NEW YORK, Oct 13 (Reuters) - The broader market rally this morning bypassed most U.S. home builders on Monday after several analysts issued notes describing very stale order trends and weak traffic in the homebuilders field.
The Dow Jones U.S. Home Builders index was down as much as 1.3 percent in morning trading while the broader market was up about 5.5 percent.
It has been recently reported that sales center traffic at the weakest levels since January 2001, when he started his "Neighborhood Watch" report, which surveys 150 sales managers in 20 markets monthly.
The fourth quarter "may prove (to be) the weakest climate for new home sales since the production homebuilding business effectively began in the late 1940s," Reichardt wrote.
Toll Brothers Inc (TOL.N:) shares were both down -- Toll nearly 2 percent at $20 and Ryland as much as 4.9 percent at almost $19 -- after Credit Suisse analyst Dan Oppenheim downgraded both. Ryland was downgraded to "neutral" from "outperform" and Toll to "underperform" from "neutral."
Another hit to asset values as home prices continue to fall has not yet been factored into Toll's share price, making it too expensive "given its premium valuation and its high-end focus," wrote Oppenheim, who sees sees an additional 45 percent decline in raw land values and extremely weak order trends over the next several quarters.
One builder looked good though, as Oppenheim upgraded Meritage Homes Corp (MTH.N:) to "neutral" from "underperform," however, and its shares bucked the trend by rising as 14 percent, or $15.96.
Showing posts with label Toll brothers. Show all posts
Showing posts with label Toll brothers. Show all posts
Monday, October 13, 2008
Friday, September 19, 2008
New Housings Starts Hit 15 Year Low - New Construction Declines
Builders in the U.S. broke ground on the fewest new homes since 1991 last month, signaling that the economy will continue to erode in coming months.
Housing starts fell 6.2 percent in August to an annual rate of 895,000, the fewest since January 1991, the Commerce Department said in Washington. Building permits, a sign of future construction, dropped 8.9 percent to an 854,000 pace.
``The home-construction industry is still in a deep recession and will remain there probably for the rest of the year,'' said Patrick Newport, an economist at Global Insight Inc. in Lexington, Massachusetts, who forecast a decline to 893,000. ``There are just too many houses on the market.''
Stocks slid as banks hoarded cash, sending money market rates higher and threatening to worsen the credit crunch that has made it tougher for homebuyers to get loans. The housing and credit meltdowns that led to the collapse of Lehman Brothers Holdings Inc. may continue to subtract from growth for the rest of the year and into next.
Starts were projected to fall to a 950,000 annual pace from a previously estimated 965,000 in July, according to the median forecast of 74 economists polled by Bloomberg News. Compared with August 2007, housing starts were down 33 percent.
Stocks tumbled as bank lending seized up in the wake of the government's takeover of American International Group Inc. The Standard & Poor's 500 Stock Index lost 4.7 percent to close at 1156.39 in New York. Benchmark 10-year Treasury notes rose, pulling the yields down to 3.41 percent at 4:31 p.m. in New York.
Condos, Townhouses
Construction of single-family homes declined 1.9 percent to a 630,000 rate, today's report showed. Work on multifamily homes, such as townhouses and apartment buildings, dropped 15 percent from the prior month to an annual rate of 265,000.
Starts decreased in three of four regions, led by a 15 percent slump in the Northeast. Construction was down 14 percent in the Midwest and 7.4 percent in the South. The West showed an 11 percent gain.
Builders completed 961,000 homes at an annual rate last month, the fewest since September 1982.
Combined existing and new-home sales have declined 36 percent from their 2005 peaks. Nationwide, home prices have fallen 19 percent on average from their peak in July 2006, according to the S&P/Case-Shiller index of 20 cities.
The credit crunch spawned by the subprime mortgage crisis forced Lehman Brothers Holdings Inc. this week to file for bankruptcy, just a week after the government took over Fannie Mae and Freddie Mac, the two biggest buyers of mortgages.
