‘The Every Man For Himself Era Has Arrived’
The housing bubble blues have hit the homebuilders. “Wall Street analysts pared back profit expectations for home builder Hovnanian Enterprises Inc. on Tuesday, reacting as the company warned that slowing housing markets, delays and materials costs would hit earnings this year.”
“‘While we have expected weaker trends in orders, we were surprised by the magnitude of the 20% decline in the quarter given the significant community growth,’ Daniel Oppenheim said. ‘The sharp decline in orders results from both lower gross orders and a significant uptick in cancellations, likely in the Southeast, Southwest and West,’ said Oppenheim.”
“The company ’seems to be underscoring that builders are being especially aggressive in liquidating inventory created by order cancellations, which is impacting margins sooner and more substantially than we had forecast in the short term,’ analyst Carl Reichardt said. ‘While the slowdown in many markets reflected in orders taken in [the second half of 2005] and later, many of which are yet to close, we are surprised by the magnitude of the earnings shortfall relative to guidance just two months old, highlighting the minimal visibility in the industry,’ analyst Ivy Zelman wrote.”
“‘Hovnanian is the first builder to report a quarter than includes April orders (since its fiscal quarter ended April 30), perhaps demonstrating that April continues to be weak,’ said Reichardt.”
“In another sign that the housing market is pulling back faster than expected, Hovnanian became the second major builder to take write downs in connection with land. Last week, rival Centex Corp. (CTX) took a charge of 14 cents a share in connection with the write down of certain option deposits and land parcels in Washington, D.C., Sacramento and San Diego.”
“The write downs sent up red flags for investors, who worried this was a sign that land values were sharply deteriorating, which could mean the housing market was falling fast.”
“The St. Joe Company today announced that its Net Income for the first quarter of 2006 was $3.7 million compared to $15.4 million for the first quarter of 2005.”
“‘We could generate additional quarterly earnings by slashing prices for our low-basis land. But those short-term earnings would be at a significant cost to shareholders,’ said Rummell. ‘It appears that speculators are no longer a major demand element in this market,’ said Rummell. ‘There are also a larger number of resale units on the market, providing further options to potential buyers. The size of the resale inventory suggests it will be some time before we return to a favorable balance between supply and demand in this market segment,’ he said.”
Some observers fear that Toll Brother’s focus on the fragile upper end of the housing market could mean further setbacks ahead. The stock has since fallen about 48% off its 52-week high of $58.67 last summer amid worries of a housing-bubble explosion.”
“What separates Toll from the rest of the major builders is its heavy focus on the higher end of the housing market. Targeting this affluent segment has been an attractive niche for Toll in recent years, but there’s worry now about how this strategy will pan out in a slowing housing market in which inventories are rising and discretionary housing sales might seriously slow.”
“The market will get the latest update when Toll releases new-home orders for its fiscal second quarter Friday, and the company could once again drag down the sector if the numbers look worse than expected. The stock fell below $30 in early February, when Toll posted a 29% drop in new orders for its first quarter. Toll pulled its fiscal 2007 earnings guidance in December and gave little comfort to investors in its first-quarter earnings report in late February.”
“‘One key thing hurting them is the inventory of existing homes for sale. That has surged,’ says analyst Greg Gieber. ‘Anybody who is buying a Toll house most likely has a house that they are selling or will have to sell in order to close on the Toll house.’”
“Big Builder Magazine released its annual report card of 21 top public builders today. The survey found that by the end of 2005 sales were slowing in the fourth quarter and cancellations were up. ‘”I’ve been saying on the record for the last five years that I didn’t think the next year was going to be as good. I was wrong for five years. Unfortunately, this year I’m going to be right,’ says Don Tomnitz, president and CEO of D.R. Horton.”
“The annual report also found that California-based KB Home had the biggest order backlog in 2005; a whopping 6,764 backlog, a 26 percent increase over the previous year. And Michigan-based Pulte Corp. had the largest number of lot inventories, 369,300, a 52 percent increase.”
