September 03, 2007

"We've hit bottom" McMansion builder Bob Toll now likely hitting the bottle as the housing market falls apart


"This past week was the worst week for traffic in our history"

-Bob Toll, September 2007

(It's all falling apart now HP'ers. Faster than anyone thought possible)

39 comments:

Anonymous said...

Only downhill from here, at least for the next year or so.

SPECTRE of Deflation said...

What the Hell happened to dancing around a bottom? Let the bastards eat cake!

LauraV said...

What's Bob Toll going to say two months from now if sales have already hit bottom???

What a liar... TB have at least 2 more years of negative sales before it hits any kind of bottom.

Anonymous said...

WOW...
Well, considering prices in the Northern VA area for "Bob's" houses went up about 300% over the last 4 years, they have a long way to fall to get back to reality.
I mean, as nice as they are, they just arent worth a $6,000 monthly mortgage payment, ya know?? and NOWWW, no one can even get the damn jumbo loans if they tried.

When your average 2 income family can once again afford a nice house for their family, utilizing a Conventional loan, this problem will be solved, and not until then. You would have to be insane to buy a house like that now.

Anonymous said...

Toll sure sold his stock at the right time

Maybe he talked to Angelo first

Tulsa Time said...

Now you need a 4 income family and your kids will NEVER LEAVE the house!

Anonymous said...

Well, with that degree of fear we know we are probably almost half way to the bottom.

We still have grief and capitulation to go.

What's the difference between the Housing Bubble and the Titanic?







The Titanic eventually found a bottom.

Anonymous said...

>>The demand for mortgage brokers in Las Vegas was so strong that "every stripper, waiter and bartender on the Strip had a broker's license," says Boyd Nyborg, a former mortgage broker who now tends bar at the Tao Las Vegas<<


I loved this part of the article.

Anonymous said...

The bottom will be in once people stop stealing the copper piping from vacant Toll Brothers homes...

Anonymous said...

Go to the Paper Money blog to read Bob Toll's response to short seller Doug Kass question on the conference call.

Lost Cause said...

Toll Bros are high end houses...they always say the high end falls the farthest, and now here is proof.

Anonymous said...

http://paper-money.blogspot.com/

“Very simply, traffic is horrible. This past week was the lowest traffic for this particular week ever in our history. And that condition has existed, pretty much, for the last nine weeks. And then prior to that, there was a little hiatus where we did a little better that the worst in our history… then going back a little further, once again we are doing the worst in our history. So, our history includes ’87, ’88, ’89, ’90 so traffic is pretty stinky out there. ”

The final “piece de resistance” of the conference call was delivered by none other than Doug “The Bear” Kass of Seabreeze Partners Management, Inc.

Kass asked “This is a much broader question than has been asked on the conference call…(Toll: It’s great to be a short by the way… Kass: chuckles…) If the administration came to you to resolve the housing crisis, what remedies would you recommend Bob to bring supply and demand back into balance over a reasonable period of time?”

“Well, I think the most important thing is to immediately address the mortgage concerns. Giuliani was asked in an interview with Kudlow recently… would he bring in any regulation and he said that it was up to the market to straighten things out and it will. In my opinion, that’s probably what the guys said in ’29 that were running the Fed.

I was castigated recently for suggesting a few weeks ago that some government regulation would not be a bad thing. The average reaction was, the minute you let the government in, you’re begging for disaster. I can generally agree with that, look at whats happened with wetland regulations for instance… you need a team of lawyers to fill a puddle in your back yard.

On the other hand, where would we be without anti-trust legislation? We would probably have one oil company known as the United States of American Standard…. (chuckles about the slipup… American standard is a toilet manufacturer Toll was referring to Standard Oil)

I think a little regulation wouldn’t be a bad thing. I wouldn’t rule out 100% or 90% LTV but if you’re seeking that kind of thing, you have to pledge additional assets or at least prove additional assets so that so if the home price goes down and you want to walk, the mortgage lender has got a note that he can apply not only to the home but that he can apply to other assets that are obviously sufficient to take care of the loss.

What happened was, for a hundred years we had S&L’s as the backbone of the mortgage system and then they went bad and we tossed the baby out with the bathwater. And went to another system, that I don’t suggest that we try to break away from which is the securitization.

The problem is, everybody is working on commission today, nobody is a portfolio lender.

