An exceptionally loud opponent of government regulation in the construction of housing in good times has found a new target to bark at in the market crash: banks.
Mick Pattinson, president of Barratt American, has rallied builders for years around common causes -- lowering government fees for constructing homes and fighting back against development opponents.
Now, despite filing for bankruptcy protection late last month, Pattinson hasn't lowered the volume. He gathered a gang of builders, subcontractors and laid-off employees who toted signs and chanted "Banks behaving badly!" outside three banks in downtown San Diego on Wednesday morning.
The Carlsbad-based homebuilder filed for Chapter 11 bankruptcy protection late last month after Bank of America foreclosed on more than 10 of the company's ongoing projects in San Diego and Riverside counties. Pattinson says he was he was blindsided by Bank of America's decision in August 2007 to freeze funding for Barratt's ongoing construction. In the ensuing financial trouble, the builder stalled some housing projects, laid off more than 100 workers, left subcontractors in the lurch and slid toward insolvency.In a newspaper column, from top posts in the local and state Building Industry Association, and through lawsuits against various cities for what he called excessive fees, Pattinson has developed a reputation for giving opponents a piece of his mind about what he considers impediments to homebuilding in the state over the years."I am not one who is at all embarrassed of what I do for a living," he said.
Pattinson's current case: banks created this housing downturn in the first place with reckless mortgage lending and thus shouldn't be allowed to cut builders off from the funding they were promised. He's assembled more than 160 builders nationwide to push for government intervention and regulation for banks. He's made his company's plight public, establishing solidarity with his builder friends and giving his laid-off employees a visible reason for their unemployment.
The company's responsibility for its troubles takes a lesser place in Pattinson's "What went wrong?" litany. But as the builder makes its predicament public, the story of what happened to Barratt American -- whether caused by Pattinson's favored targets or by the company's own decisions -- is a story of the pain in the local homebuilding industry, a sector already counting down the days to 2010, hoping for better times.The bankruptcy of one of the region's largest local homebuilders leaves in its wake a slew of subcontractors and unemployed workers, some of whom are now slipping out of business.
The debts top $20 million for just the top 20 in a long list of hundreds of creditors in the company's bankruptcy filing. The downfall of Barratt American, then, is also the story of sacrifice and distress from the smallest subcontractor to one of the largest local housing companies."Everybody had their snout in the trough," Pattinson said. "When markets rise, we rise with them, and when markets fall, we fall with them. It's a risk business."
Now that the government has started spending hundreds of millions of dollars to help banks -- who also made risks during the housing boom -- Pattinson argues that bailout should be applied with a mandate that homebuilders like him be enabled to keep their businesses afloat. Government should make the banks lend again, he said.For about two decades, Pattinson ran the local Barratt operations as a subsidiary of Barratt Group, based in Great Britain. In 2004, Pattinson and his fellow managers banded together to buy the U.S. operations of the company for $165 million, a deal that Bank of America partly financed and encouraged Pattinson to do, he said.That year was about the peak for local homebuilding activity, followed by a peak for prices in 2005 and a still-bustling, but cooling, 2006.
The company built projects in San Diego County and expanded operations to the Inland Empire. Pattinson used his pulpit in his biweekly "The Equalizer" column in the North County Times to preach the perils of government fees attached to housing, even snagging top prizes in local journalism contests. He named a state politician the "hero" of homebuyers for his efforts to restrict cities from spending fees collected from new homes on fixing infrastructure issues not caused by that development.
He lambasted Solana Beach for fighting the "mansionization" of that coastal city. He wrote a column entitled "How city policies ruin the housing market" and called the government-mandated affordable housing program an "Eastern Bloc practice."But soon it was clear Pattinson had a larger challenge to face -- the crash of the local housing market. The last two years provided a sharp drop in sales and prices as mortgage options dried up and home-buying fever cooled. The third quarter of 2008 was the worst quarter in 30 years for the region's new homebuilders, according to MarketPointe Realty Advisors.
Pattinson blames the crash in the market to the opaque systems banks were using to fuel the housing frenzy. The banks didn't explain how they were operating, he said. He claims the real estate industry couldn't anticipate how bad the downturn would be.But especially near the end of the boom, Pattinson and the region's homebuilders had clues the system was on shaky ground.
Barratt American had a mortgage lending arm that turned away some would-be buyers who couldn't qualify for the loans. Pattinson's sales team began seeing those same customers who'd been turned down coming back to purchase a house. They'd gone to a mortgage broker with less stringent requirements, and they were back. The company couldn't discriminate against those buyers, Pattinson said.But could the builder have used that trend to foresee tough times ahead?"We knew it was going to end," he said, quickly revising his own words. "I say 'we knew'-- that's an overstatement."
Pattinson describes a builders' gathering in the beginning of 2007 where he made a presentation about the softening market. But the market had already been coming down for more than a year."Turning around a homebuilding company is like turning around an oil tanker at sea, you can't do it on a sixpence," he said. "And yes there were some windfall profits. I don't dispute that but everybody was taking a piece of the action."Including the banks, he said. When it became apparent last March that Bank of America wasn't going to unfreeze the loans, the company stopped paying its interest on the loan.
The bank started foreclosure proceedings on 11 Barratt projects, including City Square townhouses in Escondido, Aragon condos in La Mesa, the Nantucket subdivision in Leucadia and Magnolia Estates in Carlsbad.Right up until last summer, when the bank began foreclosing, Barratt was working on its under-construction projects. That meant there were scores of subcontractors still framing, designing, grading, installing pools and pouring cement as the builder went through its financial fights with the bank.John DeMaria owns DeMaria LandTech Inc., and is listed as a creditor in Barratt's Chapter 11 filing. He's owed more than $450,000.
His company worked on pools and common areas in the Magnolia Estates project. When the builder kept sending requests for more work, DeMaria kept hiring workers to do it. Eventually, he wound up with a backlog of invoices that Barratt American was unable to pay."I took a home equity line on my personal house to pay their bills and now I have to sell my house," he said. "It's horrible."
DeMaria cashed out his retirement to cover his own backlog of payroll taxes and deferred expenses. He's selling his two acres in Leucadia to rent for a while. But he doesn't blame Barratt."It's not really their fault; I don't have any ill will toward them," he said. "I'm about the most resilient person you could ever have. There's sacrifices you have to make if you want to do well."Pattinson said the human impact of this situation is distressing. And his own laying off of more than 100 employees, the vast majority of his personnel, impels him to keep fighting the banks. He does assign a smaller portion of blame to his company's own decisions."What mistakes did we make? You could argue we made the mistake of buying the company a year before the market peaked, or that we didn't move fast enough to liquidate debt after we bought the company," he said. "But we were not in bad shape. What's happened to us is a reflection about the panic in the lending industry."Analysts don't see much unique about Barratt's operations during the boom, or its plight, other than Pattinson's willingness to bare his wounds."I think they had a great reputation -- they got into the urban market, did some innovative stuff, they were pretty much a normal, middle of the road San Diego County local builder," said Peter Dennehy, vice president of Sullivan Group Real Estate Advisors.
"They were doing the things that everybody was doing."Gary London, local real estate analyst, said most local homebuilders are in the same boat as Barratt."Should they have been more effective managers of their own portfolio? Of course they should have, but you know they're not without company," London said. "I think all of us in the industry had some of the same burdens, made of the same misjudgments. And the lenders aided and abetted that. There's plenty of blame to go around."
Thursday, January 15, 2009
Thursday, December 4, 2008
Kimball Hill Bankruptcy - What Happens to Kimball Hill Homeowners?
What happens when a builder goes bankrupt?
Several north Texas communities are learning the answer the hard way.
Many are unfinished and are now out of luck. Kimball Hill Homes announced Tuesday that it is shutting down all operations across the country in the next 15 months.
This affects five different developments in Tarrant, Dallas and Collin Counties.
Homeowners here are now very worried that this is going to be a huge financial loss for them too.
Jason Roberts bought his south Arlington home two years ago. It was a long-term investment for his family. But he didn't think he would outlast his homebuilder Kimball Hills.
"It is a bit disappointing to see that at such an early stage in our community development they're pulling out. And they're leaving us sort of high and dry," he said.
A statement released by Kimball Hill's Chief Executive Officer Ken Love says: "We deeply regret the necessity of today's decision, but given the current housing and financial market conditions, we are simply unable to conduct normal operations while the company continues its sale efforts."
The company says homes already under construction will be finished, but they are not building any new homes. They are looking to sell the unfinished lots.
"At this point, we don't know where it's gonna go. So you don't know if right across the street in the new phase if they decide to sell if off to somebody else, are they going to put condominiums in or apartments? At this point we don't know where it's going to go," said Roberts.
This also means homeowners association dues may dramatically increase.
"The community as a whole may suffer. Because we don't have the cash flow coming in to help us with the greenbelts, and the attractiveness and appeal of the area," said Roberts.
Just how much more, remains to be seen.
Warranties on home bought after April 23rd will be honored.
But for home purchased before this date will not have a Kimball Hill warranty.
There are five Kimball Hill properties in Tarrant, Collin and North Texas affected.
Several north Texas communities are learning the answer the hard way.
Many are unfinished and are now out of luck. Kimball Hill Homes announced Tuesday that it is shutting down all operations across the country in the next 15 months.
This affects five different developments in Tarrant, Dallas and Collin Counties.
Homeowners here are now very worried that this is going to be a huge financial loss for them too.
Jason Roberts bought his south Arlington home two years ago. It was a long-term investment for his family. But he didn't think he would outlast his homebuilder Kimball Hills.
