Oversupply ‘Aggressively Discounted’: Toll CEO
Toll Brothers has some numbers out. “Toll Brothers, the Horsham, Pa.-based luxury home builder, said the value of signed contracts declined 29% in the quarter ended April 30. Toll Brothers also cut its estimate of home deliveries for the year, as speculative buyers quit the market and ordinary demand slackens on concerns about the direction of house prices.”
“Toll Brothers Inc. on Friday cut its forecast for the number of homes it expects to sell in fiscal 2006, as quarterly orders fell 32 percent. It was the third time since November that Toll slashed its forecast for the number of homes it expected to sell in the year.”
“‘I think the Street was looking for weakness, just not this weak,’ said (analyst) John Tomlinson.”
“The decline in orders reflects softening demand and a build up of homes on the market, especially by speculators who are unloading their investments as their anticipated profit evaporates.”
“Orders fell sharply in Toll’s biggest market, the Mid-Atlantic states of Delaware, Maryland, Pennsylvania and Virginia, where they were off 45 percent. ‘Speculative buyers are no longer fueling demand,’ Robert Toll, CEO said in a statement. ‘Instead they’re putting the homes they’ve recently acquired back on the market, or are canceling contracts in mid-construction.’”
“He added that the oversupply is being ‘aggressively discounted by others.’”
“Would-be buyers also were spooked, as the cancellation rate for the quarter was 8.5 percent, above Toll’s historic average of 7 percent, the company said.”
“To help prop up the company’s sagging stock price, Toll bought back 1.3 million shares during the quarter, for a total of 3.9 million, or 2.5 percent of its outstanding shares. Since July, shares of Toll Brothers have lost 47 percent of their value, as its high-end customers are considered more knowledgeable about the housing market and have more discretion not to trade-up from their existing homes.”
I’m up 80% on my puts so far. Started buying puts when Bob Toll started aggressively selling his shares. Technically, my target is $20. Could it go lower? Sure, but I’m not greedy. I’m really amazed at how well DR Horton and Ryland have been holding up. Just a question of time I guess…
What gets me is these homebuilders buying back shares at a point in time when their inventory on the asset side is exploding, have negative operating cash flow, and are thus increasing the leverage of the company. Not very prudent in my view….
The buybacks are very lucrative for insiders clearing out their positions in company stock. Once the insiders have miked it for all it’s worth they’ll move on to their next big killing.
Can you explain what a “put” is and how you buy them?
If you have to ask this question, you shouldn’t be buying puts. They’re risky investments for people who know what they’re doing.
greenlander…
So how did the guy who knows about puts learn about puts???
Probably by asking questions and doing research… everybody has to start somewhere…
Put are an option. You can sell or buy a “call” which is when you belive the price of the stock will rise, or a “put” when you fell it will fall. There are some very complicated strategies to them, but in its basic sense, if you buy a put you are betting that the underlying price of the stock will fall within the given timeframe of the ‘put’. As the stock falls in price the value of the put rises. Again, this is extremenly dumbed down.
Unless you are doing ‘covered calls”, shoritng against the box, or buying call Leaps, options are not for the conservative investor.
Put are an option. You can sell or buy a “call” which is when you belive the price of the stock will rise, or a “put” when you fell it will fall. There are some very complicated strategies to them, but in its basic sense, if you buy a put you are betting that the underlying price of the stock will fall within the given timeframe of the ‘put’. As the stock falls in price the value of the put rises. Again, this is extremenly dumbed down.
Unless you are doing ‘covered calls”, shoritng against the box, or buying call Leaps, options are not for the conservative investor.
http://cboe.com/LearnCenter/default.aspx
Options are not for conservative players. Here is a good place to get started: Options.
Good luck.
While it is generally true that most option strategies are not conservative, they can be. For example, buying deep in the money puts is in many ways more conservative than shorting the stock: you get a 1:1 move as the stock moves, but your downside is limited. As I write this, TOL is at 30.10 and the ask on the May 40 put is 10, which is 9.90 in intrinsic value and only 0.10 in time/leverage. Moreover, one cannot go short in an IRA, but one can buy puts, which is how I have been playing the HBs since last August.