Rate Decision
Federal Reserve policy makers yesterday left the benchmark interest rate unchanged at 2 percent for a third consecutive meeting. Chairman Ben S. Bernanke and his colleagues signaled they will continue to address market turmoil with emergency lending.
As banks tighten lending standards and confidence slumps, consumer spending is faltering. Retail sales in August dropped for a second month, Commerce reported last week.
Homebuilders remain gloomy. A report yesterday from the National Association of Home Builders/Wells Fargo showed confidence among U.S. homebuilders this month held near the lowest level since records began in 1985.
As home prices continue to fall, more and more Americans a forced into foreclosure as they owe more than their homes are worth. Stricter lending rules also limit opportunities to refinance out of adjustable-rate mortgages before they reset higher.
Foreclosure filings rose to a record in August, RealtyTrac Inc. said Sept. 12. One in 416 U.S. households got a default notice, was warned of a pending auction or was foreclosed upon.
Toll Brothers Inc., the largest U.S. luxury homebuilder, on Sept. 4 reported a fourth straight quarterly loss.
``Explosive energy price increases, rising unemployment an severe mortgage and credit'' conditions cut demand, Chief Executive Officer Robert Toll said on a conference call. ``Weak consumer confidence has kept many potential buyers from taking advantage of the current buyers' market.''
Housing starts fell 6.2 percent in August to an annual rate of 895,000, the fewest since January 1991, the Commerce Department said in Washington. Building permits, a sign of future construction, dropped 8.9 percent to an 854,000 pace.
``The home-construction industry is still in a deep recession and will remain there probably for the rest of the year,'' said Patrick Newport, an economist at Global Insight Inc. in Lexington, Massachusetts, who forecast a decline to 893,000. ``There are just too many houses on the market.''
Stocks slid as banks hoarded cash, sending money market rates higher and threatening to worsen the credit crunch that has made it tougher for homebuyers to get loans. The housing and credit meltdowns that led to the collapse of Lehman Brothers Holdings Inc. may continue to subtract from growth for the rest of the year and into next.
Starts were projected to fall to a 950,000 annual pace from a previously estimated 965,000 in July, according to the median forecast of 74 economists polled by Bloomberg News. Compared with August 2007, housing starts were down 33 percent.
Stocks tumbled as bank lending seized up in the wake of the government's takeover of American International Group Inc. The Standard & Poor's 500 Stock Index lost 4.7 percent to close at 1156.39 in New York. Benchmark 10-year Treasury notes rose, pulling the yields down to 3.41 percent at 4:31 p.m. in New York.
Condos, Townhouses
Construction of single-family homes declined 1.9 percent to a 630,000 rate, today's report showed. Work on multifamily homes, such as townhouses and apartment buildings, dropped 15 percent from the prior month to an annual rate of 265,000.
Starts decreased in three of four regions, led by a 15 percent slump in the Northeast. Construction was down 14 percent in the Midwest and 7.4 percent in the South. The West showed an 11 percent gain.
Builders completed 961,000 homes at an annual rate last month, the fewest since September 1982.
Combined existing and new-home sales have declined 36 percent from their 2005 peaks. Nationwide, home prices have fallen 19 percent on average from their peak in July 2006, according to the S&P/Case-Shiller index of 20 cities.
The credit crunch spawned by the subprime mortgage crisis forced Lehman Brothers Holdings Inc. this week to file for bankruptcy, just a week after the government took over Fannie Mae and Freddie Mac, the two biggest buyers of mortgages.
Rate Decision
Federal Reserve policy makers yesterday left the benchmark interest rate unchanged at 2 percent for a third consecutive meeting. Chairman Ben S. Bernanke and his colleagues signaled they will continue to address market turmoil with emergency lending.
As banks tighten lending standards and confidence slumps, consumer spending is faltering. Retail sales in August dropped for a second month, Commerce reported last week.
Homebuilders remain gloomy. A report yesterday from the National Association of Home Builders/Wells Fargo showed confidence among U.S. homebuilders this month held near the lowest level since records began in 1985.