"It is a bit disappointing to see that at such an early stage in our community development they're pulling out. And they're leaving us sort of high and dry," he said.
A statement released by Kimball Hill's Chief Executive Officer Ken Love says: "We deeply regret the necessity of today's decision, but given the current housing and financial market conditions, we are simply unable to conduct normal operations while the company continues its sale efforts."
The company says homes already under construction will be finished, but they are not building any new homes. They are looking to sell the unfinished lots.
"At this point, we don't know where it's gonna go. So you don't know if right across the street in the new phase if they decide to sell if off to somebody else, are they going to put condominiums in or apartments? At this point we don't know where it's going to go," said Roberts.
This also means homeowners association dues may dramatically increase.
"The community as a whole may suffer. Because we don't have the cash flow coming in to help us with the greenbelts, and the attractiveness and appeal of the area," said Roberts.
Just how much more, remains to be seen.
Warranties on home bought after April 23rd will be honored.
But for home purchased before this date will not have a Kimball Hill warranty.
There are five Kimball Hill properties in Tarrant, Collin and North Texas affected.
Wednesday, December 3, 2008
Kimball Hill Banruptcy - Homebuilder is Winding Down Operations
Kimball Hill Homes, an institution in the Northwest suburbs for 55 years, will be going out of business, the company announced Tuesday. Chapter 11 bankruptcy did not help the Chichago homebuilder and they are done.
"Over the next 15 moths, we will be phasing down operations, said Ken Love, chief executive officer, in a telephone interview.
Within six months, the company will finish the approximately 500 homes it has under construction and under contract, including about 110 in the Chicago area, he said. The 120 deposits that buyers have placed on homes that have not yet been started will be returned. That includes about 40 in the Chicago area.
No homes will be started, but approximately 260 inventory and model homes will be available for purchase.
Of 400 Kimball Hill employees, 100 are in the Chicago area, Love said. Some were notified of their termination Tuesday, others will stay with the company for all or part of the wind-down period.
"We deeply regret the necessity of today's decision, but given the current housing and financial market conditions, we are simply unable to conduct normal operations while the company continues its sale efforts," Love said in a statement.
Beginning the wind-down process now ensures the smoothest transition possible for employees, home buyers, creditors and the communities where the company builds, he said.
If the company is not sold within 60 days, the opportunity for a sale will diminish, according to Love. A single buyer is preferred.
The homebuilder filed for Chapter 11 bankruptcy protection in April due to lower demand for homes during one of the worst housing markets in decades.
A year ago, the company listed assets of $795.5 million and a debt of $631.9 million, but that was the amount paid for the assets, and their current market value is not really known, Love said.
The company also said has requested a hearing on Jan. 12 to approve the disclosure statement accompanying its Chapter 11 plan.
Besides proceeds from home sales, the company has access to more than $35 million from loans obtained during the bankruptcy process.
This will ensure that employees, subcontractors and tradespeople will be paid for their work, he said. The people who will lose money include lenders and shareholders, he said.
Kimball Hill Homes is believed to have built more than 10,000 homes in the Chicago area. Most recent building has been in Bartlett, Elgin, Naperville, McHenry, Montgomery, Shorewood and Yorkville.
A predecessor to this company was started by a lawyer named Kimball Hill, who is considered founder of Rolling Meadows because his company built almost 4,000 homes there in three years beginning in 1953. His son, David Hill, who died July 26, took over leadership of the company in 1969 and later expanded into nine states and 15 metropolitan areas.
During the current housing slump, the company quit building in Florida, Ohio, Oregon and Wisconsin. It continued operating in Illinois, Nevada, Texas and California
"Over the next 15 moths, we will be phasing down operations, said Ken Love, chief executive officer, in a telephone interview.
Within six months, the company will finish the approximately 500 homes it has under construction and under contract, including about 110 in the Chicago area, he said. The 120 deposits that buyers have placed on homes that have not yet been started will be returned. That includes about 40 in the Chicago area.
No homes will be started, but approximately 260 inventory and model homes will be available for purchase.
Of 400 Kimball Hill employees, 100 are in the Chicago area, Love said. Some were notified of their termination Tuesday, others will stay with the company for all or part of the wind-down period.
"We deeply regret the necessity of today's decision, but given the current housing and financial market conditions, we are simply unable to conduct normal operations while the company continues its sale efforts," Love said in a statement.
Beginning the wind-down process now ensures the smoothest transition possible for employees, home buyers, creditors and the communities where the company builds, he said.
If the company is not sold within 60 days, the opportunity for a sale will diminish, according to Love. A single buyer is preferred.
The homebuilder filed for Chapter 11 bankruptcy protection in April due to lower demand for homes during one of the worst housing markets in decades.
A year ago, the company listed assets of $795.5 million and a debt of $631.9 million, but that was the amount paid for the assets, and their current market value is not really known, Love said.
The company also said has requested a hearing on Jan. 12 to approve the disclosure statement accompanying its Chapter 11 plan.
Besides proceeds from home sales, the company has access to more than $35 million from loans obtained during the bankruptcy process.
This will ensure that employees, subcontractors and tradespeople will be paid for their work, he said. The people who will lose money include lenders and shareholders, he said.
Kimball Hill Homes is believed to have built more than 10,000 homes in the Chicago area. Most recent building has been in Bartlett, Elgin, Naperville, McHenry, Montgomery, Shorewood and Yorkville.
A predecessor to this company was started by a lawyer named Kimball Hill, who is considered founder of Rolling Meadows because his company built almost 4,000 homes there in three years beginning in 1953. His son, David Hill, who died July 26, took over leadership of the company in 1969 and later expanded into nine states and 15 metropolitan areas.
During the current housing slump, the company quit building in Florida, Ohio, Oregon and Wisconsin. It continued operating in Illinois, Nevada, Texas and California
Denver's Adare Homes Hohnstown Farms LLC Files Chapter 11
Adare Homes Johnstown Farms LLC has filed for Chapter 11 bankruptcy protection, according to court documents.
The Greenwood Village-based homebuilder listed assets and liabilities of $1 million to $10 million on documents filed Dec. 2 in U.S. Bankruptcy Court in Denver. It named only four major creditors.
Adare Homes LLC, also based in Greenwood Village, builds homes in communities along the Front Range, including Commerce City, Greeley and Brighton, according to the company’s website.
The Greenwood Village-based homebuilder listed assets and liabilities of $1 million to $10 million on documents filed Dec. 2 in U.S. Bankruptcy Court in Denver. It named only four major creditors.
Adare Homes LLC, also based in Greenwood Village, builds homes in communities along the Front Range, including Commerce City, Greeley and Brighton, according to the company’s website.
Wednesday, November 26, 2008
Bankrupt Homebuilder Neumann Homes to Sell Land
Bankrupt Homebuilder Neumann Homes asked a judge to approve the $9 million sale of land north of Chicago to Cole Taylor Bank.
The lender, a unit of Taylor Capital Group Inc., agreed to reduce its $14.4 million claim in exchange for part of the 600- acre Clublands property in Antioch, according to papers filed Nov. 22 in U.S. Bankruptcy Court in Chicago.
U.S. Bankruptcy Judge Eugene Wedoff agreed to hold an emergency hearing to consider the sale. Cole Taylor, based in Rosemont, was Neumann's lender for the development, and the only interested buyer, the builder said.
Neumann, a 24-year-old company that built 12,000 homes in Illinois, Wisconsin, Colorado and Michigan, filed for bankruptcy in October 2007, citing inadequate funding and weakening of the U.S. housing market.
The Clublands assets include proceeds from a $13.8 million tax bond issued by Antioch for streets, sidewalks and other improvements, as well as three bonds totaling $15.6 million issued by Fidelity & Deposit Co. of Maryland, court records show. Antioch said in July that Neumann had defaulted on its obligations to finish public improvements.
Neumann has secured claims of $151.1 million, unsecured claims of $134.1 million and assets of $291.8 million, court papers show.
George Panagakis, Neumann's lawyer with the law firm Skadden, Arps, Slate, Meagher & Flom, didn't immediately return a call seeking comment.
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The lender, a unit of Taylor Capital Group Inc., agreed to reduce its $14.4 million claim in exchange for part of the 600- acre Clublands property in Antioch, according to papers filed Nov. 22 in U.S. Bankruptcy Court in Chicago.
U.S. Bankruptcy Judge Eugene Wedoff agreed to hold an emergency hearing to consider the sale. Cole Taylor, based in Rosemont, was Neumann's lender for the development, and the only interested buyer, the builder said.
Neumann, a 24-year-old company that built 12,000 homes in Illinois, Wisconsin, Colorado and Michigan, filed for bankruptcy in October 2007, citing inadequate funding and weakening of the U.S. housing market.
The Clublands assets include proceeds from a $13.8 million tax bond issued by Antioch for streets, sidewalks and other improvements, as well as three bonds totaling $15.6 million issued by Fidelity & Deposit Co. of Maryland, court records show. Antioch said in July that Neumann had defaulted on its obligations to finish public improvements.
Neumann has secured claims of $151.1 million, unsecured claims of $134.1 million and assets of $291.8 million, court papers show.
George Panagakis, Neumann's lawyer with the law firm Skadden, Arps, Slate, Meagher & Flom, didn't immediately return a call seeking comment.
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Tuesday, November 25, 2008
Florida Homebuilders Upset with Federal Bailout Plan
Florida home builders are upset with the way lending institutions are handling the cash from the $700 billion federal bailout.