“‘During the run up over the past few years, the tendency has been to look at these companies as a synchronized sector, but that’s all changing now,’ says John McManus, editor in chief of Big Builder. ‘In the next 18 months, underneath all the rhetoric that good markets will offset deteriorating ones, nearly everyone expects there’s going to be casualties among home builders of various sizes. The every-man-for-himself era among big residential construction companies has arrived.’”
we are surprised by the magnitude of the earnings shortfall relative to guidance just two months old, highlighting the minimal visibility in the industry,’ analyst Ivy Zelman wrote
Minimal visibility? WTF? Perhaps analyst Ivy should try doing some actual analysis for a change, and not rely on data spun and spoonfed from builders and NAR.
“we are surprised by the magnitude of the earnings shortfall relative to guidance just two months old, highlighting the minimal visibility in the industry,’ analyst Ivy Zelman wrote”
yeah, because investing in stocks needs to be short term, buy or sell dependent on intra-quarter “guidance.” Forget that. I have my Berkshire shares in a safe deposit box where they are gonna stay. LOL
Wow… who would think a high powered financial analyst like Zelman would just be another bitter disgruntled renter who can’t afford a home. Clearly there’s no rational motives involved here.
hey, this was supposed to go down there vvvv
Ivy Zelman has been one of the bigger housing bears on the street, she’s well known for asking hard questions and having good forecasts. Besides, analysts always write that way, if an asteroid were impacting the earth tomorrow you can rest assured that the analyst report would read, “we are surprised at the level of panic given the advance notice of the impending impact…” (they aren’t writing for news exerpts but for sharp folk who like to think that they thought up the idea so they write with a very soft touch).
Between the lines is a huge, I freaking told you this was going to happen two years ago you idiot fund managers, most of whom will still call and scream at them.
Has anyone else seen Diana Olick’s “reports” on CNBC, she has probably said the term “soft landing” more then David Lereah, prompting me to send this e-mail:
Is Diana, a tad slow, or just a NAR shill? She can repeat “soft landing” as many times as she wants. The truth is that “modest decline” is from February to March. Less pending sales in March than February?..that my friends is not normal. 6% fewer sales (demand) with 400% more supply does not signal a “soft landing”. More like a kamikaze landing without a helmet. Did she notice HB’s are sporting new 52 week lows. I love the way she cites energy costs as a contributing factor, but not all time low affordability indexes. Her report on the D.C. condo market crashing with cranes all around followed by the requisite “soft landing” was priceless, kinda like a bad Baghdad Bob impression. I would have to believe, this is planned,because no editorial arm of CNBC would allow someone this ahem… uninformed reporter to “report” this stuff. If she actually is slow, I apologize.
Peter
She has all the market smarts of Maria Bartiromo, except she isn’t as young or pretty.
Speaking of Maria…
http://www.msnbc.msn.com/id/12583997/
Real estate train will not be derailed until 30 yr. mortgage rates settle in the 9.5/10% range.
This beginning of the bust of developers and builders is like deja vu ‘90/’91, except the valuation free fall will be 10X worse.
Would not talk to that bitch again.
Oh, also, I’m not sure what “pending sales” is or why I’m supposed to care about it all of a sudden, but it sure smacks as another effort by the NAR to make real estate look not as bad as it actually is.
Good for you, Pete! Yeah, that “Gee, gas sure is going to bring housing down,” line has angered me as well. No, people, the housing market will crash because the affordability ceiling has been reached even with suicide loans which society will have to pay for for years to come. Idiots!
