Builder Confidence Slumps On ‘Wave Of Uncertainty’
The homebuilder numbers are out. “Rising mortgage rates, continued affordability issues and subsiding demand from investors/speculators are prompting single-family home builders to adjust their perspectives on the new-home market, according to the National Association of Home Builders.”
“All three component indexes slipped this month, with the largest decline registered for current single-family sales. That component declined five points to 54 in April, while the component for sales expectations in the next six months was down four points to 58 and the component gauging traffic of prospective buyers declined a single point to 39.”
“The 50-mark is a key level for the index, as it indicates that the number of positive or good responses received from the builders is about the same as the number of negative or poor responses. Monday’s reading was the lowest level for the index since November of 2001, when the measure reached a level of 48. Prior to 2001, the index last moved below the 50 mark in 1996, when it ticked to 49 in February.”
“Some builders are taking a cautious approach to the changing real estate market by monitoring their growth strategies and taking wait-and-see approaches. Other builders, however, are gobbling up every piece of dirt they can get their hands on.”
“The latter is true for Coral Springs-based Centerline Homes, which recently opened six communities in seven weeks, including four of the company’s first Central Florida projects. ‘Some builders are looking at the slowing housing market as an opportunity to build market share like Centerline Homes is doing,’ Brad Hunter says. ‘And others want to decrease their exposure and wait out this wave of uncertainty in the market right now.’”
The Phoenix Business Journal. “The region’s housing market has gone from red-hot to lukewarm in just a few quarters, stirring worries about the Valley’s all-important real estate sector. Industry insiders and boosters hope the current slowdown is a market correction, a short-term hiccup and not a more serious slump.”
“Home builders are offering incentives and extras such as pools and tile floors at discounted costs to lure buyers. ‘The current slowdown in the market is a short-term imbalance caused by excessive investor activity, rapid price runups in a short period of time and, in some cases, poor market analysis by builders that, collectively, have led to an oversupply of housing in certain price ranges, in certain areas,’ said Rebecca Burnham, a real estate attorney.”
“Investors, some local, some from California, who swooped in on Phoenix during the hot market, buying and flipping homes at higher prices. ‘The new housing starts are still going well, but the waiting lists and overall new housing traffic have slowed down,’ said Steve Prokopek, economic development director for the city of Peoria.”
why is market share so important? don’t you want to make the most money you can?
Market share is important for the NEXT cycle. You expand when times are tough to make more money later.
Market Share;…What a bunch of hogwash…Yeah, you can gain share in a accelearting market by purchasing entitled land thereby having just in time inventory…But in a stagnet (at best) or sliding market your land inventory (even if intitled) does you no good without the demand…Other developers catch up quickly by processing unintitled land during this period..
Market share??? These guys better start worrying about CASH FLOW!
Remember, Dotcoms were offering “free” services in an attempt to garner market share. Stuuuuuupiiiiid.
Indeed. Housing is “different” in that there is no market, really, during a slump. The name of the game is survival, that is all….
Build market share early in the crash and catch a falling knife just as it starts to drop… Great business plan! How can I buy some of this Centerline Home company’s stock?
I love how their indez is 39 for traffic, yet they have a “50″ for the future??!?! Lets see, no one is visting the home sites, but you feel confident you will sell them. LMAO. This is clearly a lagging indicator. BTW - HOV at a 52 week low!
The traffic part went negative about mid-2005, if i remember right. About the time new home prices peaked and incentives started. Also not mentioned is that this indicator has been falling for several months now.
Of course they are optomistic1
They built ALL winter long for the next wave of speculators, even if at lower prices.
As for market share, that’s “technical jargon” for “buy my stock” isn’t it! And the “doo hickie in the thing a ma jig” is the banker calling in their loans for over building.
Looking forward to major ass-whacking for these flippin morons and the lenders who staked them.
Bring on the pain!!
Monday’s reading was the lowest level for the index since November of 2001, when the measure reached a level of 48.
So they are in about the same state of mind that they were in while smoke was still rising from the World Trade Center. You’d never know that from reading the official release at the link, which is an astounding example of whistling past the graveyard.
I believe the term “congintive disconnect” is in order . They are simply unwilling to admit the facts when confronted with them for purely self-interests.
You can only put so much lipstick on a pig.
BigD;…I bet the disconnect becomes reconnect when the lender calls in the line of credit….
>>“congintive disconnect”
Jeez. Is that when you lose your phone connection to the Congo?
The phrase is “Cognitive Dissonance.”
…and then it looks like Tammy Faye Baker
OT:”Fingerprinting made mandatory for real estate agents in Florida
by Robyn Friedman
Posted April 17 2006
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Want to get your real estate license? Be prepared to have your fingerprints taken — electronically.
Beginning July 1, Florida law will require mandatory electronic fingerprinting for applicants for a real estate sales associate or broker’s license.”
Is this so they can have the fingerprints on file BEFORE they arrest them for fraud? LOL
The #1 email - were any realtors or brokers involved in that?