Home builders are accusing banks of misusing their federal assistance. They say lenders are hoarding the bailout money while demanding repayment of good loans from customers with top credit scores.
Builders also contend banks are eliminating lines of credit and doing away with construction financing.
The Florida Home Builders Association says the situation is driving builders to ruin.
Valrico builder Chuck Fowke says he and other builders have been meeting with members of Congress to seek a “time out” until they can reach a solution with lenders.
Home Builders President Jay Carlson says the business practices are forcing solvent, creditworthy home builders to the brink of financial disaster.
One example cited by builders involves a development in Pensacola where many owners of pre-sold lots are ready to close on their homes, but the deals are falling apart because banks are requiring down payments of up to 50 percent.
Florida Chief Financial Officer Alex Sink met with builders on Monday and promised to work on a solution, but her authority is limited to smaller, state-chartered lending institutions.
The chief economist for the American Bankers Association responds to the builders’ charges, saying banks have not received all the bailout cash yet from the federal government.
James Chessen says one of the most important factors in securing credit is to have a longstanding relationship with a bank.
Chessen says the credit situation in Florida may be among the worst in the country because of the overbuilding in the state.Friday, November 21, 2008
Land Resource LLC Bankruptcy - Another Southeast Builder Files Bankruptcy
Land Resource LLC, a southeastern U.S. developer, has filed for Chapter 11 bankruptcy earlier this week. Land Resource LLC showed liabilities of over $200 million and assets valued at only about half that.
"The banks stopped making loans to our customers," Ward said in an e-mail. "It just doesn't seem fair that the banks can put us into bankruptcy because of their failure to lend and then get a federal bailout, but then chase me personally and ruin a very good company and put 250 people out of work and affect thousands of property owners and leave them with uncompleted lots."
Ward, who is 60, said he will start over.
The company's assets include 128 unsold lots in Cumberland Harbour in St. Marys, where the largest marina complex on the Georgia coast has been proposed. According to Land Resource, 936 lots have been sold. They asked from $150,000 to $750,000 for lots.
In July, Land Resources Companies of Orlando, Fla., parent company of Roaring River, a proposed 4,300-acre, master-planned community in Fayette County next to the New River Gorge National River, closed its Fayetteville office and laid off all of that office’s employees.Friday, the company announced it and 34 of its affiliates and subsidiaries filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code.“I am presuming this does affect the Roaring River project and its lot owners,” Fayette County Commissioner Matt Wender said.
Land Resources officials cited a combination of the declining economy, the credit freeze that is currently gripping the U.S. and a challenging real estate market.“We deeply regret the impact the Chapter 11 filing will have on property owners, vendors and employees,” Land Resource Chairman and CEO J. Robert Ward said. “We remain mindful of our customers whose home sites and communities have not yet been completed.”Ward said that through the Chapter 11 process the company will identify the best means of maximizing recoveries for all creditor constituencies.“Including our customers and employees,” he said.
“As part of this process, we will explore the sale of all the company’s assets to a well capitalized and well positioned purchaser.”Wender says he has always had mixed feeling about the proposed housing development.“I have always been concerned with the encroachment to the rim of the gorge, but the part of the housing development not visible I always thought of as being beneficial to the county,” he said.Approximately 80 lots have been sold as part of the housing development.“I’m very concerned about the lot owners who purchased lots, but can’t build on them,” Wender said.In July, a groundbreaking ceremony for water and sewer services was scheduled, then canceled.“Without that infrastructure, the lot owners can’t obtain building permits to build on their lots,” he explained.
“Now, it appears that they can’t get their money back, either. Those are the people I feel bad for in all of this.”Wender added he was surprised to learn that Land Resources had no escrow or bond funds to guarantee the water and sewer infrastructure being completed.“I’m concerned the lot owners may be in a difficult situation,” he said.Land Resources develops upscale residential resort communities throughout the Southeast and West Virginia.“The sudden and steep economic downturn has significantly impacted Land Resources in each of the markets where the company operates,” Ward said.“Home site sales have also declined dramatically due in large part to the extremely limited availability of credit.
Many well qualified buyers are finding it difficult to secure financing for a second home.” In order to facilitate an orderly negotiation process with its creditors and facilitate a structured sale of the enterprise or its assets, the company filed its Chapter 11 case in U.S. Bankruptcy Court for the Middle District of Florida in Orlando, according to Ward. “Purchasers of Land Resources’ assets may elect to fulfill the developer’s obligations, including those related to funding homeowner associations,” he explained.
“All transactions will be subject to bankruptcy court approval.”Ward said as news regarding the bankruptcy filing becomes available, the company will inform property owners and other stakeholders by posting information on its Web site, www.landresource.com.”The company has also established a “Frequently Asked Questions” section on its Web site as well, Ward added.
"The banks stopped making loans to our customers," Ward said in an e-mail. "It just doesn't seem fair that the banks can put us into bankruptcy because of their failure to lend and then get a federal bailout, but then chase me personally and ruin a very good company and put 250 people out of work and affect thousands of property owners and leave them with uncompleted lots."
Ward, who is 60, said he will start over.
The company's assets include 128 unsold lots in Cumberland Harbour in St. Marys, where the largest marina complex on the Georgia coast has been proposed. According to Land Resource, 936 lots have been sold. They asked from $150,000 to $750,000 for lots.
In July, Land Resources Companies of Orlando, Fla., parent company of Roaring River, a proposed 4,300-acre, master-planned community in Fayette County next to the New River Gorge National River, closed its Fayetteville office and laid off all of that office’s employees.Friday, the company announced it and 34 of its affiliates and subsidiaries filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code.“I am presuming this does affect the Roaring River project and its lot owners,” Fayette County Commissioner Matt Wender said.
Land Resources officials cited a combination of the declining economy, the credit freeze that is currently gripping the U.S. and a challenging real estate market.“We deeply regret the impact the Chapter 11 filing will have on property owners, vendors and employees,” Land Resource Chairman and CEO J. Robert Ward said. “We remain mindful of our customers whose home sites and communities have not yet been completed.”Ward said that through the Chapter 11 process the company will identify the best means of maximizing recoveries for all creditor constituencies.“Including our customers and employees,” he said.
“As part of this process, we will explore the sale of all the company’s assets to a well capitalized and well positioned purchaser.”Wender says he has always had mixed feeling about the proposed housing development.“I have always been concerned with the encroachment to the rim of the gorge, but the part of the housing development not visible I always thought of as being beneficial to the county,” he said.Approximately 80 lots have been sold as part of the housing development.“I’m very concerned about the lot owners who purchased lots, but can’t build on them,” Wender said.In July, a groundbreaking ceremony for water and sewer services was scheduled, then canceled.“Without that infrastructure, the lot owners can’t obtain building permits to build on their lots,” he explained.
“Now, it appears that they can’t get their money back, either. Those are the people I feel bad for in all of this.”Wender added he was surprised to learn that Land Resources had no escrow or bond funds to guarantee the water and sewer infrastructure being completed.“I’m concerned the lot owners may be in a difficult situation,” he said.Land Resources develops upscale residential resort communities throughout the Southeast and West Virginia.“The sudden and steep economic downturn has significantly impacted Land Resources in each of the markets where the company operates,” Ward said.“Home site sales have also declined dramatically due in large part to the extremely limited availability of credit.
Many well qualified buyers are finding it difficult to secure financing for a second home.” In order to facilitate an orderly negotiation process with its creditors and facilitate a structured sale of the enterprise or its assets, the company filed its Chapter 11 case in U.S. Bankruptcy Court for the Middle District of Florida in Orlando, according to Ward. “Purchasers of Land Resources’ assets may elect to fulfill the developer’s obligations, including those related to funding homeowner associations,” he explained.
“All transactions will be subject to bankruptcy court approval.”Ward said as news regarding the bankruptcy filing becomes available, the company will inform property owners and other stakeholders by posting information on its Web site, www.landresource.com.”The company has also established a “Frequently Asked Questions” section on its Web site as well, Ward added.
Monday, November 17, 2008
Boston Blobe Shows 6 Steps to Fixing Homebuilding Industry
I love Boston, but does the Boston Globe really know how to fix the homebuilding industry?
The housing market is beginning to resemble one of those super bugs that are resistant to modern medicine: Despite injections of help from the government and lenders, it's still sick. Foreclosures continue at an alarming pace, sales are few, and mortgages are hard to come by.
Just this week Treasury Secretary Henry Paulson said he would not use taxpayer funds to buy up troubled mortgage-related securities, as was originally intended by the passage of the $700 billion federal bailout bill. Congress is expected to develop a new economic stimulus package in the coming weeks, and many housing industry officials and activists hope lawmakers will use the opportunity to devote more attention to fixing the nation's real estate problem.
Here are six of the top ideas being mulled in Washington, and among industry specialists.
1. Cut the rates
How does a 2.99 percent mortgage sound? Silly? Maybe 5.25 percent? Discount loan rates could draw home shoppers off the sidelines and into the market, boosting sales and helping to check falling housing prices. One proposal, plugged by Columbia Business School dean R. Glenn Hubbard and Columbia Business School professor Chris Mayer, includes refinancing primary residences into 30-year fixed-rate mortgages at 5.25 percent placed under mortgage giants Fannie Mae and Freddie Mac.
The National Association of Homebuilders, with 235,000 members, wants Congress to include in the upcoming economic stimulus package a subsidy on conforming 30-year loans that would lower the interest rate to a bargain 2.99 percent. The rate would be for all mortgages on homes purchased through June 30, 2009. For homes bought in the second half of 2009 the subsidized interest rate would be 3.99 percent.
