What he doesn't get (or actually, probably gets but wants to sell some more shares) is that people will be disgusted by housing in a few more months.
When you, or your friends and neighbors, lose everything to a real estate crash, it'll be tough to pull the trigger on that $800,000 Toll McMansion - ever again.
When you feel burned by the Real Estate Industrial Complex, when you look back and realize what a fool you were, you may want to rent forever. Some people never owned a dot-com stock again after losing it all on pets.com and theglobe.com. Toll Brothers is the new pets.com. That $800,000 McMansion is the new peapod.com. Bob Toll is the new Gary Winnick. David Lereah is the new Henry Blodgett.
To be fair, I too expect a housing rebound. Probably in 2010 or after. After a 50% haircut in some markets (Phoenix, Miami, San Diego, etc). So, yes, house prices will rise again. But only after a historic fall.
A strong economy will spark a housing market rebound after excess inventory from speculators is shaken out, perhaps very soon, the chief executive of the nation's largest luxury home builder said Thursday.
At a meeting with analysts in New York, Robert Toll of Toll Brothers Inc. said pent-up demand will drive the housing market after the current housing slowdown passes. Demand will be driven by buyers who are biding their time waiting for better incentives or lower prices.
Once they see growth in home prices start to accelerate again, they will come back, he said.
''The next great story is pent-up demand,'' he said. ``Once the natural balance is restored in the market, you're going to see prices go up again. Prices are going to go up quite a bit.''
But even as Toll Brothers expands, its stock price has been pummeled. Shares of other home builders have been hammered as well as the housing slowdown took hold.
June 09, 2006
Bob Toll expects a housing rebound (oops, I just spit up my coffee)
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19 comments:
that's as funny as saying "Buy Gold"
" Prices are going to go up quite a bit."
Go up to what for God's sake!
And who is going to by them? The pent up demand should be for functioning brain cells. I wish I could find some of the stuff that these people are on. Bastards probably wouldn't share,anyway!
prices in most markets will be declining or stagnating in real dollars until ~2015
Isn't he simply describing a dead cat bounce? Nice that he doesn't bother to describe what happens after that!
he didn't get into the fact that prices will fall 50% before rising
oopsie!
you know he can get in a lot of trouble as the ceo of a public company if he's out pumping the stock when he's selling on insider information
He is buying his own stock back..anyway ya it will rebound alright right into the toilet
Actually prices here in Colorado ARE still going up on the low end (below $200K). They have stalled at the middle level ($200K-$700K), and the higher priced homes aren't selling very fast.
Raw land and commercial lots are still selling well with prices increasing 15%-20% over last year. Go figure on that - the banks are still handing money to developers and builders who can fog a mirror.
he's got a point on pent-up demand -- fewer homes selling so more home buyers on the sidelines -- but at the same time there's pent-up supply. Supply looks bigger than demand for some time to come, at least in most markets. and all of Toll's markets.
One does not "Spit up" his coffee!
One "spews" the coffee.
To Spit Up implies vomit. To Spew implies spray and spewing produces spewage rather than vomit.
All it takes is trickle down money, government spending, and a cooperative Fed.
"fewer homes selling so more home buyers on the sidelines"
But I wonder...how many buyers are on the sidelines because the prices are insane and they think they're going down, and how many are on the sidelines because they simply can't afford it? I agree there are "waiters" out there but I also think that there are people who can't afford to buy now, and won't be able to buy in 6 mos. with higher rates even if the prices drop. So the pent up supply that you mentioned won't even be absorbed by Toll's imaginary buyers!
That $800,000 McMansion is the new peapod.com.
The analogy is apt. Peapod started as a real company, scaling up with organic growth. They sustained me in my bachelor days living car-less in the Chicago Loop in the 1990s. They began with human shoppers running around the local Jewel foods to fetch my staples from a list, and then scaled into a much more efficient warehouse model. The system started as a dial-up service, then graduated into a pure HTML website that was state of the art for its day. I loved them, and they were mildly profitable.
Then dotcom mania hit, they threw out the old biz model, and tried to expand to all markets, immediately. You know the rest of the story, the crazy capacity build-outs for peapod, homegrocer, kozmo, etc.
Similar all-out gold rush in RE. Only now we're looking at the downward spiral. I'm especially fascinated with the Boomer demographic side to it as everyone rushes for the exits at once. Kinda hard to wash out and start all over at 60.
Interesting anecdote on peapod.com. I lived near the site where Webvan built its 350,000 SF "automated" warehouse. The huge building sat unused for years until they ripped out and scrapped over $100M worth of custom-built equipment.
The RE market is on a similar glide path with huge, 6K-8K SF McMansions occupied by 2-4 people. I expect many of these will be converted to multi-family residences. Local governments strapped for cash might even take over the saddest cases (unpaid tax liens) and use them to house workers as a benefit in lieu of pay.
from the article "Toll based his optimism on the strength of the economy"
Of cource, especially with all the "Monopoly*" money pumped into the system.**
* "Monopoly(R) is a registered trademark of the Borthers"
** I personally like to own lots of 500 bills.
Yeah, but the economy isn't that strong outside the once booming housing market. Idiot Toll.
Bob Toll sold probably nearly $100 million of stock in the spring/summer of 2005.
And he pumped real estate and his high-end Toll houses in the New York Times Magazine (i.e. what rich people read) back then too.
Comments like he believed the real estate is going to be rising in a secular way and prices would soon be like they were in the U.K. for everyone.
I don't see himself PERSONALLY buying back TOL stock now. Nothing on insider transactions at least on Yahoo.
I can't believe that any reporter didn't nail him on this: "So Mr Toll, have you started to repurchase stock from the money you made when you sold last summer?"
I've been shorting and buying put options on TOL like there's no tomorrow. Obviously I have a vested interest in seeing the stock decline, but it is my firm belief that there is still a little more downside.
Bob Toll also has a far more vested interest than myself in seeing the stock go up. Therefore, his comments should be taken in the same context as David Lereah or any other paid shill in the real estate business.
The Reno housing market has really almost hit rock bottom. The supply far out weighs the demand. although I just made an offer on a great house near the golf course. for 315,000 I am thinking that in 5 yrs the market will come back around and that house will be worth 425,000 once again. I believe with the election coming you will see prices start to rise slowly about June of 08 but will take 3-6 yrs to reach the peak again.
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