The US housing industry has completely imploded, similar to the US telecom industry during the .com bust. It's over.
* Nearly everyone associated with homebuilding will be put out of work, yes, including the illegal Mexicans.
* No more homes will be built or needed for at least a decade in the US.
* City and State budgets based on homebuilding fees and property tax revenues will be decimated
* The stocks of most of these companies, down 50+ already, will head toward zero or they'll be acquired.
* You'll see massive write-offs as the builders devalue the land and assets on their books
* Millions of Americans, directly and indirectly, will now suffer the consequences of yet another popped bubble.
* Homebuyers will sue, but there'll be no assets with which to pay them off
* And the corrupt Bob Toll will go to prison, hopefully for a long, long time.
Toll:
Toll Brothers Inc. said Wednesday the value of signed contracts in the luxury home builder's fiscal third quarter fell 45% from the year-earlier period's record pace, and for the fourth time lowered its 2006 home-delivery forecast.
The builder lowered its estimate of homes it expects to deliver in the fiscal fourth quarter to a range of 2,500 to 2,800 homes, from between 2,900 and 3,300 deliveries. For the fiscal year, Toll sees deliveries between 8,600 and 8,900 homes.
WCI:
The latest news from WCI Communities (WCI) will blow your mind. WCI builds condo towers and single-family homes all over Florida and a few other places. I want to direct your attention to a line from the company's earnings release this week:
"Tower homebuilding orders for the second quarter 2006 decreased 82.6% in value to $57.0 million and 88.8% in units to 36."
August 11, 2006
Homebuilding: Another American industry at the end of it's road. WCI orders fall 88%. Yes, 88%. Toll Brothers orders fall 45%. Pop.
Subscribe to:
Post Comments (Atom)
32 comments:
Wait for the other shoe. Sometime soon one of the HBs is going to annouce negative sales. That's right; more cancellations than orders. Won't be TOL, probably not LEN, might be DHI or WCI.
Kieth ment to say. He started pumping Gold at it's peak.
Keith - you said the same thing last fall about Triad Guaranty, General Motors, and the US Stock Market.
How those apples looking now?
No one can predict what will happen over the next six months, no one.
There are too many weird, contradictory cross currents in this economy, and four potential hot spots around the world that could errupt into war at any moment. Sure these builders are probably toast, but what if Uncle Sugar declares an emergency and steps in to rescue them ala the airline bailouts after 9/11? Short plays could end very unhappily in those circumstances.
I know no one can predict the future... but can someone take a guess when they think home prices will start to become more affordable, or when it is safe to buy? Are realtors, etc. relaying to sellers that the market has changed?
Why the hell would the gov. bail out a homebuilder?
Homebuilders HAVE been done. When they re-adjust for the 2007 market, the major layoffs will begin. OUCH1!!! Not that far off.
Dropping prices have already started. However, you will not see them drop FAST. It is going to be a slow painful death, at approximately 1% a month for 36-48 months. It takes 3.7 years on average for a market to reach bottom, once it turns (6/05, so look for bottom at 9/08).
The world is not going to fall apart. A few builders will go BK, be bought out by others, stocks will drop, 800,000 to 900,000 home a year will still get built and sold (at realistic prices). People who bought at the peak will have their lives made uncomfortable and/or ruined for a long time.
NONE OF THIS WILL HAPPEN TOMORROW. GO SIGN A 1-YEAR LEASE AND QUIT STANDING AROUND READING A BLOG EVERY DAY. THERE WILL BE NO OPPORTUNITIES FOR A COUPLE OF YEARS.
The mexicans might lose their construction jobs, but we won't be going anywhere. We are smarter and more ambitious. We are certainly stronger with more endurance and by far we are more intelligent. We will take the jobs once ruled by gringos. Fat slob lazy gringos will go unemployed. Their pasty bacon smelling skin and their moldy fat rolls make them undesirable to employers.