2. Make like Sheila
Sheila is Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., who's become something of a cult hero among housing activists because of what she's doing for customers of failed IndyMac Bank who are facing foreclosure. Her agency is systematically modifying these mortgages to more affordable levels, so borrowers' monthly payments are as low as 31 percent of their income. Already around 5,000 customers have had loans adjusted by an average of $380 a month or about 23 percent. Methods include lowering a loan's interest rate, forgiving some of the principal debt, or extending the repayment period. Importantly, Bair would pay loan servicers $1,000 for every mortgage they modified, giving them an incentive to work out, instead of foreclose on the loan.
Bair wants to expand the IndyMac model across the industry. One problem: Too many of the borrowers who receive help still have trouble affording their homes and end up being foreclosed on again. The FDIC proposes that the US government would absorb up to half of the losses of those homeowners who default a second time, with the lenders or mortgage holders eating the other half. The estimated cost is $25 billion. The rub? Paulson has frowned on spending that kind of money because taxpayers are unlikely to recoup these losses.
3. Own the loanSenator John McCain, US Representative Barney Frank, a Newton Democrat, and various academics have come up with a simple idea: Have the government buy up troubled loans instead of waiting for lenders to figure out how to fix them. This, they argue, would speed the pace of loan modifications, more quickly helping distressed homeowners avoid foreclosure. One novel approach involves using the government's power of eminent domain to take, not the property, but the loan notes from investors who may be reluctant to part with them.
During the presidential campaign, McCain suggested using around $300 billion of the bailout fund to buy hundreds of thousands of loans. The government would then issue those homeowners new loans at more affordable levels. Other supporters have suggested the original lenders would have to forgive a portion of the old loan, if the home has since lost value, as part of the buyout agreement. But now that Paulson has nixed the idea of spending bailout funds on mortgages, it's unclear where funds for a loan buy-up would come from.
4. Share the pain, gain
A growing number of proposals resurrect an idea known as "shared appreciation mortgages," in which struggling homeowners would be forgiven a portion of their mortgage debt. In exchange, if the home appreciates in value or the borrower later sells at a profit, the lender would get a share of that profit.
The arrangement is a component of the federal Hope for Homeowners program, a new loan program at the Federal Housing Administration that refinances mortgages for homeowners who owe more than what their house is currently worth.
Academics such as Andrew Caplin and Thomas Cooley of New York University argue that the agreement gives taxpayers an "ownership stake in the future." The shared appreciation model was used years ago in limited measure, but has largely stalled because of an arcane tax ruling by the Internal Revenue Service.
Meanwhile, Hope for Homeowners got off to a slow start, partly because lenders are required to write down loans to participate. It now has 180 lenders enrolled, although some will only finance loans in certain areas of the country.
5. Buy cooperation
Harvard Law School professor Elizabeth Warren is circulating a proposal to buy cooperation from mortgage servicers, who perversely are in the position of making money doing a foreclosure. Many loan servicers, who are the liaisons between homeowners and investors, are limited in what they can change in loans by contract terms with the loan holders.
Warren said even if legal issues are eliminated, servicers need financial incentives to help homeowners. She proposes the US government pay servicers for each loan modification that results in a family receiving a fixed-rate mortgage with an affordable payment. Secondly, she said owners of second mortgages, who often block modifications because they stand to lose money, should receive a 10 percent bounty on the face value of the loan for writing it off and getting out of the way. Finally, she recommends a fee for specialists who assist homeowners through the negotiations and paperwork. The mortgage problems are too complex to be solved without the help of some highly incentivized middlemen, she argues.
6. Reform bankruptcy laws
This is another idea that has been around the track before and remains popular. Some Democratic lawmakers and housing officials want to amend bankruptcy laws so judges would be allowed to modify a debtor's mortgage as part of a bankruptcy proceeding. The plan was excluded from the original bailout plan but proponents want to re-insert it in the new stimulus. Nobody wants to go into bankruptcy, but when losing your home is the other option, advocates of the law change say this could make a world of a difference. Some hope the law change would push lenders to work harder to modify loans before going to court. Opponents, however, counter that this authority would violate the sanctity of contracts and be a remarkable intrusion into private business matters.
The housing market is beginning to resemble one of those super bugs that are resistant to modern medicine: Despite injections of help from the government and lenders, it's still sick. Foreclosures continue at an alarming pace, sales are few, and mortgages are hard to come by.
Just this week Treasury Secretary Henry Paulson said he would not use taxpayer funds to buy up troubled mortgage-related securities, as was originally intended by the passage of the $700 billion federal bailout bill. Congress is expected to develop a new economic stimulus package in the coming weeks, and many housing industry officials and activists hope lawmakers will use the opportunity to devote more attention to fixing the nation's real estate problem.
Here are six of the top ideas being mulled in Washington, and among industry specialists.
1. Cut the rates
How does a 2.99 percent mortgage sound? Silly? Maybe 5.25 percent? Discount loan rates could draw home shoppers off the sidelines and into the market, boosting sales and helping to check falling housing prices. One proposal, plugged by Columbia Business School dean R. Glenn Hubbard and Columbia Business School professor Chris Mayer, includes refinancing primary residences into 30-year fixed-rate mortgages at 5.25 percent placed under mortgage giants Fannie Mae and Freddie Mac.
The National Association of Homebuilders, with 235,000 members, wants Congress to include in the upcoming economic stimulus package a subsidy on conforming 30-year loans that would lower the interest rate to a bargain 2.99 percent. The rate would be for all mortgages on homes purchased through June 30, 2009. For homes bought in the second half of 2009 the subsidized interest rate would be 3.99 percent.
2. Make like Sheila
Sheila is Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., who's become something of a cult hero among housing activists because of what she's doing for customers of failed IndyMac Bank who are facing foreclosure. Her agency is systematically modifying these mortgages to more affordable levels, so borrowers' monthly payments are as low as 31 percent of their income. Already around 5,000 customers have had loans adjusted by an average of $380 a month or about 23 percent. Methods include lowering a loan's interest rate, forgiving some of the principal debt, or extending the repayment period. Importantly, Bair would pay loan servicers $1,000 for every mortgage they modified, giving them an incentive to work out, instead of foreclose on the loan.
Bair wants to expand the IndyMac model across the industry. One problem: Too many of the borrowers who receive help still have trouble affording their homes and end up being foreclosed on again. The FDIC proposes that the US government would absorb up to half of the losses of those homeowners who default a second time, with the lenders or mortgage holders eating the other half. The estimated cost is $25 billion. The rub? Paulson has frowned on spending that kind of money because taxpayers are unlikely to recoup these losses.
3. Own the loanSenator John McCain, US Representative Barney Frank, a Newton Democrat, and various academics have come up with a simple idea: Have the government buy up troubled loans instead of waiting for lenders to figure out how to fix them. This, they argue, would speed the pace of loan modifications, more quickly helping distressed homeowners avoid foreclosure. One novel approach involves using the government's power of eminent domain to take, not the property, but the loan notes from investors who may be reluctant to part with them.
During the presidential campaign, McCain suggested using around $300 billion of the bailout fund to buy hundreds of thousands of loans. The government would then issue those homeowners new loans at more affordable levels. Other supporters have suggested the original lenders would have to forgive a portion of the old loan, if the home has since lost value, as part of the buyout agreement. But now that Paulson has nixed the idea of spending bailout funds on mortgages, it's unclear where funds for a loan buy-up would come from.
4. Share the pain, gain
A growing number of proposals resurrect an idea known as "shared appreciation mortgages," in which struggling homeowners would be forgiven a portion of their mortgage debt. In exchange, if the home appreciates in value or the borrower later sells at a profit, the lender would get a share of that profit.
The arrangement is a component of the federal Hope for Homeowners program, a new loan program at the Federal Housing Administration that refinances mortgages for homeowners who owe more than what their house is currently worth.
Academics such as Andrew Caplin and Thomas Cooley of New York University argue that the agreement gives taxpayers an "ownership stake in the future." The shared appreciation model was used years ago in limited measure, but has largely stalled because of an arcane tax ruling by the Internal Revenue Service.
Meanwhile, Hope for Homeowners got off to a slow start, partly because lenders are required to write down loans to participate. It now has 180 lenders enrolled, although some will only finance loans in certain areas of the country.
5. Buy cooperation
Harvard Law School professor Elizabeth Warren is circulating a proposal to buy cooperation from mortgage servicers, who perversely are in the position of making money doing a foreclosure. Many loan servicers, who are the liaisons between homeowners and investors, are limited in what they can change in loans by contract terms with the loan holders.
Warren said even if legal issues are eliminated, servicers need financial incentives to help homeowners. She proposes the US government pay servicers for each loan modification that results in a family receiving a fixed-rate mortgage with an affordable payment. Secondly, she said owners of second mortgages, who often block modifications because they stand to lose money, should receive a 10 percent bounty on the face value of the loan for writing it off and getting out of the way. Finally, she recommends a fee for specialists who assist homeowners through the negotiations and paperwork. The mortgage problems are too complex to be solved without the help of some highly incentivized middlemen, she argues.
6. Reform bankruptcy laws
This is another idea that has been around the track before and remains popular. Some Democratic lawmakers and housing officials want to amend bankruptcy laws so judges would be allowed to modify a debtor's mortgage as part of a bankruptcy proceeding. The plan was excluded from the original bailout plan but proponents want to re-insert it in the new stimulus. Nobody wants to go into bankruptcy, but when losing your home is the other option, advocates of the law change say this could make a world of a difference. Some hope the law change would push lenders to work harder to modify loans before going to court. Opponents, however, counter that this authority would violate the sanctity of contracts and be a remarkable intrusion into private business matters.