As home prices continue to fall, more and more Americans a forced into foreclosure as they owe more than their homes are worth. Stricter lending rules also limit opportunities to refinance out of adjustable-rate mortgages before they reset higher.
Foreclosure filings rose to a record in August, RealtyTrac Inc. said Sept. 12. One in 416 U.S. households got a default notice, was warned of a pending auction or was foreclosed upon.
Toll Brothers Inc., the largest U.S. luxury homebuilder, on Sept. 4 reported a fourth straight quarterly loss.
``Explosive energy price increases, rising unemployment an severe mortgage and credit'' conditions cut demand, Chief Executive Officer Robert Toll said on a conference call. ``Weak consumer confidence has kept many potential buyers from taking advantage of the current buyers' market.''
Sunday, December 16, 2007
More Homebuilder Layoffs in Las Vegas - Toll Brothers and more
As Las Vegas homebuilders continue to slash prices and cut back on construction because of soft demand, companies are continuing to trim staff levels.
In the past four to six weeks, several builders have pared their staff once again in the latest round of layoffs that started about 14 months ago.
Beazer Homes cut its staff nationally by 25 percent and that reduction was felt in its Las Vegas offices. Pageantry Homes and Woodside Homes also made cuts, said Dennis Smith, president of Home Builders Research. Richmond American Homes, Astoria, Centex, KB Home, Pulte Homes, Celebrate, Rhodes, Ryland, Distinctive, Engle, Meritage and Lennar have also recently cut staff.
Monica Caruso, spokeswoman for the Southern Nevada Home Builders Association, said she has heard of more layoffs in recent weeks.
"We are still coming down from the boom, and the numbers are slow," Caruso said. "It's just a function of the lack of sales activity."
The number of home closings are down 44 percent for the year. Permits are down 25 percent.
Builders have been tight-lipped about the details of cutbacks in their offices.
Smith said some area developers, title companies and lenders have made cuts as well.
"I had someone tell me ... they were referring to today (Nov. 30) as Black Friday," Smith says of First American Title.
What gets overlooked, Smith said, is the job losses in related industries, such as concrete, associated with homebuilding. The one industry not affected is appraisers. They are swamped, Smith said.
Staffing cuts at Toll Bros.: A November issue of Big Builder magazine that was placed on inside billboards at a housing conference last week in Las Vegas featured Gary Mayo, the group president in Nevada for Toll Bros. He says that since January, his staff has dropped from 348 to 174, a 50 percent reduction in three rounds of layoffs.
The layoffs are in line with the company's home closings in 2007, which are down about 50 percent from the 368 closed in 2006. The company indicates 2008 may even be bleaker.
"We won't cut back on the sticks and bricks, and the land cost is what it is, so the only area I can look at is doing it with few but better people," Mayo said.
Unlike most companies, Mayo said that rather than trim mid- or upper-level managers with heftier compensation, he's kept people who have been with him for 10 to 12 years. That method saves less money, but the managers have to juggle more responsibility with the cutbacks, he said.
"Land acquisition is almost nonexistent, but we have shifted their focus into production housing to preserve them," Mayo said. "I have vice presidents all the way up to division managers who are out in the field again — now running one, two or three communities as well as maintaining what their day job was before. It breeds loyalty with these guys. They know that as long as they are willing to take a step back, we're willing to continue to hold on to them."
Mayo said Toll Bros. is in a different position than most public builders. It uses incentives but won't sell homes at any cost.
"I do need to generate enough cash flow to pay the bills, but I don't need to do it at a loss. So you're going to see us with much less market share than we have had over the last 12 months ? and we are ready for that. When things pick up, I will just need to hire some construction managers, and I'll be ready to go again."
In other news:
LaPour Corporate Center has received the Leadership in Energy and Environmental Design silver core and shell precertification from the U.S. Green Building Council. The $19 million, three-story 70,000-square-foot office building was precertified based on its submission.