We are here to stay and we will beat you at your own game, illegal or not. Gringos will be the 2nd class citizens, La Raza will achieve victory and will be running the cities. You must learn to speak spanish if you want a job in the America of the Future. Estoy Contigo en La Lucha.
Hey, why are my comments dated "Saturday, Aug 12th, 3:30 AM". Is this blog based in Dubai, and this is an Islamic conspiracy to bring down the U.S. housing market (chuckles)
right you are.housing is sticky,sticky,STICKY on the way down.slow,painful,but no sudden crash.years and years of misery till we hit bottom.
I can't wait to see all the belly up residential developments all over the country. Real estate development and homebuilding is our last industry here in the U.S. When it goes, 40% of our GDP goes. Maybe after that, we can start to realistically think about what we will do next as a nation. Maybe we will have to really start to do some work. The days of getting something for nothing will be over with.
Hey Juan
Gringo means foreigner. You are the foreigner. You are the Gringo!
Get off your fat lazy Gringo ass, turn off Bonaza and Wagon Train, and head back to the land of your birth.
Here in the U.S., KBR (Haliburton) is in the process of building over 300 holding camps. I wonder who they are building those camps for.
Keith, you checked out XHB? It has options too! Probably safer than shorting individual HB stocks.
Quite obviously KBR is building the camps for Lieberal Demo-craps. Demon-craps hate freedom and soon they will have none as they are marched 24 at a time into zyclon-B filled gas chambers. Those with good skin will have their pelts harvested for office furniture and lamp shades.
John in Rocklin - That is my concern... I hate the waiting, I want to buy. I am looking in a pricey area, but I think it will drop in value, but what will speed the decline? Lowball offers? I think when we (bloggers) want to buy a house, we should get others to put in way lowball offers 1st, then the one who wants the house can come in $1k higher and be the winning bidder. So what if realtors think it is unethical - does anyone know one realtor who wouldn't gladly sell you a house right now?
Is it possible for TOL's P/E to go into negative territory?
Hey Juan - lighten up. This blog is for more civil people wanting to exchange views on housing bubble. Leave that racial slur somewhere and join the housing blog. You may just learn something new. After that, you can take this debate in your community and become the smartest person around.
If you don't have any input, just read the blogs as they come in.
"Homebuilding: Another American Industry at the end of it's road."
"Housing Panic: Another drunken post to make grammarians cry."
Dear Anonymous (wanting to buy) I too have been ready to buy a new home for about a year. Could not find the right deal, then the HP blog and others helped me see the light. I am close to signing a 1-year lease with a flipper who is upside down ($150,000 over value). I will pay $2k/mon on his $56k cost/year (not to mention $150k in neg equity) and live in a new 3500 sf home with my family. He takes all the risk, loses 30% market value in 3 years, and $32k in neg cash flow each year.
It is sort of like short selling. And it helps me to be very patient. Keep in mind the bottom will be very long and low. You will see it in 3 years or so, with no upward movement for another 2-3 years after that, so you can be very patient and get the right deal in 3-5 years.
Good luck. J in R
J in R - what happens when the owner of your new place defaults on his mortgage and gets foreclosed on - will your lease be null and void as the bank will now own the property..
just wondering how that'll work cause its gonna happen a lot
Keith, Yes, it is possible the new lease could be voided in foreclosure. In CA, a tenant is always subordinate to the lender, who is prior in time. Any Notice of Default must be posted on the property. 90 days of missed payments, then 30 days to foreclosure on the courthouse steps for a sale. It is possible to lose my security deposit. If this kind of confusion exists, I will "escrow" the rent with a third party friend. More than likely, I will get several months free. If the landlord is in foreclosure, he has bigger problems than chasing me.
I know this particular investor put 20% down and has some net worth, but it pays to be careful. As Lance says "If you were afraid of falling off the bike, you would never get on it".....
juan carlos,
just your display of writing style tells all, you live in a dream world....take a look in the mirror...do you really believe your race to be supreme.what a joke.
freedon fighter-
The sooner everyone realizes that the Dems and Repubs drink fron the same well, the better off we will be.