Sly_Ace,
Do you have a self-directed IRA? How do you set this up?
Thx,
GS
I have two self-directed IRAs through Scottrade.
A put is a contract for the right to sell 100 shares of stock at a set price, for anytime prior to the contract’s expiration. Some people buy puts as insurance for a position to prevent major losses. Others buy puts as a speculative bet on falling prices.
Option contracts purchased out of the money can have an extreme amount of leverage. Of course you can also have your contract expire worthless and lose whatever you invested. Because of this leverage, buying puts or calls is considered risky.
And a lot of traders sell “puts” and short the stock per the Fisher Black scholes time decay formulae. Therby receiving interest on the short sell as well as the premium from the puts.
…how you buy them?
http://tinyurl.com/mw8zq
Thanks for all the comments. In the late 90″ and early 2000’s I paid a professional financial person a monthly fee to manage a 100K 401 account. She lost 60K in two years which started me into learning about managing my own money. I have heard people talk about puts and calls but was not sure what it was. My new financial advisor advised me not to buy gold. I set up an e-trade account and bought GLD which is up about 35% from were I bought it. I have learned alot about houses, mortgages and the economy by reading this blog. I did not know what a inverted yeald curve was either. You can never know to much and don’t ever count on someone managing your money.
OT, but did that ‘friend’ ever unload that house she was trying to sell?
No, I have a post below. She has lower the price 35K but it has not sold. She bought a Toll Bro Condo at the peak of the buying frenzy and it took over a year to build. She brought samples of the grante countertops to the ladies golf league Christmas party. Now she can’t sell her house. HA HA
You are buying the right to sell at a given price at a given time. Don’t think about stocks, apply it to something real.
Imagine I pay you $5 for the right to sell a car to you in 2 months for $1000. If in two months I can get that car for $700 I can then buy it and sell it to you for $1000 (I purchased that right!), making $300.
Best advice: start small. You’ll lose money. It’s very volatile.
I suggest you check out the movie “Enron: The Smartest Guys in the Room” if you want to gain insight to how this strategy works…
Given that option value decays in time, and that the options market is a zero sum game. Collectively the buyers of options transfer wealth to the writers.
IMHO the best use of options is to buy LEAPS on stocks that you think will go up. Lots of leverage and much less risk.
Discounts for everyone! Sacramento is way overpriced but seems to be slowing. In my subdivision where I rent they want 430k for 1600 sq ft stucco box w/ tiny yard, ridiculous. We are 30 - 50 % overvalued in roseville area. Where are the greater fools going?
Dude;….I have been following the Sac market closely even though I live in the bay area….Lots of land deals comming on the market…The land speculators don’t like what they see….
I think what Robert Toll is saying here is that we’ve got a massive housing glut on our hands.
Serves Toll right for thinking the flippers would keep coming .
” the Mid-Atlantic states of Delaware, Maryland, Pennsylvania and Virginia, where they were off 45 percent”
Thats serious change in the market…almost half. Wow!.
Simmsays…
what not to get your mom for mother’s day
http://www.Americaninventorspot.com
Mortgage applications up? Mish decided to investigate….
“I thought the jump in activity was a little surprising as well, although as Sloan says the “index can be volatile”. I asked Mike Morgan at MorganFlorida if he could step outside Florida and comment on the numbers. Here was his reply:
A year ago most speculators did not have to close on homes. They could simply flip their contracts prior to closing. No need to apply for a mortgage. That was shut down starting about a year ago. So we actually have a double counting of mortgage applications being reported now. The flippers that never had to get a mortgage before now have to get a mortgage and close, even if they are flipping the property the same day and the new buyer has to get a mortgage. So not only are mortgage applications not realistically up, but they are substantially down. The Fed and MBA is double counting mortgage apps for those flippers that only need the mortgages to close.
The builders are not selling more homes. Take out the flippers and you have a horrible decrease in “true” mortgage applications. The real year-to-year numbers will not show up for another year. There is no soft landing to this housing market. The smart money knows this and is positioning accordingly. The money that sits on the Street and does not make a trip out in the field is still star struck by the numbers based on misleading foundations.”
http://globaleconomicanalysis.blogspot.com/
I think what Robert Toll is saying here is that we’ve got a massive housing glut on our hands.
