Folks, you can't make this stuff up. Bob Toll blames the media for causing the impression that homes are depreciating assets, then admits that he is depreciating his assets through incentives and "creative price cuts".
When do people get the tar and feathers (and handcuffs) out for this slimeball?
I love that he says they never lower nominal prices, just use incentives. Guess what Bob, that's a price cut. If I wanted to sell you my car for $10,000, and threw in a Plasma TV and a trip to Tahiti worth $5000, the real price of the car is $5000. Get it?
Also, this business fool shouldn't say "never". Because a day will come soon, when there's so much bloated inventory not moving, that Econ 101 says Bob, you'll either lower your "nominal" price, or you'll never sell another McMansion again. Sorry old chap.
U.S. home builders are adding incentives to lure buyers but are keeping prices steady, meaning buyers can request more amenities to close a deal in a soft real estate market, real estate executives said this week.
"In the latter part of 2005 and 2006, we're learning how to creatively lower prices in those communities that are having a tougher time," said Robert Toll, chief executive of luxury home builder Toll Brothers Inc.
"We never lower nominal prices, but give more incentives, create a better mortgage deal, that kind of thing," Toll said at the Reuters Real Estate Summit in New York.
A few weeks can mean the difference between a high-demand market and one that requires sweeteners to close a deal, Toll said. In Arizona in March, Toll needed a lottery system because of strong demand for homes in a new community, and the company was able to raise prices. But a few weeks later, Toll was looking at incentives to draw interest.
These can run anywhere from $1,000 or $2,000 worth of kitchen remodeling, or better appliances, to a spa in the back of the house, or as much as a $50,000 credit for options, Toll said.
"Incentives are all over the place," he said, adding that their extent depends on the community.
July 11, 2006
FLASH: Bob Toll creatively lowering the prices of Toll Brothers homes (in other words, depreciating his assets)
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"These can run anywhere from $1,000 or $2,000 worth of kitchen remodeling, or better appliances, to a spa in the back of the house, or as much as a $50,000 credit for options, Toll said."
Certainly sounds like a $50,000 reduction to me. So much for "never lowering nominal prices".
*POP* goes the bubble!
North Jersey Market Slows
From the Star Ledger:http://www.nj.com/business/ledger/index.ssf?/base/business-3/1152596280277870.xml&coll=1&thispage=1
Home sales slowing in North Jersey
BY SAM ALI
The "For Sale" sign has been up for three months. You've had a handful of showings and open houses. But your four-bedroom colonial in your quaint middle-class suburban neighborhood is just not selling.
In America's cooling housing market, it's a story many home sellers in New Jersey can relate to these days.
Housing activity is slowing across the state, and the inventory of unsold homes is expanding.
"You have this standoff between buyers and sellers who tend to be as much as three-quarters of a year behind the market," said Jonathan Miller of Miller Samuel, a real estate appraisal firm in New York. "Sellers have been trained over the past five years to stick with their prices and be firm, and yet now you have buyers on the other side saying they want a deal."
As of June, the supply of homes on the 12-county northern New Jersey market is 69 percent higher than it was in June 2005, climbing from 23,584 homes to 39,829, according to Jeffrey Otteau of East Brunswick-based Otteau Appraisal Group, who also authors a series of widely followed quarterly market reports on the New Jersey real es tate market.
Middlesex County saw the largest year-over-year surge in inven tory, with the supply of homes on the market climbing 99 percent, to 4,739 homes, from June 2005 to June 2006.
The number of months it would take to sell the existing inventory of active listings at the present sales pace stands at seven months, up from three months a year ago, Ot teau said.
Historically, a 5 1/2-month supply of unsold inventory has been considered a "stable" market.
In the late 1980s, when the residential real estate market last hit the skids, that number ranged from nine months to 24 months.
...
Otteau also believes "the chorus of voices predicting this collapse and the attention they have received from the media" are playing a big role in bringing the housing market to its current state.
"As always, perception becomes reality," he said.
The market currently has a six- month supply of homes priced below $600,000. For homes priced between $600,000 and $1 million, there is a 10-month supply, and for homes priced above $1 million, there is a nearly 13-month supply.
Home-sales volume also is slowing in the state, declining 18 percent through May from one year ago.
Incentives?
In any other business, wouldn't Toll et al's shenanigans be called "Accounting Fraud?"
Remember Enron pretending to "sell" something with a hidden clause to buy it back?
Is the "average selling price" really the average selling price? Or shouldn't they be reporting to SEC the true selling price?
Watch what he does and not what he says.
Remember that back in the middle of 2005---he sold a google worth of shares---and then had a propaganda hagiography made for him in the New York Times Magazine. Wherein he said things equivalent to "house prices have reached a permanently high new plateau", saying that yes in many places the US will now be as expensive as Britain and children will live with parents until age 40 or so before they can buy their first house. blah blah blah.
Why isn't there a reporter with some balls to pull out his quotes and insider sales to counter his "you mean mean bubble bloggers" whinging.
If these guys are going to complain that the media is putting pressure on housing prices, then by the same token, they would also have to argue that the media accentuated the housing bubble to begin with. You can't have it both ways, Bob.
Bob Toll: "We never lower nominal prices.."
In page 10, http://www.mmr-homes.com/Newsletter/June%202006%20Edition.pdf
In another interesting shift that is probably
somewhat market related, Windgate Crossing, the much clamored for Toll project on Bell that has been releasing home sites solely via lottery, has dropped that procedure for homes in its Ocotillo section. These homes, which are both two-story and in close proximity to Bell Road,
are now available without having to deal with
either a lottery or a waiting list and are now
priced about $20K less than was being asked
when they were first introduced (the high
$700’s versus the low $800’s)."
Daud
Daud,
I was at the showroom for those models. The Octillo collection sucked, it wasn't even gated and was separated from the other collection with a wash. You couldn't even call it the same subdivision.
I looked at the high end Mesquite which had a huge waiting list. My friend was there 3 weeks ago and there was still a wait list. I wonder if that changed in the last week.
Monarch,
I was there too once around the beginning several months ago as my other option is "only" to build on a my lot, an option which is now twice the money compared to 2 years ago when the architect started.
At that time the plexi-glass boxes for lotery had like 5 times more registrations than the number of houses.
The problem here is the delayed CA fall, as long as people can cash their home there, the $800-1 mil price can seem to them still acceptable.
Daud
Bob is lowering prices. I recently left the company and sat through many meetings on how to reduce the price without reducing the proce. The discounts are up to $50,000 in many communities. In addition they are throwing in financing incentives. Lowering prices is not rocket science and Bob is definitely on board
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