Wake up! We live in a corporate controlled world.
Big money controls big politics.
I'm a registered Dem, but in my opinion Ron Paul, Repub from Texas, is the only elected official worth listening to. He's is the only one who tells the truth and makes sense. There are several interviews located on C-Span. You should listen to him.
Educate yourself and get smart. Spewing out Liberal Dem sh*t all the time shows you are a dummy.
Juan what is with the racial slurs? America is a multi-cultural country with opportunities for anyone, legal or not, who is willing to work hard. You can't say the same for Mexico. Mexico is ruled by a bunch of arrogant, rich, who care nothing for their country or their people or they wouldn't use emigration to the US as a safety valve.
If a country like Japan can become a world class economic power with little land or resources, what is Mexico's excuse since it is a resource rich country? They have lots of land, coastlines, diverse ecologies, silver, gold, oil, low costs, a work force that has a lot of skills in masonry, construction, willing to work hard in the fields and farms, a rich artistic culture. Mix that with American freedom and opportunity and you get sucessful immigrants. We are all Americans, some from the North, some from the South and some from Mexico and Central America. The sooner we create a greater America like Europe is doing the sooner we all can have more prosperity.
The Mexican government is like the Muslims, blame all their problems on Gringos instead of the real causes. Generate hate, nationalism, and keep oppressing your own people so they leave. That way you won't have a revolution and loose everything to the people you oppress. Shout for mexican rights in the USA but deny them in Mexico. Mexico discriminates against foreigners from investing, owning land, being protected by Law from having their wealth confiscated but then even an illegal can own property, get a mortgage, own a car in the USA as an illegal.
Juan, if Mexico is so great why don't you live in the heartland of your dream?
Mexico discriminates against foreigners from investing, owning land
Motherfucking thank god that foreigners cannot come into mexico and buy up every hacienda in sight. Gringos would swoop in buy everything up and then expect mexican police to protect their "investments". Mexican citizens would be far worse off. It would quickly become impossible for a mexican to own property because the gringos would bid the prices up beyond any mexicans means to buy.
You are right that Mexico is in sad shape because a minority of extremely wealthy families horde the wealth. The USA quickly following Mexico in this area. The American middle class is shrinking and rich get richer. The US will closely resemble Mexico in income distribution inequality.
Gringo Juan--
Thank goodness you turned off that espisode of the Lone Ranger and looked up the meaning of Gringo. This time you got it right. Foreigners in Mexico would be Gringos.
Mexico does not allow people to immigrate to their country but they are only to happy to allow (get rid of) native Mexicans (different from the Mexicans of Spanish decent) to come to U.S. to work and send money back.
Our new immigration policy should be an exchange. One of your citizens can come to our land only if one of our citizens can go to your land.
"Gringo" is a derrogatory term for foreigner, no different that if we were to refer to Mexicans as beaners or spics. But wait, in America we're too PC to even have those thoughts anymore...
To Juan Fuentes- I get a list of homes entering foreclosure proceedings every week. The numbers of defaults have been soaring.If Mexicans are so smart and hard working, why are they 80% of the defaults? They were the last in, and will be the first out of real-estate. Adios Muchacho they will be able to buy again when the BK runs out in 7 years.LOL
Juan is absolutely right. Wealthy people fuck up all markets and make life difficult for everyone but the top 5%.
USA following the same ugly route.
EAT THE RICH.
sudbury home buildersBloggers
Looking for sudbury home builders at http://doityourselfpro.com/. Well I recomend This Site. Maybe your asking who am I.... Well Im not Who you think I am. If you need help with sudbury home builders Then GO NOW
It AIN'T over....dummies.....
Sure, home values got way ahead
of themselves, is everyone going
to live in a rented 700 sq. ft.
apartment? Buy the homebuilders, if
not now, then soon....
Post a Comment