Gee, I thought that everyone wanted to own at least 5 homes and they are not making land anymore?
Nobody talks about the ’shortages’ anymore.
Thankfully, I no longer hear, ‘RE only goes up.’
I went to a party last weekend in SF and the tone has dramatically changed since last summer. No big, smug smiles and boasting about big RE gains. Instead, there was fear on many faces who I know are deeply exposed to RE. There is a lot of sleep being lost these days in SF.
Glad I cashed out last year, no worries here.
The girl I play golf with how thought she could put up a FSBO sign and sell for top dollar in a few days, has now listed the house on the MLS and dropped the price 35k. She was always bragging about how much her house had gone up. I am really enjoying this! She is also a crappy golfer. Ha Ha Ha
Why list MLS? Why not drop the price 60K and list FSBO. That would do it. 7% commissions would make up the diff.
Why is she selling?
Probaby because she needs to “sell” it. Doesn’t have time to try to find buyers in a dead market. Doesn’t have the money or doesn’t want to spend the money to market it in a dead market it.s cheaper to let the agent use their resources etc etc.
AZ Golf, was this the same girl u told us about a month back? Nice to hear follow up stories
Yes, this is the same girl. MLS # 2488530. She paid 190K for in in 2001. The funny thing is she bought an over priced Toll Bros Condo with granit countertops and now has to sell. I can’t wait until Toll Bros start reducing the condo prices and she figures out that she was SCREWED. HA HA
She is selling because she bought a Toll Bros Condo at the very height of the market and now it has taken almost a year to get it built. The condo will finally be ready to move into next month and now she can’t sell her house. This is just too good. I have been the housing bubble leaper for over a year at the golf course.
Well, if she is moody next time, comfort her with “at least you won’t be throwing money on rent”, or “everybody wants to live in Arizona”, or something like that.
The people stuck are going to just have to hold long term or loose alot . No more quick buck . I held my last house for 23 years going thru all kinds of cycles ,but, I bought it to live in ,not turn a quick buck in 6 months . I have bought rentals in my lifetime but my rule there was that I could have no higher than a $200 a month neg. Usually I started out with a positive . When I bought a rental I had to put 20 to 30% down and pay a higher interest rate ,(per lender requirements in those days ).
I remember before the last turn down in California I had two friends that wanted to flip houses ,(mid to late 80″s).I advised both these friends not to do it because the real estate was at a high point . They both went ahead and invested . One of my friends lost 100k the other friend lost 150K. These homes were fixer uppers that they put alot of money into also. The market tanked quickly just as both friends put the houses on the market .
I found out later that both these friends had realtor friends that advised them strongly to make these purchases. Some great friends these realtors . My friends wouldn’t even talk to me during this period after I advised that the timing was bad to invest .
Why the phuck do you even accept 200neg flow..?>>>> that is how we are in the shambles we are in… I would not think of getting into a place with out 400-800 POSITIVE flow. If there is not positive flow,then you are better pursuing other investments. One of my properties rented out for 2100/mo and my PITI was 1200. Now that is an investment!!!! I sold it, and he sold it, and now the bagholder has 1900/mo rent (yes it went down) and a PITI of 1900 (at best) for a flow of ZERO. once again phuck the flippers… phuck themselves … they will (said with a Yoda accent)
Pluckthe flippers … Because given the tax right off at the time I came out ahead on a 200 neg. The only other reason for the 200 neg .was that the area really did have potential for appreciation . I bought for long term potential , not for a short term gain . Also the property had to be the type that would be easy to rent with high demand . Better to always have it rented than go through 3 or 4 months trying to get a renter . I wasn’t some big investor or current day flipper but I wanted rentals to always be rented . 1/2 month was the longest I ever had a place vacant . I also would give a good deal to the renters . Maybe I wasn’t greedy enough .Usually within a couple of years I was no longer at the $200 a month negitive .So don’t call me a modern day flipper or I will bunch you out .
Nobody talks about the ’shortages’ anymore.