Wow thats amazing California has been doing that for years. I thought all states did that. LOL that’s funny there are actually states out there that let you practice Real Estate with no background checks or finger printing. Amazing
No, its just another intrusion on our God given right to earn a living, by our friendly government plantation owner!
forget the fingerprinting lets cut to the chase and proceed to the cavity search..
I just found a methodological problem in tracking inventory from Realtor.com.
If a development goes in that has say 50 homes, it may be listed only once, with the ad referencing 50 homes. Yet the 50 homes only get counted as one when Realtor.com’s serarh returns for you say something like “9 of 185 properties in the area match your criteria”.
Up until now I was thinking that the ineventory count is 9. Now I realize it’s at least 9 + the 49 not counted.
Great way for brokerages to suppress real inventory I suppose.
Ok you’ve posted that twice so your obviously trying to get some traction on it. I’ll bite. Realtor.com is not designed for analysis. It’s an advertising site. It was marketed to realtors as a way to give their listings interent exposure. You would be amazed at the number of Realtors who opt out through their respective MLS’s of putting the listing on there. It’s akin to nothing more than a billboard. Most of the information on there is dated it generally lags the MLS anywhere from 3 days to months. Using it for analysis is going to give you a garbage in garbage out results.
There’s a few folks on this blog who use ziprealty for analysis I never ventured to their site so I don’t know how accurate it is or where they are getting there information from. The ones who are using it seem happy about it so you might want to try that.
Thanks. I’ve tried Zip but they’re not in all states or areas it seems.
You said “You would be amazed at the number of Realtors who opt out through their respective MLS’s of putting the listing on there”. To clarify, by this do you mean they do not want their litings on the MLS or Realtor.com. I think you mean Realtor.com. If that’s the case, what would motivate them not to be on Realtor.com? Is it to save money? Wouldn’t sellers want the exposure?
I realize it’s not much more than a billboard, but presumably it’s a way to pre-shop online, or at leasr get a sense of a neighborhood before going out with ann agent. So I’d say it has a much higher click thru rate than normal scattershop web billboards, because the audience is looking for information.
“To clarify, by this do you mean they do not want their litings on the MLS or Realtor.com. I think you mean Realtor.com. If that’s the case, what would motivate them not to be on Realtor.com? Is it to save money? Wouldn’t sellers want the exposure?”
No money is not the issue it’s a free service. A lot of agents have big problems with having the information online. It decreases their option of actually talking to someone. That’s why in a lot of cases you don’t see addresses. They cite privacy for their clients but thats not the reason. The big reason is that in their minds the information is proprietory(sp?) and if someone wants the information they should have to come to a Realtor to come get it they feel. After all they are paying for it. They pay fees to the MLS and the Realtor organization not the consumer.
The click thru is basically nil for a Realtor from Realtor.com believe it or not.
Why should the listing agent care if the listing is on Realtor.com? A buyer could call them and they would show the property and get both sides of the commission .
Wizard-
I agree but you would be surprised, well probably not because you were in the business. When the option was first presented you would have thought someone took away the phones. I still hear the argument to this day. The enviroment right now is heavily against double popping that argument won’t get you very far these days.
mrincomestream -
You said: “A lot of agents have big problems with having the information online. It decreases their option of actually talking to someone. That’s why in a lot of cases you don’t see addresses. They cite privacy for their clients but thats not the reason. The big reason is that in their minds the information is proprietory(sp?) and if someone wants the information they should have to come to a Realtor to come get it they feel”.
OK, I can sure understand why they don’t want the addresses, In fact in northern Westchester the addresses are never listed. Without an address, the buyers can’t go find the housr without an agent, so the agent is still needed. No? So how does it decrease the chances of an agent and buyer talking?
Well on the “buyers” agents IMO it’s no big whoop or it shouldn’t be. I get calls all the time from people about stuff they have seen on Realtor.com. As far as the selling agent if he has no qualms with dual agency then he has a problem with not getting all the calls on his listing which he has put a lot of work into obtaining he’s not getting the full effort of his marketing dollar. From a brokers perspective if he splits the fee outside of the house it means less for his pocket. Your going to have those situations anyway. But the net further increases that possibility.
In reality I think it’s a technology fear more than anything I know agents who don’t have cell phones and email addresses. Me personally would think I was in armaggedon if I didn’t have either. As I stated before to Wizard I don’t understand it. It’s far from being my personal opinion. Too me it’s just like having a sign on the front of the property with your number on it. It’s just one of many arguments I have heard.
The following is excerpted from the current issue of TV WEEK, which it looks like they’ve reprinted from ADVERTISING AGE. It’s about a month or so away from the annual TV “Upfront” marketplace when advertisers buy a year’s worth of network TV and national cable TV. So the trades are very much into economic forecasting.
“Consumers can live beyond their income for a time by drawing on savings and capital gains and by borrowing. Many are extracting cash from the house, taking out gains after a sale or borrowing on equity.
A cooling housing market means less easy money. One indicator of a peak: Census Bureau data show the percentage of households that owned homes reached an all-time record of 69.2 percent in late 2004.
