in Central Florida, helped create an interactive Web site for the company's new Frey Homes line. "With so many people starting their home search online, we recognize the importance of giving them the tools they need," Trisler said. The builder's 11 new luxury-home styles, designed for move-up buyers, are in two communities: Eagle Pointe Estates in Groveland and a project in Cape Coral. The Web site will soon include an interactive floor plan and furniture spacing option. . .

Mercedes Homes has a new designer showroom in Altamonte Springs. Ann Marie Meyer, design center coordinator, said visits are by appointment only.

Now May Not be the time to buy real estate - Duh!

Real estate has often been referred to as the one of the surest investments, and homeownership has long been part of the American dream. But in a market that seems to be in a freefall, buying may no longer be the safest bet.

The Federal Reserve recently warned that the housing market is unlikely to recover anytime soon.

Shira Boss, the author of Green with Envy, says first-time buyers probably shouldn't rush to get a mortgage.

"Nobody knows where we are on the curve," Boss tells Renee Montagne about the housing market. "It could be a little bit cheaper now or it could be getting cheaper for the next five or six years. You really don't know."

Boss says people should examine their individual situations "and not really rush and try to time the market."

In recent years, prospective buyers have been able to purchase homes with small down payments, or even no money down, and borrowing more than the house is worth. But these days, Boss says, buyers should count on saving enough to put 10 percent or 20 percent toward a home purchase.

"You shouldn't even look at houses until you have that kind of down payment," she says.
Before deciding to buy a house, you should also consider how stable your job is, and the likelihood that you will be required to relocate in the near future.

"Friends of mine bought a house and had it for less than year," Boss says. "And he got laid off and spent months job searching and this week accepted a new job in another city. Next week, their house is going on the market." It probably hasn't appreciated since the couple bought it, Boss says.

"Real estate is not a sure thing in terms of easy and quick profit.... There are situations where you can be stuck and lose money."

Boss says young people often feel pressured to buy a home.

"That's something I would love to caution young people against ... that feeling that, 'Oh my gosh, owning real estate is something to aim for, and if we're renting, we're basically losing money every month....' You can get in this kind of panic attack when you're young about having to buy.

"It's not necessarily something everybody can do or everybody should do," Boss says. "We should ... relax and not push people into real estate as something they have to do."

Thursday, November 8, 2007

K Hovnanian 4th Quarter Reports - Sales Continue to Slow - More Layoffs?

RED BANK, N.J., Nov. 6 /PRNewswire-FirstCall/ -- Hovnanian Enterprises, Inc. today announced preliminary net contracts and deliveries for the fourth quarter ended October 31, 2007. The Company delivered 3,969 homes during its fourth quarter, a decrease, excluding home deliveries from unconsolidated joint ventures in both periods, of 19% from the same quarter a year ago.

Management continues to focus on improving its balance sheet and on generating cash flow; during the fourth quarter total debt was reduced by $390 million. The Company retired the remaining $140 million of its $150 million 10-1/2% senior notes and reduced the amount drawn under its $1.5 billion unsecured revolving credit facility by $250 million, from $456 million at July 31, 2007 to $206 million at October 31, 2007.

Net contracts for the quarter were 2,781 homes, a decrease, excluding net contracts from unconsolidated joint ventures in both periods, of 10% from last year's fourth quarter. During the month of October, the sales pace in most of the Company's markets significantly deteriorated when compared to the sales pace of recent months. Cancellations for the fiscal 2007 fourth quarter were 40% of gross contracts, compared to the cancellation rate of 35% for both the third quarter of 2007 and the fourth quarter of 2006.

The primary reason for the increase in the Company's cancellation rate is the tightening of mortgage underwriting standards, which has lead to some customers cancelling their contracts due to an inability to obtain mortgage loans. Contract backlog, as of October 31, 2007, excluding unconsolidated joint ventures, was 5,938 homes, a decrease of 30% from the same quarter a year ago.

Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, Chairman, is headquartered in Red Bank, New Jersey. The Company is one of the nation's largest homebuilders with operations in Arizona, California, Delaware, Florida, Georgia, Illinois, Kentucky, Maryland, Michigan, Minnesota, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia. The Company's homes are marketed and sold under the trade names K. Hovnanian Homes, Matzel & Mumford, Forecast Homes, Parkside Homes, Brighton Homes, Parkwood Builders, Windward Homes, Cambridge Homes, Town & Country Homes, Oster Homes, First Home Builders of Florida and CraftBuilt Homes. As the developer of K. Hovnanian's Four Seasons communities, the Company is also one of the nation's largest builders of active adult homes.

Wednesday, November 7, 2007

Is now the time to buy Homebuilders Stock? Some say yes

Dueling Fools: Bullish on Homebuilders - Is now the time to buy homebuilders stock?
Anders Bylund October 19, 2007
Yeah, you read that right: I'm bullish on homebuilders.

That's kind of like waving a Yankees pennant at Fenway Park, but there it is. It just makes sense when you think about it.

Remember that other bubble that popped seven years ago? Of course you do; the downfall of Yahoo! (Nasdaq: YHOO) and (Nasdaq: AMZN) and the Nasdaq as a whole was too obvious and deliciously ironic to miss. Anything with "dot-com" in its name got pumped up to ridiculous valuations, and then the whole thing came crashing down all at once.
That's what's happening to the housing market right now. Home prices climbed too close to the sun, followed by insane loan terms designed to let people buy houses they really couldn't afford. The joyride is done, my neighborhood is full of unsold flip-me properties, and homebuilder stocks are going the way of property prices -- down, down, down.

And that's where you'll find some of the most amazing deals you'll ever see on the stock market.
Look back at the tech bubble again. Yes, it hurt to hold stock in the big Y or Amazon back in 2000. But if you bought those stocks when they bottomed out in 2001, you'd be sitting on better than a four-bagger in Yahoo today, and a Lynch-esque 10-bagger in Amazon -- better than a 40% annual return, my friend.

That's the kind of rebound opportunity we're seeing in the housing market today. An entire industry just can't roll over and die, especially one as ingrained into the American economy and culture as homebuilding. And some of these companies are brilliantly run operations that will simply ride out this storm, rising phoenix-like from the ashes in a couple of years.
So the trick is to find the good homebuilders, those that will survive the shakeout and pounce on a less competitive market when the credit crunch is over. Take a look at these candidates, for example:

Again, you're not dreaming or hallucinating. You can still find profitable homebuilders whose stocks are priced well below their annual sales or tangible book values. They're household names like Ryland and Toll Brothers, and most of them back up their numbers with strong cash flows, too.

It's just a matter of diving into that pile of excellent value propositions and finding the ones most likely to survive the breakdown. Every crash has a bottom, and while it's tough to call the lowest point with precision, I think we're close enough now to warrant some trash-picking.

Thursday, November 1, 2007

Tennessee Homebuilder - Ole South Properties Lay Offs

Declining demand for housing in Middle Tennessee has spurred the state's largest home builder to cut staff from its Murfreesboro-based operations, a move that many companies tied to the real estate market have already made, experts said Monday.

John Floyd, owner of Ole South Properties, said he put off the downsizing, which pares the staff size from 33 to 25, hoping new home orders would return to levels seen in the recent boom years.

Ole South had staff in place to build up to 700 homes a year, but with actual numbers likely to be in the high-500s this year, people "just didn't have anything to do," the owner said. Next year, Floyd is conservatively estimating between 300 and 400 new orders.

"We've held out and held out, thinking the tide would turn and that home building would pick back up," Floyd said. "But now it's apparent that it's not picking up and that next year won't be picking up either."