Ben;….I have been thinking about this myself as it relates to material cost…I wonder if we are going to see layoffs in the building material sector soon ????
Does anyone have a link to the Toll interview from last year where he said (paraphrased from memory) that people would start living with their parents until 40 years old, and that the only people who would be able to buy in the future were other homeowners?
OK, someone has to dig up the quote last year where Robert Toll said we’re going to turn into Europe, with everyone living with their parents until they’re 35 because houses will become so expensive.
35 Bub? I’ve got the over!
It was in the NYT magazine last summer and was titled “Chasing Ground.” He said the average home Toll was building at the time would rise in price from $650,000 to about $4,000,000 in the next five years. I burst out laughing when I read it. I wonder how many gullable people read that and ran out to sign up for more pre-construction homes.
http://select.nytimes.com/gst/abstract.html?res=F00A15FC3D5B0C758DDDA90994DD404482
thanks for the link, but over my dead body will I pay to access anything at that Pinko rag… aka New(old) York Times.
>Pinko rag
I didn’t think people still used the word “pinko”…kind of like nobody still uses the word “forsooth”.
Wow, “pinko” that is a blast from the past.
Maybe you mean “the reds” or something?
If Kossites weren’t calling everyone to the right of Bernie Sanders “fascist”, maybe “pinko” might sound a little dated.
From CNN:
Jobs Growth Slows in April
http://money.cnn.com/2006/05/05/news/economy/jobs_april/index.htm?cnn=yes
Is this the beginning of the economic shockwaves from the housing downturn?
Welcome to the 70’s. High energy prices, debt and the burst will cause stagflation again.
Its a real pity no generation actually learns from the last. Ever.
No. It is a reason for the stock and bond markets to rally, in anticipation that the Fed will be able to step on the gas pedal once again, thanks to weak employment growth.
““He added that the oversupply is being ‘aggressively discounted by others.’”
*****************************************************************
Centex just announced that it would offer discounts up to $100,000 in California…Yuba City, Elk Grove area, etc
http://www.CentexSac2DaySale.com
I suppose that if you don’t act within two days, Centex prices will…..um,
…er,…go back up?
Hey, if you don’t buy NOW, you’ll be priced out forever!
my hubby still believes this…all it takes is seeing a sale or two of an overpriced house around here, and he seriously worries. I so wish it was clearly untrue so he would stop harassing me. I tell ya, this housing bubble thing screws with relationships bigtime. The pressure to give in a la “but Suzanne researched this!” is bloody enormous. Patience is hard …:-(
“This is the LAST time we’ll be offering this discount, and we really, really, really mean it this time.”
That guy in the add is a Centex executive running with the homebuyers’ money last year…
That’s funny, ’cause last week they ran the same exact add, but the discount was $75,000.
For some odd reason the Street liked the news and TOL is up about 2.5% this morning… and HB Index are up 2+% …
http://www.marketwatch.com/tools/quotes/quotes.asp?symb=dj_hom&vc=&siteid=mktw&dist=dropmenu
‘To help prop up the company’s sagging stock price, Toll bought back 1.3 million shares during the quarter, for a total of 3.9 million, or 2.5 percent of its outstanding shares.’
What kills me is that some of the big builders are using their line of credit to finance the buybacks. Mind boggling.
Is this legal? Why would any fool stay long in the stock of a company that was up these Enronesque shenanigans?
why would it be illegal? ever heard of a leveraged buyout? same principal…lenders typically put covenants into credit facilities to limit the use of borrowings to fund buybacks, but since TOL’s overall leverage is low (1.5x) lenders are comfortable allowing some share repurchase as contemplated by the terms of the credit agreement.
There is a nice story typically used to support LBOs: The purchased company is not managed efficiently, making it a takeover target. The purchaser (e.g., Kerkorian) knows how to manage the company more efficiently, justifying the use of leverage to take over the company.