Thursday, November 13, 2008
Buena Vista Custom Homes - Another Imploding Oregon Builder
Buena Vista Homes hasn’t gone bankrupt like some other custom home builders in the housing slump, but according to The Oregonian, the company faces a growing list of unpaid bills.
The newspaper reports that Sterling Savings Bank sued Buena Vista because the company allegedly stopped paying its loans.
Sterling seeks to recover $11 million in loans and foreclose on some 50 lots Buena Vista owns in a Happy Valley subdivision, according to the newspaper.
Happy Valley is among the areas hardest hit by the metro area’s housing downturn.
Buena Vista owner Roger Pollock says he will attempt to renegotiate his loans with the bank but that can’t happen until he’s defaulted.
Pollock joins a growing list of area homebuilders who have gone under since the housing bubble burst, which economists say occurred in late 2006.
Pacific Lifestyle Homes Inc. announced last month it was filing for Chapter 11 bankruptcy.
In September, Renaissance Homes, a Portland-area luxury home builder, announced it was entering bankruptcy as well.
Legend Homes, one of Oregon’s largest home builders, filed for bankruptcy in June after its parent company made some bad land investments.
Homebuilder Roger Pollock can claim some success simply because his company, Buena Vista Custom Homes, hasn't been forced into bankruptcy like three of his competitors in the housing downturn.
But public records show that Pollock, 47, and his affiliated companies face a growing list of mortgage defaults, past-due construction bills and unpaid homeowners dues.
Buena Vista's new stone-fronted headquarters in downtown Lake Oswego sits unfinished with plywood covering parts of the building. Banner Bank of Walla Walla says Pollock's company, Pollock Commercial Holdings LLC, has defaulted on its $5 million construction loan, and his general contractor has gone to court to collect $1.3 million in unpaid bills.
But Pollock's bigger problems are with his housing projects.
Sterling Savings Bank sued Buena Vista because it said the company stopped paying its loans. The bank is seeking to recover about $11 million in loans and foreclose on about 50 lots Buena Vista owns in a Happy Valley subdivision, areas hardest hit by the Portland area's housing slowdown.
Pollock blamed the commercial project problems on the lender that he said backed out of commitments to provide more funding.
On his housing work, Pollock said he stopped paying loans on his rentals because the rents didn't cover his mortgage. He hopes to renegotiate those loans and possibly resell his subdivision lots. But that plan, he said, was stalled when Sterling Savings Bank stopped the talks after months of negotiations.
"The only way to start negotiations with the bank is if you're in default," Pollock said. "I don't think they know what to do. Do you take the home? Do you wait to see if you get any of the (federal) bailout?"
Lawyers representing Pollock's lenders either didn't return calls seeking comment or declined to comment.
Like most homebuilders, Pollock and Buena Vista made a fortune during the 2004 to 2006 housing boom.
Trade journal Builder Magazine in 2005 named Buena Vista the nation's fastest-growing homebuilding business. Pollock made plans during the heat of the boom to build a more visible headquarters on Lake Oswego's main downtown street.
As the housing market slowed, Pollock later decided not to move into the building if he could find other tenants. He'd hardly need the space now, since he's now one of just three employees of a company that employed 50 at its peak.
"Buena Vista, we're just on hold until the market comes back," Pollock said.
Before he could finish the 20,000-square-foot building and find a tenant, the project ran into financial trouble.
In August, Carlson Testing Inc. of Tigard filed a small-claims case against Pollock Commercial Holdings LLC. Subcontractors Dallas Glass, Cascade Fire Protection Co., Sowles Co., Portland Electrical Construction Inc. and Western Partitions Inc. all filed liens for unpaid bills.
In September, the general contractor, Precision Construction Co. of Portland, filed a $1.3 million lawsuit for unpaid bills.
Last week, lender Banner Bank filed a lawsuit asking the Clackamas County Circuit Court to appoint a receiver to manage the project. The bank said Pollock had defaulted on a $5 million construction loan when he failed to pay his construction bills. It also said Pollock didn't make his monthly $31,600 payment starting in September.
Banner Bank's most dangerous allegation was that Pollock used some of the loan funds for "purposes unrelated to the construction."
Banner Bank's suit provided no further detail, and its lawyer, Kimberley Hanks McGair, declined to comment. In some cases, such charges can lead to a criminal investigation. Federal prosecutors are currently investigating possible bank fraud charges against at least two other Oregon developers, both in Deschutes County, who allegedly misappropriated construction loan proceeds.
Pollock denied the allegation. "That's completely false," he said. "We've provided them with complete documentation since August, and they haven't even looked at it."
He said Banner Bank agreed upfront to provide another $2 million loan to finish the building but later changed its mind. "The bank is stalling in funding the rest of their loan," Pollock said. "The truth about Banner Bank will come out in due time.
"We fully intend to countersue them if they won't honor their commitment."
Houses go to auction
Last year, Buena Vista became the first major local builder to auction off its excess inventory in the housing slowdown. It sold 177 homes and 11 lots for about $75 million in two auctions.
Even so, Pollock and his companies held onto dozens of rental homes and lots as Portland-area home prices declined for the first time in a generation.
Sterling Savings Bank filed two lawsuits against Pollock and his companies. The first seeks to foreclose on homes and lots, many of them in Happy Valley's Lincoln Heights subdivision.
The second says Pollock or his company had defaulted on loans for 20 rental properties, all but two in Happy Valley. A Clackamas County judge appointed Ted Durant & Associates Inc. as receiver and directed it to collect rents from Pollock's rental homes.
But in court filings, the receiver accused Pollock and his company of demanding that the tenants continue to pay rent to Pollock's company. One tenant said Pollock contacted him and was "very pushy, articulated very strongly that he was still the person in charge and had ownership/control of all the properties," according to an e-mail the receiver sent to Pollock's lawyer.
Pollock denied pressing the renter for the payment and said he has collected no rent from the properties since the receiver took over.
The homeowners' associations in Pollock's neighborhoods are also seeking money for unpaid bills.
Northwest Community Management Co., which manages the homeowners' association, filed six liens against Buena Vista seeking $4,900 in unpaid dues. Pollock said all the homes were rentals but he stopped making the payments while he negotiates with his lenders.
Despite his troubles, Pollock insists that he and Buena Vista will make it through. While his commercial project has unpaid bills, Pollock stresses that Buena Vista has paid all of its subcontractors.
"We're not going out of business," he said. "We're not going bankrupt. We're just watching the market."
Wednesday, November 5, 2008
D.R. Horton to Lose up to $900 Million in Q4
After the stock markets closed Tuesday with all eyes on the presidential election, home builder D.R. Horton Inc. warned investors that it expected to lose as much as $900 million in its fiscal fourth quarter -- about 18 times as much as in the prior-year period.D.R. Horton, one of the nation's largest home builders, projected a loss for the quarter ended Sept. 30 of $800 million to $900 million, including an expected tax benefit of $350 million. That works out to about $2.53 to $2.84 a share.
Analysts had forecast a loss of 58 cents a share on revenue of about $1.6 billion when D.R. Horton reports its financial results on Nov. 25, according to a poll by Thomson Reuters. In the year-ago period, D.R. Horton lost $50.1 million, or 16 cents a share. The company projected that revenue for the quarter would fall by half to $1.5 billion.Shares of Fort Worth-based D.R. Horton rose 19 cents to $6.87 in regular trading. The stock was down 11 cents in after-hours trading.
Analysts had forecast a loss of 58 cents a share on revenue of about $1.6 billion when D.R. Horton reports its financial results on Nov. 25, according to a poll by Thomson Reuters. In the year-ago period, D.R. Horton lost $50.1 million, or 16 cents a share. The company projected that revenue for the quarter would fall by half to $1.5 billion.Shares of Fort Worth-based D.R. Horton rose 19 cents to $6.87 in regular trading. The stock was down 11 cents in after-hours trading.
Friday, October 31, 2008
M/I Homes - Sell of Land, Layoff People
"We're facing what may well be the most difficult time in the history of the building industry," Robert H. Schottenstein told financial analysts yesterday in addressing the company's third-quarter financials.
The Columbus homebuilder said it lost $58.7 million in the three-month period as it continued to struggle with low demand for new homes.
Included in the Columbus homebuilder's loss were pretax charges of $43.5 million for asset impairments, reflecting the housing downturn's effects on land and property values, and a loss from operations of $14.9 million. M/I's per-share loss for the quarter was $4.18, compared with a $1.73-a-share loss a year ago.
Yet as it continues to sell land and cut expenses, including layoffs, M/I has a few things going for it, Schottenstein said.
During the quarter, the company reduced its debt to zero. At the beginning of 2007, Schottenstein said, M/I owed $410 million on its homebuilding credit line. M/I reduced its debt-to-capital ratio over that period from 44 percent to 32 percent.
Meanwhile, it also is reducing the number of communities in which it builds homes. Schottenstein said the company had 9,530 lots at the end of the quarter, 43 percent fewer than a year earlier and down nearly a third from the beginning of 2008.
Schottenstein also said M/I has had positive cash flow for eight quarters in a row.
M/I's shares increased $1.45 yesterday to close at $11.95, nearly a 14 percent boost.
However, Schottenstein also warned of job cuts ahead in the face of lower demand. M/I delivered 555 homes in the third quarter, down 29 percent from the third quarter of 2007. It also booked 456 new contracts in the quarter, a 19 percent decline.