Once again, IIRC the NAR has updated their lexicon and talking points to use the terms “Soft Catastrophic Meltdown” or “Soft Cosmic Death Spiral”
Pete, you want to see how this soft landing might occur…
http://yahoo.reuters.com/stocks/QuoteCompanyNewsArticle.aspx?storyID=urn:newsml:reuters.com:20060502:MTFH40200_2006-05-02_17-48-55_N02276293&symbol=GM.N&rpc=44
Bill Gross has underestimated the rate increases so far but in the long run he could prove to be right. This fall in the dollar has many implications however… where the dollar gets dropped as the international benchmark currency long bond soaring… and inflation will be severe with gold and oil going through the roof (dollar denominated)… but the housing sector would, probably, given this scenario, end up experiencing that soft landing?
That doesn’t sound so “soft” to me. Unless you mean it in the prison loving way.
Sure, you get the short term rates way down so the ARMs become managable as inflation takes care of the past 5 years of froth in real terms over the next several years. I’m not saying it’s going to be pleasant and wages won’t even come close to keeping up so the middle class, what little is left of it, will vanish.
not if that real interest rate is derived with 15% inflation, and how do you figure out real, real interest rates with manipulated CPI data?
Oops, sorry - nominal terms. So without inflation adjustment there might not be hard nominal losses - no bringing cash to the table to close, perhaps…
Go to John Williams site about ‘the Shadow Government’. He demonstrates that inflation is running almost 9% and that the phony CPI number is used to reduce transfer payments.
They mean soft as in that lovely “pfffftttrrrrrrtrffftrffff” sound that dominoes make as they fall down and into each other… one at a time…. “pffffttrrrttrfffftrfffffft”
I don’t see anyway, anyhow that the FED is gonna let gold run. Yes, right now gold is our friend but the I believe the FED will do anything and everything to break the gold rally.
I’m just wondering, what are the options?
Limit or contract the money supply and tighten credit, propping up the $, but possibly throwing us into a recession (or worse, as so much of our economy is now based on loose credit)?
Or letting the economy run on with an ever growing money supply and relatively loose credit, creating underreported inflation, tanking the $ and raising gold even more?
All the stock market players on the board are stoked, I’m sure.
It’s a very good day for HB shorts.
“What separates Toll from the rest of the major builders is its heavy focus on the higher end of the housing market. Targeting this affluent segment”
Or the affluent want to be who just took out a negative amortization loan.
David
http://bubblemeter.blogspot.com
Or, the affluent who know that you don’t get or stay affluent by buying at the top…
Perhaps today’s affluent are the same 6 out of every 10 Americans that can’t find Iraq on a map or the 1/3 who can’t find Louisiana either. I just heard this factoid on the radio and thought it was interesting.
Those bells you hear at the COB today are actually the death bells for the HB’s.
Are you saying that they actually DO ring a bell at the top?
Just saw Rhode Island’s first quarter sales report, the median price rose 16.18% compared to last year. This is crazy.
Sales is down 12%
A common occurrence. Sales on lower-median homes fall due to affordibility issues so that over-all sales fall, but the median price inflates due to the new mix. Gives the uninformed just enough rope to hang themselves with before that sudden stop at the end.
Guess again sales are down 12% (through March) Inventory is exploding. 02906 (East Side) has doubled in 6 months The RI median at the end of 2005 report was 282,900 this quarter is 280,000 and pending sales and closings for April and May are way down. RI is crashing, Its the lack of reports and timing of this one that make it difficult to track. Drive around, you’ll see the inventory.
Oh and The East Side had 28 closings for THE QUARTER but they have 318 listings—nearly 3 years supply, good luck with that.
In the past 12 months East Side’s sales is 191. So 318 is 20 month supply. I didn’t know East Side has so many listings.
In East Greenwich it is around 9 months supply
umm.. the market has changed in the last 12 months thats why I used the last 3…we don’t really don’t need to quibble over a year or two though
Initially overlooked this; Update:
‘The St. Joe Company today announced that its Net Income for the first quarter of 2006 was $3.7 million compared to $15.4 million for the first quarter of 2005.’