That seems a bit different from using credit to prop up the stock price so that insiders can unload their shares before it is altogether obvious that they are overvalued. How is this the same principal?
the term leveraged buyout refers to using debt (that’s the leveraged part) to buy equity (that’s the buyout part). using debt to buy stock is a leveraging transaction…same principal. Kerkorian is not even the best example of an LBO player. He’s more of an activist shareholder who pressures management to make changes in how they run the company (changes that may or may not include the use of leverage to increase shareholder value). Your classic LBO players include KKR, Texas Pacific Group, Permira, Blackstone, etc.
garcap,
leveraged buybacks are dangerous because of conflicts of interests. Buyouts are different because initiators are not always vested.
where’s the conflict of interest? and what’s an “initiator”?
It would be incredibly disingenuous to initiate a share repurchase program only so insiders could “dump” their stock at an “inflated” price. It’s an obvious ruse and the market would see through it pretty quickly.
My point is that adding some leverage to a company that does not have a lot of debt in order to help fund a share buyback is a move that has risks; but those risks are acceptable. Shareholders would welcome the move given the stock’s recent performance and creditors agreed to these terms…
Conflict of interest is if the vested management uses leveraged buybacks, and markets unfortunately do not always see, or purposefully ride the way up. Such buybacks were very common in the 20’s, when it seemed the sky was the only limit.
Second, you must remember the only purpose of buybacks - to avoid undervaluation - when thinking whether the move is justified. I don’t see how TOL is undervalued, and therefore, their buyback programs are probably first serving the vested management. There is no other reason.
i’m not sure I understand what you are saying. Ar you suggesting that because YOU think the stock is not undervalued, a share buyback program can only be self-serving for “vested” management?
I was under the impression that we ran out of land in Florida and that we had reached a new higher plateau.(sp)
For some odd reason the Street liked the news and TOL is up about 2.5% this morning… and HB Index are up 2+% …
Plunge Protection Team???????
Nope. Just really dumb investors looking to get rid of excess cash.
Old stock market adage “Sell on the rumor, buy on the news”
Even when the news suggests the fundamentals are a lot worse than anybody thought? You have me scratching…
I will put my money on the good ol’ Plunge Protection Team. It will be interesting how long this upsurge lasts. Previous examples have not lasted but a few days at the most.
and who would these people be?
Goldman sachs, bear stearns, and the rest
Toll brothers has done exactly one equity offering in the last 10 years (with Citi in 2003). Why would the dealers put their own capital at risk for such a small underwriting client?
because they have an under the table deal with Fed and Treasury that the government will print money and reinmburse them for any losses.
you’re joking, right?
anyone have a link for the granite market ?
I’m seeing signs on telepone poles pushing granite !
Re: HGX up today:
stock buybacks + rates down due to lower than expected employment report. HGX support holding at 250. Wait for the April house sales figures. At some point (soon) HGX will fall below the support level (IMHO).
There is no way a slightly lower interest rate trumps a 29% decrease in contract values, especially when you take into consideration that Toll inevitably shines the best possible light on the underlying fundamental reality. Toll’s business model (sell overpriced BigBox houses built on small lots to wannabe millionaires who believe the price will go up by 20%/year forever) is toast now that the housing market is in crash (er, I mean, soft-landing) mode.
“To help prop up the company’s sagging stock price, Toll bought back 1.3 million shares during the quarter, for a total of 3.9 million, or 2.5 percent of its outstanding shares. Since July, shares of Toll Brothers have lost 47 percent of their value, as its high-end customers are considered more knowledgeable about the housing market and have more discretion not to trade-up from their existing homes.”
Meanwhile, insiders continue to sell their shares and options and put the money in the bank.
This is simple money laundering. A way for Robert Toll and others to raid the safe. This is just a legal way of doing it.
Take that Enron!
Robert and Bruce Toll are far-and-away the largest shareholders in the company. Why would they want to do anything that hurts shareholder value?
(Since July, shares of Toll Brothers have lost 47 percent of their value, as its high-end customers are considered more knowledgeable about the housing market and have more discretion not to trade-up from their existing homes.)
Interesting issue. Usually the median sales prices goes up initally as housing prices fall, because the LESS affluent buyers drop out of the market (due to rising interest rates and tigher lending not offset by sellers lowering prices). If the less affluent buyers keep buying, and the more affluent buyers (who read Fortune, etc) stop buying, the median sales prices will fall.
