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Millionaire Now! by Larry NusbaumThis blog is based on the organizational principles found in my new book, "Millionaire Now! - A Financial Toolbox with Seven Steps to Wealth". |
Builder Standard Pacific Sees 'modest Improvement'
Posted on 12/06/2006 14:46 PM | Link | Post Comment
Marketwatch is reporting that Andrew Parnes, CFO of Irvine builder Standard Pacific, told a New York crowd this morning ...
• Order and cancellation trends improved in the fourth quarter. The company lowered prices to focus more on moving volume at the expense of profit margins.
• During October and November, home orders have seen "modest improvement" compared with the 58% decline in the third quarter. Meanwhile, the cancellation rate has fallen to the "low 40%" range from 50% in the third quarter.
• The spring selling season will be a better gauge than the winter months of whether the slumping housing market has bottomed out. "It's going to take more than a few months of improved or stable [home] order activity to say things have gotten better," Parnes told the New York Society of Security Analysts.
• Orders have improved recently due to lower pricing, not from a general market recovery. He added the company's middle market has fallen more than entry and luxury. High-end buyers are less affected by higher prices, while "first-time home buyers don't have the challenge of selling their existing home" in the difficult market.
For more of Marketwatch's coverage of Standard Pacific, CLICK HERE
Pimco sees builders leading home-price cuts
Pimco mortgage guru Scott Simon's got a new national housing report out. ... Among the thoughts:
"Existing homes on the market outnumber new homes for sale by about six to one. But, if you look at the incredible run-up in inventories of existing homes, we would argue that a lot of those homes really aren’t for sale. In many cases, homeowners have put their house up for sale at above-market prices and will simply take that house off the market if it doesn’t sell.
"The inventory of new homes is real. Builders need to sell these homes. That will be an interesting dynamic to watch. Homebuilders are under more pressure today to control inventories than they were in the past because more builders are public companies. For example, in the 1990 housing slowdown in California, only one of the top 10 builders was a public company. Today, nine of the top 10 builders are public companies. Equity analysts treat homebuilders like manufacturing companies and frown on excessive inventories.
"So, we believe builders will be much more aggressive than individual homeowners in cutting prices. They want buyers to purchase new homes, not existing homes. We think homebuilders are going to push on price, so that they make the sale rather than the existing homeowner."
To read more, CLICK HERE.
• Order and cancellation trends improved in the fourth quarter. The company lowered prices to focus more on moving volume at the expense of profit margins.
• During October and November, home orders have seen "modest improvement" compared with the 58% decline in the third quarter. Meanwhile, the cancellation rate has fallen to the "low 40%" range from 50% in the third quarter.
• The spring selling season will be a better gauge than the winter months of whether the slumping housing market has bottomed out. "It's going to take more than a few months of improved or stable [home] order activity to say things have gotten better," Parnes told the New York Society of Security Analysts.
• Orders have improved recently due to lower pricing, not from a general market recovery. He added the company's middle market has fallen more than entry and luxury. High-end buyers are less affected by higher prices, while "first-time home buyers don't have the challenge of selling their existing home" in the difficult market.
For more of Marketwatch's coverage of Standard Pacific, CLICK HERE
Pimco sees builders leading home-price cuts
Pimco mortgage guru Scott Simon's got a new national housing report out. ... Among the thoughts:
"Existing homes on the market outnumber new homes for sale by about six to one. But, if you look at the incredible run-up in inventories of existing homes, we would argue that a lot of those homes really aren’t for sale. In many cases, homeowners have put their house up for sale at above-market prices and will simply take that house off the market if it doesn’t sell.
"The inventory of new homes is real. Builders need to sell these homes. That will be an interesting dynamic to watch. Homebuilders are under more pressure today to control inventories than they were in the past because more builders are public companies. For example, in the 1990 housing slowdown in California, only one of the top 10 builders was a public company. Today, nine of the top 10 builders are public companies. Equity analysts treat homebuilders like manufacturing companies and frown on excessive inventories.
"So, we believe builders will be much more aggressive than individual homeowners in cutting prices. They want buyers to purchase new homes, not existing homes. We think homebuilders are going to push on price, so that they make the sale rather than the existing homeowner."
To read more, CLICK HERE.
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