‘We could generate additional quarterly earnings by slashing prices for our low-basis land. But those short-term earnings would be at a significant cost to shareholders,’ said Rummell. ‘It appears that speculators are no longer a major demand element in this market,’ said Rummell. ‘There are also a larger number of resale units on the market, providing further options to potential buyers. The size of the resale inventory suggests it will be some time before we return to a favorable balance between supply and demand in this market segment,’ he said.’
A hot summer. A long cool fall. A very long cold winter. A frozen spring. Is this descriptive of 2005, 2006, 2007 or 2008? At some point, it will just be the new reality.
Oh please, just slash the prices
I am interested in the town of East Greenwich, RI because of the good schools. There are very few houses around 450K that is remotely decent. Price is very sticky. One house I looked at had been on market for 5 months. When the agent asked if I want to make an offer, I replied that I think the price is coming down, this is her answer:
The seller has authorized me to offer a $5,000 credit
at closing. Despite what you read in the newspapers, we do not see prices dropping on the realistically priced properties, and are expecting a 4% appreciation in house values this year.
I just replied: “I am going to pass, thx”
\
Dude E. Greenwich is the gold standard for this crash. Median price at the end of 2004 550k at the end of 2005 527,500 at the end of this quarter 459,500, all on decreased sales and swelling inventory of course.
“What separates Toll from the rest of the major builders is its heavy focus on the higher end of the housing market. Targeting this affluent segment has been an attractive niche for Toll in recent years, but there’s worry now about how this strategy will pan out in a slowing housing market in which inventories are rising and discretionary housing sales might seriously slow.”
Too bad so many of their buyers were only wannabe affluents, and were only able to buy with the help of suicide loans and on the optimistic assumption that owning a McMansion would make them all millionaires to the tune of 20% YOY appreciation forever.
Too bad so many of their buyers were only wannabe affluents, and were only able to buy with the help of suicide loans and on the optimistic assumption that owning a McMansion would make them all millionaires to the tune of 20% YOY appreciation forever.
You are right on the money, GS…Media editorials should be beatin’ this perspective like a drum.
Of course they won’t…to much RE ad dough…
Too bad so many of their buyers also sold their stucco chit boxes where they actually had equity and reasonable payments because they bought them prior to the boom… and rolled them over into these mcmansions and STILL needed a suicide loan to squeeze into it… too bad… so sad. buh-bye!
I SO agree…what exactly determines “affluence”? These days it’s stuff, paid for by a HELOC. Debt is the new “affluence”!
Affluence for everyone!
Borrowing is the new Saving!
TOL said on one of the recent conference calls that 38% of its customers in the prior quarter used I/O loans. All of this business about how TOL is immune to the effect of higher interest rate because its customers are more affluent is total BS.
All of my puts are currently in HOV (better to be lucky than good), but I may shift some to TOL before they announce on Friday. On the other hand, TOL really has not gone anywhere since early November (which is why I switched to HOV a couple of weeks ago — weakest in the sector).
Actually the sales number in EG is better than last year. And price is not down yet. I am not sure how long I have to wait.
you have misrepresented the RI market for months now
http://www.riliving.com/oceanstate/SalesStats/default.asp people can check this out and realize for themselves how bad it is. Its as frothy as Mass, without all the burden of any high paying jobs
That is where I get the data. Volume in EG is better than last year. I say the price is not down in EG because I also check the NewEnglandMoves.com for recent sales data. In the last 6 months(because 1st quarter sales number is so small it is too biased). the median is still around 500K.
ok even though sales are way down,inventory is exploding, and the realtors say the median is $459,500 you go ahead and believe whatever you want.
I am just expressing my frustration that one particular town is still too frothy. I am not saying the whole state is going up or down. Of course I want to believe the bubble is bursing.
patience sensei, it took 7 years for the run up, let the fall come, literally and figuratively
I do believe people are moving away from RI. The open houses I go to, owners are moving to all kinds of other states. My husband works in Brown University, and his department didn’t have many new employment because people prefer other locations, (like CA , even with the ridiculous prices there it seems more attrative).