Also, if speculators have been buying and reselling new luxury homes, that in itself might have inflated the average prices of “existing” homes as measured by the NAR, no?
I love that comment about how the high-end buyers are more knowledgeable about the market…that’s a very good one. So, if you have a clue right now, you realize it’s a shitty time to buy, is basically the admission. You ignore even the incentives and recognize how glut and credit bubble and RE mania translate into future pricing…hmm.
perhaps the extreme high-end (captured by Toll, at least among the big national builders posse) has realized now isn’t the time to trade up or over or whatever, the extreme low-end can’t afford anything anymore, and most of the activity is in the middle, with the first-upgrade-over-starter-crap homes being traded in for spiffy new countertops and more squarefootage, but not quite toll-level luxury. That profile would maybe raise the median too, no?
The quotes about the knowledgeable highend buyers reminds me of how in 2001 or so a realtor responded to my tears, as my husband was trying to convince me we needed to buy a 900 SF house that would stretch our budget greatly and move us miles from work and school, that even the folks she worked with who were buying 400-500K houses (her specialty, I learned) needed to make compromises and couldn’t get everything they wanted. My tears were about whether I could stand living with 2 kids in a place with 7X9ft bedrooms, of course, while her other clients were deciding about whether the hardwood in the 12X15 entry foyer instead of the slate was something they could tolerate.
turns out we would have made maybe a couple grand if we’d bought the thing then and sold at the peak (maybe summer 2004 or so), but we’d have had to use that money to buy another car.
I can’t wait til *everyone* is out of this bloody market and the corrections start to happen in a serious way…
Anyone who needed evidence that the HB stocks are not a place for us amateurs need look no further. What about this report by TOL is any reason to cause a jump of 2%? What about anything reported in te last quarter should have the HGX at the same price as Jun 05? As others have mentioned these buybacks represent aform of insider trading. 12.3% of TOLs float is short. 3/4ths of all stock is still held by institutions. The HBs are being gamed. When elephants fight the grass gets hurt.
I am an amature and have been doing fine, thank you very much. We are still below yesterday’s open; just a little relief rally that the news (that obviously leaked yesterday) was not even worse.
The builders are up because the market thinks todays jobs report (138,000 new jobs was under the consensus of 210,000) will cause the Fed to stop or pause in raising rates after the May 10 meeting.
but… if there aren’t enough people with jobs… then fewer people… will be able to buy houses… and inventory keeps going up… so… confused… must… stop… world… from…. spinning… aaaaahhhhhh….
Soooo funny!
What’s amazing is how people never learn. How many times in the past year+ has the market thought the Fed would stop raising rates? Each time, they were proven wrong. I suppose it’ll be true at some point, but I wouldn’t keep betting my money on it like these guys do.
As a very smart and bright guy in the financial business once told me, no one knows where interest are going.
>
That’s part of the reason, but TOL was actually up pre-market before the jobs numbers was released.
The trend in Toll Bros stock is clearly established, and only points one direction (down). They can use share buybacks out the wazoo, but at the end of the day it will only make the necessary black swan correction to align their share price with eroded underlying fundamentals all the more severe. I concur that it is not a good idea to be overconfident about the day-to-day connection between news and stock prices, though, as the phenomenal amount of liquidity and leverage in the hands of elephants these days opens the door for short-term price manipulation.
It’s up 4% now. Excellent entry point for a short, considering it’s just going to keep going right back down after every one-day rally.
I will still bet the market for HBs is being manipulated by the PPT and that it will fall back next week.
I will be elated if the lense of history shows this to be the case. It would be so true to form if it turned out the govt was using tax $ to prop up the stock market, and the like of Robert Toll and anyone working in the hedge fund industry was making out like bandits because of it…
Stop with the PPT already! I believe they probably exist, but why do they care about homebuilders when the homebuilders’ fundamentals are caput. At this point, I think the stock is just being gamed to help the big guys get out with a profit (probably selling puts and keeping the stock above the strike price until options expiry.
(hmmm… unless they’re just trying to unload some of that newly printed funny munny, perhaps?)
How do you know? Or are you just musing? Show me the data that proves your point.