The guy that wants to get you the mortgage is a commission fella, and he’s handing it over to guys that are working commission to package it. The brokers are working on commission in order to sell the goods. And the guys buying the goods are not really paying attention to what they’re buying. And I think it’s reasonable to have standards imposed that you can’t lend above these lines and that should, to some extent, protect us from ourselves.

But I’m getting so many ‘cut the throats’ around here… guys are signaling to me to please stop this… and remember this is a Toll Brothers call and not a Bob Toll call so I’m off, I’m going back to Toll Brothers.”

Anonymous said...

Get used to $1 million starter homes. Get used to $25/gal gas and carrying around bundles of thousand dollar bills. The Fed will cut to the bone to avoid deflation. Fed gov mishkin says that it is the Fed's job to ensure there is no deflation of asset prices.

SeattleMoose said...

For whom the bell Tolls.......

stocksystm said...

We aren't even close to the bottom here in Tampa. People are still paying $150 a square foot. Why anyone would do that when inventory is triple what it was 2 years ago, I have no clue. I won't buy for another year at least. It will take sellers that long to get realistic.

k.w. - southern ca. said...

The Fed will most likely step-in by October, but *only* because some of them are now feeling the pinch in their own wallets.

Also, it's the banks who are getting the break here, not the individual house debter or speculator.

$50billion in ARM re-adjustments coming next month - are we ready as a nation for the "bail-out" ?

Anonymous said...

Toll Brothers CEO Bob Toll (looking to dump more shares, skirt the SEC) - "Fifteen months into the current slowdown, we may be seeing a floor in some markets where deposits and traffic, although erratic from week to week, seem to be dancing on the bottom or slightly above"

Anonymous said...

Bob,
Too bad my violin is in the shop for a tune up. Get back to me next year about your problems.

Su amigo muy sympatico.

Anonymous said...

Gasoline prices are headed to $4 next summer, even higher if the Fed lowers rate. Good luck living in those 5000sf McMansions in the exurbs. The waste is mind boggling even if those people can afford it. Think of how much more good that money would do if invested in smaller innovative companies instead of needlessly burning fossil fuels and driving prices sky high.

Anonymous said...

Bush is going to attack IRAN, soon!

Gas prices are going north of $5.00/gal.

Get ready for the HYPE coming soon to a mass media outlet near you.

The israeli's are behind this as they are scared that IRAN is going to get a NUKE and use it on them.

Anonymous said...

Watch for congress to kill the mortgage deduction for mcmansions larger than 3,000 sq ft to bale out the FBs. Ouch!

borkafatty said...

Looks like Ameriquest is Amerigone

http://tinyurl.com/3dmtsf

lmao said...

The all-time classic is the Ft Meyers townhomes being auctioned off for less than half of what they were going for in 2005.

Watch and laugh at the FB's:

http://tinyurl.com/359ab8

Anonymous said...

If they kill the mortgage deduction for over 3,000 square foot houses, you can put a fork into what's left of the housing market, cause it's TOAST!!

As Schiller said at the recent Wyoming conference, prices have to collapse before we can make any legitimate progress...All this Fed tinkering is just F'ing things up worse by the day.

The only issue is--People can't afford houses!!--Bring on the price collapse and let's get on with life.

Anonymous said...

The bottom will come in about 8-122 months when millions of homeowners start the process of foreclosure after exhausting their credit cards..so sad to see many people who were finally in a position to own a home taken for a ride by the realtors,lenders,mortgage brokers and appraisers. The answer is to learn from this mistake. Wall Street has already found a way to rid us of the lenders when are other states in this country going to do something about the rest? People who get a "license" in the matter of a weekend class or a bunch of weekends should not be allowed to make incisions into Americans financial lives that can be a death sentence..

Beyond Shocked said...

Here in Green Bay the bottom may have finally fallen out. Three bedroom homes in the suburbs selling for $80,000. An older home sold for $36,000. Freaking amazing.

Osman said...

At $21/share, a p/e of 12 and 550MM in cash, Bob Toll is probably buying back stock. Sure, they have 6B tied up in inventory but even if you cut the value of the inventory by 1/3, they cover their liabilities handily.

there she blows! said...