Real estate analyst Doug Timmons agrees that the Midstate housing market isn't likely to rebound to previous levels anytime soon, but says the job growth and population surge in Rutherford County puts local builders in a much better position than others across the country.
"The strength in the regional economy bodes well for us," the MTSU business and economics professor said. "Certainly, if you're going to be in a slow-down market, you want to be in a community like this."
Timmons said builders have outpaced demand by putting too many houses on the local market and now face a period of contraction. "That's the economic cycle, and that's just the way it is," he said.
Housing permits in Murfreesboro declined by 34.1 percent through September compared to the same period last year, according to city records. The county reported a similar declines of 16.8 percent with 634 total home permits compared to the 762 the previous year.
Still, nearly 1,000 new homes and condos have been built or are under construction in the Murfreesboro.
And even though demand is down, Murfreesboro Planning Director Joseph Aydelott said it's good to have housing available for companies looking to relocate because they need housing for their employees.
"It's good to have more than a year's supply (of housing) in any given time," said Aydelott.
Karyn Beaty, the executive officer for the Rutherford County Homebuilders Association, said her members aren't panicking, they're just repositioning themselves to unload excess inventory.
"Sales agents for builders are definitely becoming a bit more aggressive," Beaty said. "But everyone knows it's important that we avoid a wholesale dumping; no one wants to see the house values go down because that hurts the whole community."
"The strength in the regional economy bodes well for us. Certainly, if you're going to be in a slow-down market, you want to be in a community like this

Orlando New Home Market Gets Worse

Nov 1 - Orlando Sentinel Reports:

Home builders continued cutting back in the Orlando area this summer, as new-home starts plunged 47 percent in the third quarter compared with the same period a year ago.

MetroStudy, a Texas-based real-estate-research company, also said in its latest survey that the July-to-September home construction in Metropolitan Orlando was down 20 percent from the previous quarter.But the number of home buyers closing on their purchases, and moving into their new houses, in the four-county metro area slipped only 5 percent from the second to third quarters.

Economists and industry experts said the sharp drop in housing starts is painful in the near term but helpful in the long run because it means the inventory of unsold homes can be absorbed faster. It also means a rebound in the region's housing market might begin sooner, and perhaps be even stronger, than after previous downturns, they said."They are anxious to work their way through the inventory.

Now is not the time to be building," said Terry Eckert, a longtime Orlando-area home builder. Builders are smart enough to know the cyclical nature of the market, Eckert said, and most builders are not starting work on any homes unless it involves a confirmed sale with lender-approved buyer.

Eckert, a former president of the Home Builders Association of Metro Orlando, worked for years for major-production builders -- the companies that fill subdivisions rather than erecting custom homes on single sites. He recently became director of construction for Habitat for Humanity-Orlando, the charity that builds for families who ordinarily could not qualify for a regular home loan. In contrast to the area's conventional builders, Eckert's nonprofit group is on pace to build a record 17 single-family homes in the region by the end of its fiscal year next June 30.

But only the major commercial builders have the scale and financing to build homes in the volume required to meet overall demand, and the MetroStudy report released Wednesday showed that housing starts in the Orlando area during the third quarter fell 46.9 percent year-over-year to 4,851 units.Anthony Crocco, director of MetroStudy's Central and Northeast Florida divisions, said the sharp decline in Metro Orlando -- which comprises Orange, Seminole, Osceola and Lake counties -- is a reflection of "the slow sales paces and high cancellation rates of late summer and early fall." His survey of subdivisions showed that the number of homes sold and occupied in the third quarter totaled 3,850, down 29.8 percent from the same period in 2006 but off only 5 percent from this year's second quarter.

Orlando economist Hank Fishkind told builders, developers and Realtors last week that this housing downturn does appear to be different in Central Florida when compared with past housing slumps, in that home builders have slammed on the brakes harder than ever.That should help clear out the inventory of unsold homes and set the stage for a more robust rebound in sales of both new and used homes, perhaps in 2009, Fishkind said during his quarterly forecast for Stirling Sotheby's International Realty Global Gallery.

MetroStudy's report did, in fact, show a drop in the area's new-home inventory. Total inventory -- homes under construction, finished-but-vacant units and model homes -- totaled 10,412 at the end of the quarter, down 36.3 percent from a year earlier.But at the recent slow sales pace, that still amounted to a 6.6-month supply. And the critical finished-but-vacant category fell just 9.9 percent from a year ago, to 5,264 homes -- still, a sign that the large stockpile of homes is finally starting to get whittled down.