Through the first nine months of 2008, the company's new contracts are down 30 percent, to 1,540.
"Demand is weak, consumer confidence is at or near a historical low, unemployment is rising, and tightened mortgage lending standards, combined with the unprecedented turmoil in the financial markets, have further contributed to very difficult conditions for homebuilders," Schottenstein said.
Related terms - M/I Shottenstein, MI Homes, M/I Homes bankruptcy rumors, low demand for new homes, home demand, MI Homes layoffs, MI homes sells land MI Homes Selling Land, MI Homes layoffs
The Columbus homebuilder said it lost $58.7 million in the three-month period as it continued to struggle with low demand for new homes.
Included in the Columbus homebuilder's loss were pretax charges of $43.5 million for asset impairments, reflecting the housing downturn's effects on land and property values, and a loss from operations of $14.9 million. M/I's per-share loss for the quarter was $4.18, compared with a $1.73-a-share loss a year ago.
Yet as it continues to sell land and cut expenses, including layoffs, M/I has a few things going for it, Schottenstein said.
During the quarter, the company reduced its debt to zero. At the beginning of 2007, Schottenstein said, M/I owed $410 million on its homebuilding credit line. M/I reduced its debt-to-capital ratio over that period from 44 percent to 32 percent.
Meanwhile, it also is reducing the number of communities in which it builds homes. Schottenstein said the company had 9,530 lots at the end of the quarter, 43 percent fewer than a year earlier and down nearly a third from the beginning of 2008.
Schottenstein also said M/I has had positive cash flow for eight quarters in a row.
M/I's shares increased $1.45 yesterday to close at $11.95, nearly a 14 percent boost.
However, Schottenstein also warned of job cuts ahead in the face of lower demand. M/I delivered 555 homes in the third quarter, down 29 percent from the third quarter of 2007. It also booked 456 new contracts in the quarter, a 19 percent decline.
Through the first nine months of 2008, the company's new contracts are down 30 percent, to 1,540.
"Demand is weak, consumer confidence is at or near a historical low, unemployment is rising, and tightened mortgage lending standards, combined with the unprecedented turmoil in the financial markets, have further contributed to very difficult conditions for homebuilders," Schottenstein said.
Related terms - M/I Shottenstein, MI Homes, M/I Homes bankruptcy rumors, low demand for new homes, home demand, MI Homes layoffs, MI homes sells land MI Homes Selling Land, MI Homes layoffs
Thursday, October 30, 2008
Standard Pacific - Losses up, Sales Down
Big Homebuilder Standard Pacific Corp. on Thursday said its third-quarter net loss tripled after a $368.4 million pretax charge to buy down the value of homes and land.
The housing slump seems to be worsening for some.
"Housing market conditions deteriorated further during the quarter," said CEO Jeffrey Peterson, in a statement. "It does not appear at this time that the earlier efforts by the federal government to stabilize the housing market across the country has had any meaningful impact."
Standard Pacific said net new home orders fell 32 percent in the quarter to 921 homes. The worst performance was in Texas, followed by a tie between Southern California and the Carolinas.
Standard's housing backlog of new homes completed but not yet delivered fell 59% to $395.7 million. New home deliveries was down 24 percent to 1,188.
California, which comprised half of revenue for Standard Pacific , saw sales fall by 31 percent. The Southwest was down 42 percent and the Southeast fell 46 percent.
Standard Pacific develops homes in California, Arizona, Texas, Colorado, Nevada, Florida and the Carolinas.
The housing slump seems to be worsening for some.
"Housing market conditions deteriorated further during the quarter," said CEO Jeffrey Peterson, in a statement. "It does not appear at this time that the earlier efforts by the federal government to stabilize the housing market across the country has had any meaningful impact."
Standard Pacific said net new home orders fell 32 percent in the quarter to 921 homes. The worst performance was in Texas, followed by a tie between Southern California and the Carolinas.
Standard's housing backlog of new homes completed but not yet delivered fell 59% to $395.7 million. New home deliveries was down 24 percent to 1,188.
California, which comprised half of revenue for Standard Pacific , saw sales fall by 31 percent. The Southwest was down 42 percent and the Southeast fell 46 percent.
Standard Pacific develops homes in California, Arizona, Texas, Colorado, Nevada, Florida and the Carolinas.
Gunstra Builders of Indianapolis Shuts Down Most Sales Offices
From Indystar.com
Gunstra Builders, a large Indianapolis area homebuilder, has shut most of its sales offices and stopped communicating with clients, leaving buyers at its projects wondering if Gunstra will stay in business or fall prey to the nation's housing downturn.
One of Gunstra's partially finished projects is a 77-townhouse development called Monon on Main in Carmel's new Arts & Design District. Residents there are exchanging e-mails to figure out what's going on with Gunstra, which hasn't staffed its sales office on the site for over a week.
At Blackthorne, a housing development in Plainfield zoned for 322 units, Gunstra has turned management over to another company and stopped new construction with only 23 homes sold.
Lafayette-based Gunstra hasn't commented publicly on its viability. Calls to its main office went unanswered Tuesday and Wednesday.
Phones are disconnected to at least seven Gunstra communities where the company is building homes in Indianapolis, Carmel, Fishers, Plainfield and Zionsville.
"They've retrenched. I am under the impression they are hunkering down . . . to weather the storm," said Jeff Watkins, owner of Environmental Services Associates in Carmel, who serves as a spokesman for residents of Gunstra's Monon on Main townhome project. He said he has talked to Gunstra officials recently.
About 38 units at Monon on Main have been sold, with others sitting unsold and some partially built, Watkins said. Construction has stopped. On Wednesday, townhomes sat partially built on a silent, weedy quarter-block that holds a trailer-sized trash bin and stacks of bricks.
Soori Ardalan, who runs Soori Gallery in a townhome at Monon on Main, said Gunstra recently told her by e-mail it no longer would respond to maintenance issues she has with the home she bought almost a year ago and she would have to turn to a warranty company.
"I don't know what's happening," Ardalan said, calling herself "very disappointed" with Gunstra's disappearance. Besides her concerns about getting repairs done on her unit, she said residents also wonder if they need to take control of their residents association from Gunstra.
The city of Carmel has pushed redevelopment of its old downtown, and Monon on Main occupies a key site on the north side of Main Street.
"Monon on Main is a pretty high-profile project. If this means it's going to end up . . . unfinished, that's not what we had in mind," said Mike Hollibaugh, Carmel director of community services. He said he is trying to find out the status of Gunstra.
The company, which specializes in condominiums and townhomes, was started in 1976 by Bruce Gunstra, a former construction manager for National Homes Corp. He expanded into the Indianapolis market in 1984, and the company has built hundreds of homes since.
In Plainfield, Gunstra has notified residents of its Blackthorne development that a new management company has taken over running the fledging homeowners association, a resident said. With the development far from done, a promised clubhouse and swimming pool haven't been built.
Earlier this year, a nursing home developer arranged with Gunstra to buy 9.3 acres in the Blackthorne subdivision for a 264-bed facility, but the rezoning request was denied by Plainfield.
Homebuilders in Indiana and elsewhere find themselves under financial stress as a result of their own overbuilding, a large inventory of unsold older homes on the market and the end of a period of easy-to-get mortgages requiring small down payments during the housing boom years of 2002-2006.
In the metro area, new home construction has plummeted to an estimated 5,000 units this year compared with a peak of more than 15,000 in 2001 and 7,331 last year.
Among the major builders who have disappeared from the Indianapolis market in the past 18 months are locally based Davis Homes, which shut its doors in July, and Los Angeles-based KB Homes, which pulled out last summer. Is Gunstra going Bankrupt?
Wednesday, October 29, 2008
Centex Posts Smaller Loss, but huge recenue cut
Centex Corp. posted a smaller net loss for its fiscal second quarter Tuesday, but the housing slump cut the struggling home builder’s revenue by more than half.
Dallas, Texas-based Centex (NYSE: CTX) said that it lost $172 million, or $1.38 per share, for the quarter that ended Sept. 30. That compares to a loss of $644 million, or $5.26 a share, in the year-ago quarter.
Factoring out an after-tax gain of $30 million for the sale of its Westwood Insurance Agency, Centex recorded a third quarter net loss from continuing operations of $202 million, or $1.62 per diluted share – an improvement from the year-ago comparable loss of $645 million, or $5.27 per diluted share.
The narrowing of the net loss resulted from an $873 million reduction in paper losses taken for impairments on land and joint ventures.
The bottom-line improvement was not indicative of Centex’s top-line performace. The company’s revenue plummeted 54 percent, to $1.01 billion, matching the 54 percent drop in sales orders, which fell to 2,728. Factoring out results from Centex’s Financial Services business, the company posted a 55 percent drop in home-building revenue – to $953 million – as closings plunged 48 percent.
Centex has long been one of the most active home builders in the Triangle. The company ranked No. 1 on Triangle Business Journal’s list of residential homebuilders for years before falling into second place with 928 homes completed in 2007. This year has been hard on Centex’s national and local operations, as evidenced by longtime Raleigh division President Hampton Pitts resigning in July after 16 years with the company.
Dallas, Texas-based Centex (NYSE: CTX) said that it lost $172 million, or $1.38 per share, for the quarter that ended Sept. 30. That compares to a loss of $644 million, or $5.26 a share, in the year-ago quarter.