September 1, 2007

FLASH** From the press:

Over the next six weeks, more than $1 trillion worth of commercial debt is set to come due and will need to be refinanced, more than five times as much as came due since the SUBPRIME disruption began one month ago.
*************************

My prediction: FED PANICS and lowers wholesale interest rates to 3.95%!! (from 5.25 today)

*********************************

CA Realtor said...

Still lots of financing out there for people who can afford to buy - Just sold one listing to a buyer with 100% financing - a 80/20 piggyback loan. Sold another of my listings to a buyer with a 80% LTV jumbo at 7.125%. Great credit scores and job history for both - full doc loans. Listings were right priced for today's market. I still would not reccomend 100% financing to any of my buyers. We are back to working with the folks who can afford, and who are qualified to buy (thankfully).

Anonymous said...

You don't get those kind of delusions from alcohol it takes something with a little more kick.

Snooter said...

I love this blog, but now that the crash is upon us, can we start the discussion on finding buying opportunities...It seems pointless only to laugh as Rome burns if we can't profit off of it. For instance I found an investment property at $130k (bank owned) in a SF Bay Area suburb where an exact comp. sold in 1/07 for $240. So we're talking $.50 on the dollar. Do I buy? Cash flow from rental covers all costs (if I put about 20% cash down). Is that a good deal.
As a blog, can you please start to shift gears from purely "ha ha told you so" to "when do the smart investors start rushing in as everyone else rushes out"...

Anonymous said...

Asian groups on US asset spree
By Sundeep Tucker in Hong Kong
Published: September 3 2007 22:05 | Last updated: September 3 2007 22:05
Acquisitions by Asian companies of US assets have surged to record levels as the region’s emerging industrial companies take advantage of dollar weakness to build global scale, new data have revealed.

The value of announced deals in the US by companies in Asia, excluding Japan, has climbed to $16.1bn in the year to date, smashing the full-year figures of $3.9bn last year and $1.8bn in 2005, according to Dealogic, the data provider.

pwnd

hendry said...

Osman is a typical clueless realtor dope. If toll was buying back stock, he would have to file with the SEC, so there is no probably. Either he is or he isn't. Right now he isn't. Also, learn how to read a balance sheet, you dope. If they write off 1/3 of the inventory, the book value drops to around $10/shr.

Folks, never take financial advice from a real estate chauffeur.

Budvar said...

"Cash flow from rental covers all costs (if I put about 20% cash down). Is that a good deal"

Does 10 x rental income = price of house?
If not don't waste your time and money because you can't make it pay.

You have to take into account time without tenants/tenants who dont pay/tenants who smash up the place. Repairs like leaky roof/pipes, central heating boilers and all the other crap that goes with renting out you're liable for.

bummer man said...

"As a blog, can you please start to shift gears from purely 'ha ha told you so' to 'when do the smart investors start rushing in as everyone else rushes out'..."

Any fireman will tell you it's a really bad idea to rush into a burning building. Sometimes the roof collapses and you don't want to be in there when that happens.

We have no sense for how much intervention the Fed and Congress will use to stabilize this market. Investors who relied on rational market behavior and normal trends were handed their heads last month as the Fed whipsawed their short positions. No, we're dealing with desperate creatures here, and there is nothing more dangerous that a crazed, cornered animal - except maybe a politician facing reelection in '08.

I have money on the sidelines and I'm waiting 'til next Spring before I even think about the next moves in this fiasco.

Anonymous said...

"You don't get those kind of delusions from alcohol it takes something with a little more kick".

LOL!

Anonymous said...

What are people thinking when they buy a house in that picture? It's like living in a Serf Village.

A real home should be on at least 10 acres of land that you can use (e.g., grow your own food, go for a walk on your own land with the dog sans stupid pooper scooper laws).

Mammoth said...

CA realtor 6:04 am said:
"We are back to working with the folks who can afford"
------------------
Why did you people leave this path, to begin with?

You knew where it would lead!

Greedy b@stards.

Osman said...

Hendry,
Filing with the SEC is not a hindrance to instituting a corporate buy-back program. I'm not even sure the company needs to file to start buying it's shares on the public market. However, it would need to disclose any large private purchase of a block of shares. That happens *after* the purchase is completed.

p.s. As an executive with insider knowledge, you're right. Toll can't buy or sell for his own account except under a long term program. I'm talking about the company, not Bob Toll personally.