TWC Construction has started work on a project for Blackstone Capital Group. The Durango Centennial Retail Center is valued at $6.5 million for site improvements and the shell. It consists of four one-story buildings totaling 72,000 square feet and has underground parking at the corner of Durango Drive and Centennial Parkway. The project is slated to be finished in the third quarter of 2008. The Blackstone Retail Center on Fort Apache Road is scheduled to open in July.
Smith reports 51 apartment conversions closed escrow in October. That brings the year's total to 1,569, which is a year-to-year decrease of 3,410 units or 69 percent. Closings of conversion units have declined steadily in 2007 because of tightening mortgage credit, Smith said.
Title One Las Vegas, a title and escrow company, has made organization changes and additions designed to combat the slow residential market and service the commercial sector, it said. The company has named a new president, Norma Spaeth, and created private-client services, a new business unit under newly appointed Vice President Angelina Galindo. Guyon Long has also been appointed senior vice president/assistant county manager. Spaeth has previously worked as executive vice president for Equity Title of Nevada. Galindo previously served as vice president of special projects and a senior escrow officer with Chicago Title.
R/S Development has signed up to participate in the Green Building Partnership program of the Southern Nevada Home Builders Association. R/S is building green homes in its Kingswood Crown Series in Summerlin at Interstate 215 and Charleston Boulevard and at the Alpian Meadows at Mountain's Edge. The company plans to build 182 homes. For more information, go to www.rsdev.com. Model homes built by Pulte Homes in the Timbercreek subdivision in northwest Las Vegas are the first homes to achieve certification as green-built homes under the program. The model homes meet the program's requirements for resource, energy and water efficiency and indoor environmental air quality.
An 11-building multitenant office complex in Las Vegas has been purchased for $24.8 million by Koll/PER, a limited liability company owned by the Koll Co. of Newport Beach, Calif., and the Public Employee Retirement System of Idaho. Koll Canyon Plaza, formerly called Trident Business Park, consists of 103,345 square feet of office and retail space on eight acres on the south side of Sahara Avenue, west of North Buffalo Drive. The seven-year-old office park was purchased from Trident Development, which was represented by Grubb & Ellis. Koll represented itself. It's the fourth Las Vegas area acquisition by the group in the last two years.
Gavin Maloof, co-owner of the Sacramento Kings and brother of Palms owner George Maloof, sold his 5,499-square-foot home on Innisbrook Avenue for $2.2 million. The buyer was the Douglas Unger Trust.
Arte Nathan, the retired human resources boss with Wynn Resorts, sold his 5,304-square-foot home on Grouse Street for $1.3 million. The buyer was Paragon Relocation Resources.
In the past four to six weeks, several builders have pared their staff once again in the latest round of layoffs that started about 14 months ago.
Beazer Homes cut its staff nationally by 25 percent and that reduction was felt in its Las Vegas offices. Pageantry Homes and Woodside Homes also made cuts, said Dennis Smith, president of Home Builders Research. Richmond American Homes, Astoria, Centex, KB Home, Pulte Homes, Celebrate, Rhodes, Ryland, Distinctive, Engle, Meritage and Lennar have also recently cut staff.
Monica Caruso, spokeswoman for the Southern Nevada Home Builders Association, said she has heard of more layoffs in recent weeks.
"We are still coming down from the boom, and the numbers are slow," Caruso said. "It's just a function of the lack of sales activity."
The number of home closings are down 44 percent for the year. Permits are down 25 percent.
Builders have been tight-lipped about the details of cutbacks in their offices.
Smith said some area developers, title companies and lenders have made cuts as well.
"I had someone tell me ... they were referring to today (Nov. 30) as Black Friday," Smith says of First American Title.
What gets overlooked, Smith said, is the job losses in related industries, such as concrete, associated with homebuilding. The one industry not affected is appraisers. They are swamped, Smith said.
Staffing cuts at Toll Bros.: A November issue of Big Builder magazine that was placed on inside billboards at a housing conference last week in Las Vegas featured Gary Mayo, the group president in Nevada for Toll Bros. He says that since January, his staff has dropped from 348 to 174, a 50 percent reduction in three rounds of layoffs.