Factoring out an after-tax gain of $30 million for the sale of its Westwood Insurance Agency, Centex recorded a third quarter net loss from continuing operations of $202 million, or $1.62 per diluted share – an improvement from the year-ago comparable loss of $645 million, or $5.27 per diluted share.
The narrowing of the net loss resulted from an $873 million reduction in paper losses taken for impairments on land and joint ventures.
The bottom-line improvement was not indicative of Centex’s top-line performace. The company’s revenue plummeted 54 percent, to $1.01 billion, matching the 54 percent drop in sales orders, which fell to 2,728. Factoring out results from Centex’s Financial Services business, the company posted a 55 percent drop in home-building revenue – to $953 million – as closings plunged 48 percent.
Centex has long been one of the most active home builders in the Triangle. The company ranked No. 1 on Triangle Business Journal’s list of residential homebuilders for years before falling into second place with 928 homes completed in 2007. This year has been hard on Centex’s national and local operations, as evidenced by longtime Raleigh division President Hampton Pitts resigning in July after 16 years with the company.
Thursday, October 23, 2008
Pulte Homes Reports Eighth Straight Loss as Sales Slump Deepens
From Bloomberg - Oct. 22 -- Pulte Homes Inc., the third-largest U.S. homebuilder, reported its eighth consecutive quarterly loss as the frozen credit markets reduced mortgage lending, deepening the housing recession.
The third-quarter net loss narrowed to $280.4 million, or $1.11 a share, from $787.9 million, or $3.12, a year earlier, the Bloomfield Hills, Michigan-based company said today in a statement. The loss was more than analysts estimated. Revenue fell 37 percent to $1.56 billion from $2.5 billion a year ago.
Construction of single-family homes fell in September to the lowest in 26 years as builders cut production to match vanishing demand. Mortgage rates are rising, unemployment is increasing and only the most-credit worthy homebuyers are able to borrow, just as the growth in foreclosures across the country adds to the inventory of homes for sale.
``The competition between the builders is going to become ruthless,'' Vicki Bryan, senior high-yield analyst at Gimme Credit LLC, said in an interview before the results were issued. ``There's a chance this year could top last year as far as horrible quotient.''
Pulte, the builder of Del-Webb homes for retirees, was projected to report a net loss of 53 cents a share, according to the average estimate of 12 analysts in a Bloomberg survey.
The shares fell 60 cents, or 5.7 percent, to $9.95, in New York Stock Exchange composite trading, giving the company a market value of $2.6 billion. Pulte dropped 33 percent in the past 12 months.
Also after the close of regular trading today, Ryland Group Inc., the California homebuilder that lost 31 percent of its value in the past year, reported a third-quarter loss as home sales fell and increasing foreclosures pushed down prices.
The net loss in the three months ended Sept. 30 was $65.7 million, or $1.54 a share, compared with a net loss of $54.7 million, or $1.30 a share, a year earlier, Calabasas, California- based Ryland said today in a Business Wire statement.
The average price for a Pulte home in the second quarter fell 11 percent to $320,000. Pulte, founded in 1950 by William Pulte, the company's largest shareholder, sold the most homes in the second quarter in Arizona, Nevada and New Mexico.
Pulte's results came a day after NVR Inc., the builder of Ryan Homes, reported a 60 percent decline in net income.
NVR is the only major homebuilder to remain profitable in the three-year housing slump. NVR has remained profitable because it uses options to control land. That has prevented the company from having to reduce the estimated value of its land assets significantly.
In a July survey, the Federal Reserve said that 75 percent of U.S. lenders indicated they'd tightened their standards for prime mortgage lending.
Employers cut the most jobs in five years in September, pushing the unemployment rate to 6.1 percent as nonfarm payrolls fell by 159,000, the U.S. Labor Department said on Oct. 3.
U.S. housing starts will drop to 525,000 in the second quarter of 2009, a record 70 percent decline from the peak in the third quarter of 2005, according to a Mortgage Bankers Association forecast. Mortgage originations for home purchases will fall 20 percent this year to $912 billion, according to Jay Brinkmann, the association's chief economist.
The third-quarter net loss narrowed to $280.4 million, or $1.11 a share, from $787.9 million, or $3.12, a year earlier, the Bloomfield Hills, Michigan-based company said today in a statement. The loss was more than analysts estimated. Revenue fell 37 percent to $1.56 billion from $2.5 billion a year ago.
Construction of single-family homes fell in September to the lowest in 26 years as builders cut production to match vanishing demand. Mortgage rates are rising, unemployment is increasing and only the most-credit worthy homebuyers are able to borrow, just as the growth in foreclosures across the country adds to the inventory of homes for sale.
``The competition between the builders is going to become ruthless,'' Vicki Bryan, senior high-yield analyst at Gimme Credit LLC, said in an interview before the results were issued. ``There's a chance this year could top last year as far as horrible quotient.''
Pulte, the builder of Del-Webb homes for retirees, was projected to report a net loss of 53 cents a share, according to the average estimate of 12 analysts in a Bloomberg survey.
The shares fell 60 cents, or 5.7 percent, to $9.95, in New York Stock Exchange composite trading, giving the company a market value of $2.6 billion. Pulte dropped 33 percent in the past 12 months.
Also after the close of regular trading today, Ryland Group Inc., the California homebuilder that lost 31 percent of its value in the past year, reported a third-quarter loss as home sales fell and increasing foreclosures pushed down prices.
The net loss in the three months ended Sept. 30 was $65.7 million, or $1.54 a share, compared with a net loss of $54.7 million, or $1.30 a share, a year earlier, Calabasas, California- based Ryland said today in a Business Wire statement.
The average price for a Pulte home in the second quarter fell 11 percent to $320,000. Pulte, founded in 1950 by William Pulte, the company's largest shareholder, sold the most homes in the second quarter in Arizona, Nevada and New Mexico.
Pulte's results came a day after NVR Inc., the builder of Ryan Homes, reported a 60 percent decline in net income.
NVR is the only major homebuilder to remain profitable in the three-year housing slump. NVR has remained profitable because it uses options to control land. That has prevented the company from having to reduce the estimated value of its land assets significantly.
In a July survey, the Federal Reserve said that 75 percent of U.S. lenders indicated they'd tightened their standards for prime mortgage lending.
Employers cut the most jobs in five years in September, pushing the unemployment rate to 6.1 percent as nonfarm payrolls fell by 159,000, the U.S. Labor Department said on Oct. 3.
U.S. housing starts will drop to 525,000 in the second quarter of 2009, a record 70 percent decline from the peak in the third quarter of 2005, according to a Mortgage Bankers Association forecast. Mortgage originations for home purchases will fall 20 percent this year to $912 billion, according to Jay Brinkmann, the association's chief economist.
Homebuilder Ryland Group posts loss of $65.7 million
From the LA Times
Calabasas-based home builder Ryland Group Inc. reported a third-quarter loss of $65.7 million Wednesday as revenue dropped 26.7%.The hard-hit builder's sales were $526.2 million during the period of July 1 through Sept. 30, down from $717.5 million for the same period a year earlier.
The loss of $1.54 a share exceeded 11 analysts' average projection of $1.10 a share, according to a Bloomberg survey. Ryland released the earnings results after the close of regular trading. The company's shares fell $1.10 to $17.90. The stock has dropped 35% this year. Company officials declined to comment, saying they would do so in a conference call with analysts today.
Ryland builds homes in 17 states. Some of the firm's California developments are in areas particularly hard-hit by the housing crash, including the Inland Empire and the Coachella Valley. Like other construction businesses, the firm has been hurt by a reduction in demand and prices for homes. Ryland closed escrow on 2,017 homes in the quarter, compared with 2,495 closings the same period last year. The company's average closing price on a home for the quarter was $254,000, down from $284,000.
Calabasas-based home builder Ryland Group Inc. reported a third-quarter loss of $65.7 million Wednesday as revenue dropped 26.7%.The hard-hit builder's sales were $526.2 million during the period of July 1 through Sept. 30, down from $717.5 million for the same period a year earlier.
The loss of $1.54 a share exceeded 11 analysts' average projection of $1.10 a share, according to a Bloomberg survey. Ryland released the earnings results after the close of regular trading. The company's shares fell $1.10 to $17.90. The stock has dropped 35% this year. Company officials declined to comment, saying they would do so in a conference call with analysts today.
Ryland builds homes in 17 states. Some of the firm's California developments are in areas particularly hard-hit by the housing crash, including the Inland Empire and the Coachella Valley. Like other construction businesses, the firm has been hurt by a reduction in demand and prices for homes. Ryland closed escrow on 2,017 homes in the quarter, compared with 2,495 closings the same period last year. The company's average closing price on a home for the quarter was $254,000, down from $284,000.
Friday, October 17, 2008
Florida Home Builders Association Executive Director Quits
With the state's home building industry in a slump and cutbacks in the industry's Tallahassee-based trade group, the Florida Home Builders Association said today that its executive director has resigned to pursue other opportunities. J. Emmett Reed, CEO and executive vice president, will step down Jan. 1 and be succeeded by longtime FBA staffer Paul Thompson.
In recent years Thompson has been overseeing marketing and handling the group's big annual trade show in Orlando, the Southeast Building Conference.Florida Home Builders Association President Jay Carlson said that "Reed's many contributions to the success of our association will leave an enduring legacy." Reed worked for the group 11 years in various roles, including membership director, and was the driving force behind creation of the educational Foundation and Future Builders of America program.
He said in a prepared statement today that he cherished his time with the builders and "will have nothing but fond memories. But for me it's time for new challenges."