You can check open interest in the puts and calls, if there is an inordinate amount of volume in the puts - the price of the stock may become “pegged” to the majority of the option strike price. This is due to the market inefficiency that allows traders and trading firms to place a position in the options/stock market called a “reversal”. This hedging position when properly done gives an annualized yield of 18%. Non exchange members do not do this because there are the enormous costs in contract commissions which members do not have.
A “reversal” is Shorting 100 shares of stock, selling one put and buying one call. At expiration the position is neutral. The short seller receives the cash from the short sale which is generally used to buy Tbills (again you must be an exchange member to receive the cash).
This information is all public and when there is so much interest in buying puts, it makes the transaction very profitable for traders. And as I said above it pegs the stock.
I don’t know - it just seems common sense… If the homebuilders tank, at this point, the mainstream press can just chalk it up to the fact that the housing bubble popped without really mentioning the risk to the whole financial system that it entails. That’ll keep the masses happy. If anything, the PPT will prop up FNM and GM, but not these builders with no fundamentals supporting them… (of course, my own opinion…)
“When elephants fight the grass gets hurt”
When elephants fight the mice get trampled…
“He added that the oversupply is being ‘aggressively discounted by others.’”
Hey wait a minute… What happened to the severe housing shortage that was supposed to fuel price increases for years to come?? Didn’t everyone get the memo? I mean, Suzanne researched this!!!
(The builders are up because the market thinks todays jobs report (138,000 new jobs was under the consensus of 210,000) will cause the Fed to stop or pause in raising rates after the May 10 meeting.)
Perhaps there is no one qualified left to hire, which is why other reports show wages up.
Do they really include overtime pay in the wages numbers?! Some CNBC guy was just talking about that… I mean, I guess it would make sense at a certain level, but if they can bust that out of the figure it would be helpful, and to conflate them surely changes the real picture of labor market!
The spin I saw on it in the mainstream (okay, it might have been Fox) seemed to indicate that this is all good, jobs added (not taken away! isn’t that nice?! the bush admin. they said, pointed out that this marks like 30-something straight months of jobs being added…), which might get those homebuyers feeling okay and ready to commit, while the reality of it being under the estimates, downplayed on the non-financial outlets, gets the Fed feeling like it can stop raising rates now, or at least so the street hopes…perfect for the homebuilders.
Dont know, if some has the patience they can add up all the newjobs created in the last 30 months and it could be more than the number people in the USA! including new born, child etc.
Comment by shel
2006-05-05 08:59:46
Do they really include overtime pay in the wages numbers?! Some CNBC guy was just talking about that… I mean, I guess it would make sense at a certain level, but if they can bust that out of the figure it would be helpful, and to conflate them surely changes the real picture of labor market!
The spin I saw on it in the mainstream (okay, it might have been Fox) seemed to indicate that this is all good, jobs added (not taken away! isn’t that nice?! the bush admin. they said, pointed out that this marks like 30-something straight months of jobs being added…), which might get those homebuyers feeling okay and ready to commit, while the reality of it being under the estimates, downplayed on the non-financial outlets, gets the Fed feeling like it can stop raising rates now, or at least so the street hopes…perfect for the homebuilders.
_________________________________________________
Sadly enough, over 65% of those “new jobs” trumped up by the neo-con loonies are service jobs paying under 20k/yr.
Instead, there was fear on many faces who I know are deeply exposed to RE. There is a lot of sleep being lost these days in SF.
I usually like to talk load and say “Man did you see how home prices are dropping like a stone? Sure reminds me of the dot.com bust!” Yea! Its fun to see those faces turn green. Its worth a laugh!
Thomas, you’re bad, dude
“Centex just announced that it would offer discounts up to $100,000 in California…Yuba City, Elk Grove area, etc”
Must be another one! They just had one last month!
‘”As interest rates and new and existing inventory continue to rise, we believe the near-term outlook for the company is less than positive and calls for a soft landing may be overly optimistic,” wrote Raymond James & Associates analyst Rick Murray in a research note Friday.
“Based on these preliminary results, we suspect that current fiscal-year 2006 estimates for Toll Brothers are probably too high,” he added.’
“Probably too high?” D’oh…