The layoffs are in line with the company's home closings in 2007, which are down about 50 percent from the 368 closed in 2006. The company indicates 2008 may even be bleaker.
"We won't cut back on the sticks and bricks, and the land cost is what it is, so the only area I can look at is doing it with few but better people," Mayo said.
Unlike most companies, Mayo said that rather than trim mid- or upper-level managers with heftier compensation, he's kept people who have been with him for 10 to 12 years. That method saves less money, but the managers have to juggle more responsibility with the cutbacks, he said.
"Land acquisition is almost nonexistent, but we have shifted their focus into production housing to preserve them," Mayo said. "I have vice presidents all the way up to division managers who are out in the field again — now running one, two or three communities as well as maintaining what their day job was before. It breeds loyalty with these guys. They know that as long as they are willing to take a step back, we're willing to continue to hold on to them."
Mayo said Toll Bros. is in a different position than most public builders. It uses incentives but won't sell homes at any cost.
"I do need to generate enough cash flow to pay the bills, but I don't need to do it at a loss. So you're going to see us with much less market share than we have had over the last 12 months ? and we are ready for that. When things pick up, I will just need to hire some construction managers, and I'll be ready to go again."
In other news:
LaPour Corporate Center has received the Leadership in Energy and Environmental Design silver core and shell precertification from the U.S. Green Building Council. The $19 million, three-story 70,000-square-foot office building was precertified based on its submission.
TWC Construction has started work on a project for Blackstone Capital Group. The Durango Centennial Retail Center is valued at $6.5 million for site improvements and the shell. It consists of four one-story buildings totaling 72,000 square feet and has underground parking at the corner of Durango Drive and Centennial Parkway. The project is slated to be finished in the third quarter of 2008. The Blackstone Retail Center on Fort Apache Road is scheduled to open in July.
Smith reports 51 apartment conversions closed escrow in October. That brings the year's total to 1,569, which is a year-to-year decrease of 3,410 units or 69 percent. Closings of conversion units have declined steadily in 2007 because of tightening mortgage credit, Smith said.
Title One Las Vegas, a title and escrow company, has made organization changes and additions designed to combat the slow residential market and service the commercial sector, it said. The company has named a new president, Norma Spaeth, and created private-client services, a new business unit under newly appointed Vice President Angelina Galindo. Guyon Long has also been appointed senior vice president/assistant county manager. Spaeth has previously worked as executive vice president for Equity Title of Nevada. Galindo previously served as vice president of special projects and a senior escrow officer with Chicago Title.
R/S Development has signed up to participate in the Green Building Partnership program of the Southern Nevada Home Builders Association. R/S is building green homes in its Kingswood Crown Series in Summerlin at Interstate 215 and Charleston Boulevard and at the Alpian Meadows at Mountain's Edge. The company plans to build 182 homes. For more information, go to www.rsdev.com. Model homes built by Pulte Homes in the Timbercreek subdivision in northwest Las Vegas are the first homes to achieve certification as green-built homes under the program. The model homes meet the program's requirements for resource, energy and water efficiency and indoor environmental air quality.
An 11-building multitenant office complex in Las Vegas has been purchased for $24.8 million by Koll/PER, a limited liability company owned by the Koll Co. of Newport Beach, Calif., and the Public Employee Retirement System of Idaho. Koll Canyon Plaza, formerly called Trident Business Park, consists of 103,345 square feet of office and retail space on eight acres on the south side of Sahara Avenue, west of North Buffalo Drive. The seven-year-old office park was purchased from Trident Development, which was represented by Grubb & Ellis. Koll represented itself. It's the fourth Las Vegas area acquisition by the group in the last two years.
Gavin Maloof, co-owner of the Sacramento Kings and brother of Palms owner George Maloof, sold his 5,499-square-foot home on Innisbrook Avenue for $2.2 million. The buyer was the Douglas Unger Trust.
Arte Nathan, the retired human resources boss with Wynn Resorts, sold his 5,304-square-foot home on Grouse Street for $1.3 million. The buyer was Paragon Relocation Resources.
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