In recent years Thompson has been overseeing marketing and handling the group's big annual trade show in Orlando, the Southeast Building Conference.Florida Home Builders Association President Jay Carlson said that "Reed's many contributions to the success of our association will leave an enduring legacy." Reed worked for the group 11 years in various roles, including membership director, and was the driving force behind creation of the educational Foundation and Future Builders of America program.
He said in a prepared statement today that he cherished his time with the builders and "will have nothing but fond memories. But for me it's time for new challenges."
Thursday, October 16, 2008
Sacramento California Homebuilder and Developer Files Personal Chapter 11
Central Valley developer Christo Bardis has filed for Chapter 11 personal bankruptcy listing liabilities between $100 million to $500 million, and assets of $10 million to $50 million, according to filing this week with the U.S. Bankruptcy Court in Sacramento.
Mr. Bardis is co-founder of Reynen and Bardis Communities, a Sacramento-based developer with new-home communities in Elk Grove, Sacramento and West Sacramento in the Central Valley as well as in northern Nevada.
His partner, John Reynen, filed for personal bankruptcy earlier this year.
Both had given personal guarantees on loans used to buy land for the company.
Mr. Bardis told the Sacramento Bee newspaper that the filing of personal bankruptcy would help keep his company in business. The company has not filed for bankruptcy.
Mr. Bardis is co-founder of Reynen and Bardis Communities, a Sacramento-based developer with new-home communities in Elk Grove, Sacramento and West Sacramento in the Central Valley as well as in northern Nevada.
His partner, John Reynen, filed for personal bankruptcy earlier this year.
Both had given personal guarantees on loans used to buy land for the company.
Mr. Bardis told the Sacramento Bee newspaper that the filing of personal bankruptcy would help keep his company in business. The company has not filed for bankruptcy.
Pacific Lifestyle Homes of ORegon Files Chapter 11 Bankruptcy
A third Portland-area homebuilder has faltered amid the nationwide housing crisis.
Pacific Lifestyle Homes Inc. of Clark County says it will file Thursday for protection under bankruptcy laws. The 12-year-old company is one of the largest homebuilders in Oregon and southern Washington.
Earlier this year, Oregon builders Legend Homes and Renaissance Homes made similar Chapter 11 bankruptcy filings.
Pacific Lifestyle Homes founder Kevin Wann says the company has about $56 million in bank debt and the company has 24 employees — down from 115 people three years ago.
Wann's bankruptcy consultant Clyde Hamstreet says he expects the company will be restructured and survive.
Ugh, what homebuilder will go bankrupt next?
Pacific Lifestyle Homes Inc. of Clark County says it will file Thursday for protection under bankruptcy laws. The 12-year-old company is one of the largest homebuilders in Oregon and southern Washington.
Earlier this year, Oregon builders Legend Homes and Renaissance Homes made similar Chapter 11 bankruptcy filings.
Pacific Lifestyle Homes founder Kevin Wann says the company has about $56 million in bank debt and the company has 24 employees — down from 115 people three years ago.
Wann's bankruptcy consultant Clyde Hamstreet says he expects the company will be restructured and survive.
Ugh, what homebuilder will go bankrupt next?
Confidence in U.S. Homebuilding Market Hits All Timee Low - Credit Markets May Worsen
Bloomberg says:
Confidence among U.S. homebuilders slid in October to the lowest level since record-keeping began in 1985, a sign the crisis in credit markets may deepen the worst housing recession in a generation.
The National Association of Home Builders/Wells Fargo index of builder confidence decreased to 14, less than forecast, from 17 in September, the Washington-based association said today. A reading less than 50 means most respondents view conditions as poor.
The meltdown in worldwide financial markets that has clogged credit and sent U.S. stocks plunging is likely to worsen the economic slump. Home sales and construction will probably keep dropping as access to loans is restricted, weighing on growth well into 2009.
"Tight credit standards, rising unemployment and the potential for further home-price declines will continue to dampen housing demand and the still significant housing inventory overhang will continue to weigh on construction activity,'' Stephen Stanley, chief U.S. economist at RBS Greenwich Capital Markets in Greenwich, Connecticut, said before the report.
The builder confidence index was forecast to fall to 17 this month from an originally reported reading of 18 for September, according to the median estimate of 41 economists surveyed by Bloomberg News. Projections ranged from 15 to 20.
Wall Street
Today's report "reflects builders' assessments of the recent events on Wall Street, the rapid deterioration in job markets and the corresponding weakness in consumer confidence,'' NAHB chief economist David Seiders said in the statement. "The impacts of the record-breaking housing contraction have spilled over to other key sectors of the economy and weighed heavily on financial markets.''
Other reports earlier today showed the credit crisis is taking a toll on other parts of the economy. Industrial output fell 6 percent in the third quarter, the most since 1991, and a factory index for the Philadelphia region hit an 18-year low this month.
The builders' confidence gauge, which was first published in January 1985, averaged 27 last year. The confidence survey asks builders to characterize current sales as "good,'' "fair'' or "poor'' and to gauge prospective buyers' traffic. The survey also asks participants to gauge the outlook for the next six months.
The group's index of current single-family home sales fell to 14 this month from 17 in September.
Expectations Plunge
The index of buyer traffic decreased to 12 from 14. A measure of sales expectations for the next six months plunged to 19 from 28.
Confidence deteriorated in all four regions, led by declines in the South and Northeast.
U.S. foreclosure filings rose to a record in August as falling home prices made it harder to sell or refinance homes to pay off mortgages, RealtyTrac Inc., an Irvine, California-based seller of foreclosure data, said on Sept. 12.
The Commerce Department may report tomorrow that builders in September began work on 870,000 homes at an annual rate, the fewest since 1991, according to the median estimate in a Bloomberg survey. Building permits probably also fell.
Combined sales of new and existing homes have fallen 36 percent from their peaks in mid-2005. Home construction has declined 61 percent from a peak in January 2006. The supply of unsold homes on the market remains above 10 months' worth of sales, signaling homebuilding is likely to continue falling.
Lennar Corp., the second-largest U.S. homebuilder, on Sept. 23 reported its sixth straight quarterly loss as potential buyers struggled to get mortgages and rising foreclosures increased the supply of homes on the market.
"The weakness in the market actually accelerated as a result of increased foreclosures, weakened consumer confidence and tightened mortgage lending standards,'' Chief Executive Officer Stuart Miller said in a statement.
How will the credit crisis affect the homebuilding industry?
Confidence among U.S. homebuilders slid in October to the lowest level since record-keeping began in 1985, a sign the crisis in credit markets may deepen the worst housing recession in a generation.
The National Association of Home Builders/Wells Fargo index of builder confidence decreased to 14, less than forecast, from 17 in September, the Washington-based association said today. A reading less than 50 means most respondents view conditions as poor.
The meltdown in worldwide financial markets that has clogged credit and sent U.S. stocks plunging is likely to worsen the economic slump. Home sales and construction will probably keep dropping as access to loans is restricted, weighing on growth well into 2009.
"Tight credit standards, rising unemployment and the potential for further home-price declines will continue to dampen housing demand and the still significant housing inventory overhang will continue to weigh on construction activity,'' Stephen Stanley, chief U.S. economist at RBS Greenwich Capital Markets in Greenwich, Connecticut, said before the report.
The builder confidence index was forecast to fall to 17 this month from an originally reported reading of 18 for September, according to the median estimate of 41 economists surveyed by Bloomberg News. Projections ranged from 15 to 20.
Wall Street
Today's report "reflects builders' assessments of the recent events on Wall Street, the rapid deterioration in job markets and the corresponding weakness in consumer confidence,'' NAHB chief economist David Seiders said in the statement. "The impacts of the record-breaking housing contraction have spilled over to other key sectors of the economy and weighed heavily on financial markets.''
Other reports earlier today showed the credit crisis is taking a toll on other parts of the economy. Industrial output fell 6 percent in the third quarter, the most since 1991, and a factory index for the Philadelphia region hit an 18-year low this month.
The builders' confidence gauge, which was first published in January 1985, averaged 27 last year. The confidence survey asks builders to characterize current sales as "good,'' "fair'' or "poor'' and to gauge prospective buyers' traffic. The survey also asks participants to gauge the outlook for the next six months.
The group's index of current single-family home sales fell to 14 this month from 17 in September.
Expectations Plunge
The index of buyer traffic decreased to 12 from 14. A measure of sales expectations for the next six months plunged to 19 from 28.
Confidence deteriorated in all four regions, led by declines in the South and Northeast.
U.S. foreclosure filings rose to a record in August as falling home prices made it harder to sell or refinance homes to pay off mortgages, RealtyTrac Inc., an Irvine, California-based seller of foreclosure data, said on Sept. 12.
The Commerce Department may report tomorrow that builders in September began work on 870,000 homes at an annual rate, the fewest since 1991, according to the median estimate in a Bloomberg survey. Building permits probably also fell.
Combined sales of new and existing homes have fallen 36 percent from their peaks in mid-2005. Home construction has declined 61 percent from a peak in January 2006. The supply of unsold homes on the market remains above 10 months' worth of sales, signaling homebuilding is likely to continue falling.
Lennar Corp., the second-largest U.S. homebuilder, on Sept. 23 reported its sixth straight quarterly loss as potential buyers struggled to get mortgages and rising foreclosures increased the supply of homes on the market.
"The weakness in the market actually accelerated as a result of increased foreclosures, weakened consumer confidence and tightened mortgage lending standards,'' Chief Executive Officer Stuart Miller said in a statement.
How will the credit crisis affect the homebuilding industry?
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