I’m moving to Wellesley Ma. from Providence on 6/1 I am a s.v.p. of sales and there are NO jobs here for professionals.
The major Wall Street builders relied on bullish announcements over the past year to help insiders dump shareholdings at artificially inflated valuations. Read their lips: nobody dumps shares when they are expecting their value to skyrocket. The housing bubble is morphing into the hosing bubble for the fools who bought these shares in the past year-or-so.
Going forward, it will be impossible for the HBs to hide the truth, which is that fundamentals have severely eroded from where they were a couple of years back when these stock prices were rising meteorically. It will soon come to light that a big factor in the runup in these builder stock prices was the bubblicious valuations of their land holdings (reflected in the inventory item in the balance sheet)– what goes up, must come down as they say.
Yep. TOL and HOV were the worst offenders in terms of both insider sales and CEO compensation.
Interesting article about flipping properties, and what the tax ramifications could be.
http://tinyurl.com/h5clj
“”Right now, you have people jumping in on frenzy and it will bankrupt a lot of Joes and Susies who have no business doing this,” he says. “I mean, my wife is a doctor, you don’t see me going out doing heart surgery.”"
Wow… I didn’t know flippers had such high opinions of themselves. I was nodding my head up until the point where he compares the skills it takes to flip a house to the skills required to perform an open-heart surgery.
Wow. A lot of “stark reality” stuff is hitting the media today. Finally.
Recent buyers have not been getting the “subtle” clues that have abounded for months. Maybe this more “in your face direct-speak” will have an impact.
OT, the start of the Saturday Night Specials (i.e., insurance fires)? Or in this case maybe a Tuesday Morning Special?:
Greenpoint Warehouse on Fire
“We went over to check out the fire and can confirm that the fire was very, very hot from about two blocks away. It seemed like the FDNY was just trying to contain the fire in the current area and not let is spread to the surrounding buildings. We spoke to a couple people on the scene who were rather suspicious of the fire’s origins. One person we spoke to, who has been inside before, said the interior is mainly wood, with lots of junk - including some antique fire fighting gear. As we were leaving the scene, parts of the southern wall were collapsing, shooting flames even higher into the air. It was easily the biggest fire we’ve ever seen…”
“UPDATE:: After a commenter left a note about developer Josh Guttman owning the Terminal Market, we took to finding out a little information. Guttman was the owner of a DUMBO property, which he transferred to a Limited Liability Company as 225 Water Street Associates LLC in 1995. A fire at that location in 2004 raised suspicions, which Guttman did not address when contacted by the Village Voice in 2004. Gothamist found that, like the properties on Water Street in DUMBO, the properties surrounding the area of the fire are not under Guttman’s name for ownership. However, in a 2002 meeting in Greenpoint, Guttman expressed an interest in developing housing for the Greenpoint Terminal Market site. Additionally, we found that several of the buildings between West Street and the river (including the northwest and southwest corner of Noble and West) are already set up as LLC’s with a common lawyer - Joseph Kosofsky of White Plains. Coincidentally, or not, a Joe K filed satisfaction of mortgage papers for the 255 Water St. property where Guttman was listed as the borrower.”
For this particular developer it sounds as though this may be just business as usual. Sleazy as RE is in other parts of the country, it’s much worse in NYC. It should be interesting to see what the FDNY turns up after the several days it’ll take for the fire to stop smoldering.
I’m just glad I heard about this on the news before I smelled the smoke and saw the plume out of my bedroom window. I would have thought it was much closer than it was.
Wow- St Joe’s Revenue was off 75% from the same quarter last year… Holy cow!
BubbleTrack.blogspot.com
The party is over….Now come the layoffs….Then (Probably) forclosures….Then changing consumer behavior….Then ??
‘”I’ve been saying on the record for the last five years that I didn’t think the next year was going to be as good. I was wrong for five years. Unfortunately, this year I’m going to be right,’ says Don Tomnitz, president and CEO of D.R. Horton.”