The decline since then has been small; 69 percent of families owned a home in late 2005. But lack of growth (after 10 consecutive years of growth) suggests a limit to the percentage of households that want to or can buy a home at current prices”.
http://www.tvweek.com/article.cms?articleId=29695
in some cases, poor market analysis by builders that, collectively, have led to an oversupply of housing in certain price ranges,
And I thought that they really did research before they would commit millions of dollars for such transactions? Guess that they will now pay for poor research. LOL - bring it on in Phoenix.
NEED TO LEAVE CA….That’s what I thought to . I think the builder Pulte has the right idea in building 55 and over housing tracts because I think there will be a high demand in that type of housing .70% ownership of homes already is high . Did the builders think everyone was going to want 2 homes ?
The builders will continue to make money, just at a reduced margin. Those getting killed are the FB flippers.
Right O, OC;…Low land basis…Economies on constructions cost…Cheep $ from the institutional banks & wall street….
Yes, the flippers are toast, but the real toasted are the wannabee developers/builders that don’t have the big builder advantages…
The builders can switch to building rental units in some spots .
Wizard;..Yes they will….Public builders will lease them up and sell to reit’s and “flush” private builders will lease them up and hold…
I just learned from a co-worker that Veridian homes in Madison, WI backed out of a project to build 400 homes in Cross Plains. The reason being a huge inventory of unsold homes. I really have not thought of this area as bubbly, but if this is any indication, we may even have problems here.
“The name of the game is survival, that is all….”
The whole idea of trying to gain marketshare in this market sounds like a death wish to me.
simmssays…
http://www.AmericanInventorSpot.com
AmericanInventorSpot.com
I know this thread is old, but was looking through insider transactions on KBH. If you notice the volume on sales, you will see that the executives unloaded the most shares in July ‘05. The next time we see high volumes of unloading is in January ‘06. Now, take a look at their charts… Coincidence? I think not.
Sorry for typos again! That’s volume of sales (100s of thousands of shares at a time).
Also this:
(sorry for the length, can’t link it right now)
Lennar to house urban divisions under one roof
By Knight-Ridder Open
Last Update: 4/13/2006 9:33:28 AM Data provided by
Apr 13, 2006 (The San Diego Union-Tribune - Knight Ridder/Tribune Business News via COMTEX) — Major U.S. home-builder Lennar Corp. has decided to consolidate its Southern California divisions specializing in urban development, a move that will lead to a significant downsizing of its downtown San Diego office.
Regional Vice President Mike Levesque, confirming the reorganization yesterday, insisted the move will not diminish the company’s presence in San Diego County, where it has major developments under way in Carlsbad’s Bressi Ranch, a traditional tract-home community, and downtown.
“This is not a message of pulling out of the market,” Levesque said. “We are absolutely committed to the San Diego market. We’re as committed today as we ever have been in the past.”
The consolidation will mean that roughly one-third of the 25 people working in Lennar’s San Diego urban division will be laid off. Some of the remaining employees will stay in San Diego and others may move to the Los Angeles office, Levesque said.
In addition to Los Angeles and San Diego, Lennar also operates an urban division in Orange County.
As San Diego County’s most productive home-builder last year, Lennar sold more than 700 homes in 2005. Lennar’s Web site lists 13 communities in the county that have homes for sale.
It is a key partner in a massive residential, office and retail project known as Ballpark Village to be located on 7 acres across from Petco Park. The partner in the downtown development is JMI Realty, the development arm of San Diego Padres’ owner John Moores.
Asked what impact the reorganization might have on the project, Levesque said, “We don’t expect this specific issue will have any effect on any of our business in San Diego.”
Still unclear is the fate of longtime developer Larry Clemens, who has headed the San Diego urban division. Levesque declined to say whether Clemens is remaining with the company, and Clemens could not be reached for comment last night.
Clemens, a board member of the San Diego Regional Chamber of Commerce and also the Downtown San Diego Partnership, long has specialized in suburban development, working at one time for the company that developed the Aviara resort and community in Carlsbad.
Lennar’s decision to restructure its urban divisions comes at a time when major housing developers are increasingly expanding their operations to focus on high-density infill development because of the shrinking supply of developable suburban land.
Because urban-style development is a specialized niche, Miami-based Lennar wanted its key management experts in one office, Levesque said.
“Urban infill is one thing, building towers is another,” he noted. “It’s a specialized business that requires you to surround yourself with other managers that understand that business model, and our company believes we’ll do a better job of that by consolidating aspects of the San Diego, Orange and Los Angeles groups.”
Lennar last month reported record results for its first quarter, ended Feb.
28. The company’s first-quarter profit grew 34 percent, ahead of Wall Street forecasts, and Lennar reaffirmed its financial target for the year despite a recent downturn in new-home sales.
Still, San Diego urban developer Sherm Harmer said that Lennar’s decision may be driven by the need to safeguard its earnings picture at a time when home sales are not as robust as they once were.
“They’re a large public company, and across the country (public companies’) stock is down, so there’s a belt-tightening going on in almost all public companies,” observed Harmer, president of Urban Housing Partners Inc. “This is a time for public companies to be very, very careful.”
Anyone know what the housing market is doing on the Big Island of Hawaii?