____________________
I think this is very telling. For those who have been following this for a few years, even David Lereah has been saying **each year** that the market would start slowing down. 2005 was the most bullish I’ve heard Lereah (including his book — why did he wait so long?). Personally, I thought the natural market peak was in 2001 (in San Diego). Our house had doubled in value in just over 3 years. That’s not normal. If you look at the inventory/sales/price history, you will see that things started slowing in 2001 (even before 9/11) and again slowed in 2003 (when rates went up) and 2004 (fall). Each time, more money was pumped into the system, and ever-more creative loans were tossed out to less and less qualified buyers.
A lot of other posters here suggested that 1998/1999 was the last time prices made sense. When looking at wages, income, etc. that sounds about right. We have a long way down, folks. Don’t be in a rush to grab something at 10% off. With the demographic shift (boomers will be SELLING re, not buying it), and globalization, we might not see these prices for decades, IMHO. Patience will be greatly rewarded.
Has anybody seen the new Harpers? Look at this cover.
http://www.harpers.org/MostRecentCover.html
The article is an excellent graphic description of why the bubble will crash. This is finally getting onto the front pages.
Venice;…Nice post….Everbody should look at it….
Great photo….
Read the article last week.
Nothing that the posters here haven’t known for a couple years.
Luv the artwork.
If a picture is worth a thousand words-that’s it.
Excellent! Thanks for posting this, Veniceguy. I’ll have to buy the issue to reward Harpers for doing a story most news magazines wouldn’t touch. I think I’ll visit every open house I can this weekend with that issue tucked under my arm — should be a great conversation-starter with the realtors!
Excellent! Thanks for posting this, Veniceguy. I’ll have to buy the issue to reward Harpers for doing a story most news magazines wouldn’t touch. I think I’ll visit every open house I can this weekend with that issue tucked under my arm — should be a great conversation-starter with the realtors!
Harpers is the best magazine in America–bar none.
The pictures great, but the title “The New Road to Serfdom” is just as powerful.
Finally, the bottom-line truth.
I bought the mag.
It was a little guns, ammo, canned food and bunkers from a liberal perspective.
The nefarious elite planned this whole thing just to have serfs for the next 20-30 years may make for an interesting story.
However, I would never ascribe to nefarious ends what incompetence can explain fully.
It’s not a conspiratorial article. I don’t know where you get that. It comes off more as a basic econ lesson illustrating the obvious math of this situation. I came out of it with an inpression that it was a lesson for people who weren’t paying attention to the game the big boys are playing. What is conspiratorial about that? I would put the weight more on incompetence of the buyer’s understanding of free markets as the writer’s point, if there was any spin to it. He was very neutral in his description, but did not steer away from pointing out either side’s part in the market.
I’ll be very interested to read this piece–thanks for the headsup on it Veniceguy! I used to subscribe to Harpers and liked it quite well, but it did tend to have a rather depressing quality. Not so much conspiratorial as pointing out without prettifying anything the silliness and ugliness humans can engage in.
I like the idea of buying it this Sunday before heading out to open houses and keeping it under the arm!
Read about Buckle Up For a Soft Landing, Housing Economists Advise.
“After topping out in the third quarter of last year, it is pretty clear that the housing sector is in a period of transition,” said NAHB Chief Economist David Seiders. “Sales and starts are trending lower toward more sustainable levels. Even so, the slowing housing market is not likely to derail the current economic expansion as other industries pick up the slack.”
Expressing a similar assessment, Michael Moran, chief economist at Daiwa Securities America Inc., said, “The housing sector is going through an adjustment, not a collapse.”
So why the heck do you need to buckle up? Crash!!!!!
“In the event of a water landing, please use your seat-bottom as a flotation device.”
Nobody ever bluckled up for a soft landing.
The face of panic: http://www.foxmovies.com/fightclub/flightcard_med.jpg
Can somebody please help me understand why the home builder starts and the homebuilder sales don’t match up?
“in the long-run it is reasonable to expect starts in the 1.8 million to 2 million range,”
“NAHB is forecasting that new home sales will hit 1.13 million units in 2006″
Simple math would indicate we have 700k-900k houses that are started but not sold. Anybody?
This may not account for the discrepancy between the two numbers you reference, but the fact is that the builders have keep building even if they are not selling what they build. They are really in the business of cashing in on stock options and if they stop building Wall Street will know the gig is up, so they keep building and hope that sales will catch up. There is no way, for example, that TOL can meet its lowered guidance because it is so backloaded, but TOL would rather delay the day of reckoning for as long as possible so the insiders can continue selling.
I think it’s condos and townhomes included and one is not.
They don’t build an extra 900,000 homes that sit empty every year.
The Fed’s say about 300,000 homes become obsolete each year. So they have been overbuilding by about the difference.
Read about Real estate foreclosures up in California.
“First-quarter foreclosure activity in California increased to the highest level in more than two years, the result of slower home-price increases, a real estate information service reported.
Lending institutions sent 18,668 default notices to California homeowners during the January-to-March period. That was up 23.4 percent from 15,122 for the prior quarter, and up 28.7 percent from 14,501 for 2005’s first quarter, according to DataQuick Information Systems.”
If you noticed… the OC had an increase of 43 percent!!! The gas in all those hummers did it… lol
Thank you, Melody! Did you see Riverside and San Diego, though?
Yes, they’re high… so is Napa.
By the way, although OT, I said I would mention when I saw the first “Price Reduced” signs in Venice, CA. It wasn’t here, but it was on the Westside. I saw a price reduction sign in Pacific Palisades on sunday. It’s the first sign I’ve seen in the beach areas. It was at the corner of Temescal Cyn and Sunset. The place must have been on Sunset.
Read about Profits fall at LendingTree parent co..
“First-quarter profit at IAC/InterActiveCorp, the media and Internet company owned by Barry Diller, fell 32 percent to $47.2 million from $69 million the year before, according to a company statement today.”
It just keeps getting better and better
Is Every Man For Himself the same as Man the Lifeboats!
Read about Accredited Reports Q1 2006 Results; Net Income up 15% in Q1 2006; Net Cost to Originate down 19%; Loans On-Balance Sheet up 30%; Originations up 11% .
Is this a good balance sheet?
It is a highly leveraged balance sheet. LEND’s liabilities exceed $9 billion and its net worth is about 700 million. Its assets are mainly mortgages. So if they can’t collect on, say 10% of the mortgages, the loss would exceed its net worth.
From an investment standpoint, LEND is a prime candidate for shorting, IMHO.
dawnal,
Wow. Those are some big numbers.
Is it just me, or are things starting to finally get exciting for us housing bears?
BTW, I’m not cheering the economic recession/depression which is guaranteed to come, IMHO. It’s just time to eliminiate these distortions and get back to a balanced position. Yes, the transition will be very painful, but it is very necessary.
Let me say it again, it will not be over until everyone is gagging RE.
The shoeshine boy has to be advising you to stay out of real estate, buy stocks and gold because they always go up…
Actually, the shoeshine boy heard something new today.
Can’t tell you what it is just yet.
Depends on the shoeshine boy.
I’m going to let the NAR fall into this trap.
INVENTORY WENT DOWN, OR STABILIZED, OR ONLY MARIGINALLY WENT HIGHER.
I know what that means, on May 3, 2006.
Might be some interesting soundbites coming up from the NAR.
Remember what I said before.
Let them have the summer.
“ALL HELL BREAKS LOOSE IN SEPTEMBER”
And always remember this…
A good shoeshine boy gets to look them…
…in the eyes…
…when they speak…
Not sure I understand your comment. Shoeshine boy told me to buy WWY in 1973. 10k investment now 720k.
Oh!, please keep chewing that gum.