Posted on 12/05/2006 8:21:40 AM PST by GodGunsGuts
Toll Brothers hit by housing slowdown
By Daniel Pimlott in New York
Financial Times
Dec 5, 2006
Toll Brothers said fourth-quarter net income plunged 44 per cent as the the largest builder of luxury homes in the US felt the full force of the downturn in the housing market....
(Excerpt) Read more at msnbc.msn.com ...
Yet - their stock has been up in the last few weeks...
This is "hugh and series" as people like to say on FR. They might cancel their sponsorship of the Metropolitan Opera broadcasts. :(
This was a sector begging to be shorted in summer of 05
Well, if you build too many $750,000 homes, coupled with higher interest rates, especially in conjunction with those high risk ARMs, then your house of cards is bound to crash sometime.
ping
*Bump*! But, but, but . . . Pedro and Toadster told people toll bros and other builders were doing great.
Apparently rumors of their rosy financial picture were greatly exaggerated.
And their stock is up another 3.5% today. The end of the world has been postponed yet again.
>>And their stock is up another 3.5% today. The end of the world has been postponed yet again.<<
I don't know that a 3.5% increase in a day makes for overwhelming evidence for much speculation about the long term.
It could also be a belated "last gasp". I've seen that before. We'll have a pretty good idea about who is right about this come next year, early spring.
if there is weakness in one of the strongest areas of employment in the country, NC-raleigh-Durham, Houston we have a problem. 2007 will be flat at best.
http://www.newsobserver.com/104/story/517968.html
Cloudy forecast for local housing market
Unsold homes will linger, builders told
Dudley Price, Staff Writer
RALEIGH - Weakness in the Triangle housing market probably will continue through the middle of next year, the region's builders were told Monday.
Although builders are beginning to cut back on housing starts, tempered demand will take six months to reduce a large inventory of unsold homes, said Bernard Helm, president of Market Opportunity Research Enterprises, a Rocky Mount company that tracks Triangle residential sales trends.
"We will see some real, negative numbers in both new and resale home transactions, as they compare to a year ago, during the next six months," Helm told members of home builder associations for Wake, Durham, Orange and Chatham counties.
"We now have to wait for the market to find a way to absorb the excesses and imbalances, a large resale inventory and a fairly large new home inventory, in a market short on buyers," Helm said. "I expect growth later in 2007, but not much."
The Triangle's home building industry is one of the area's most important economic drivers, with ancillary effects on a range of businesses from bankers to furniture retailers.
Last year, closings on new and existing homes totaled $9.3 billion. The region's sales have increased every quarter since 2003, and probably will set another record this year.
Michael Carliner, staff economist for the National Home Builders Association, called the Triangle "perhaps the healthiest market in the United States."
That's because the Triangle is gaining jobs faster than the national average, bringing more potential buyers into the housing market.
In the Raleigh-Cary metropolitan statistical area in October, the number of jobs was up 4.4 percent compared with a year earlier; and the Durham area had 2.2 percent more jobs. Nationally, jobs increased 1.5 percent during the same period, Carliner told the group.
"The underlying demand is growing as fast or faster than the supply, because people are moving here from other parts of the country and you didn't have the speculation in other markets," Carliner said, referring to investors who drove prices up in many other markets but now are having trouble selling.
The Triangle's housing market has felt the slowdown largely because many people moving to the area are having difficulty selling their homes in distressed markets.
Production builders have begun slashing prices and offering incentives.
Homeowners, facing more competition, have begun reducing their selling prices.
In October, resales dropped for the first time in almost four years, 17 percent more homes had price reductions than a year ago and the inventory of homes for sale grew by 6.6 percent, with 14,538 homes on the market, according to the Triangle Multiple Listing Service.
Ed Dunnavant, regional director for Metrostudy, which tracks residential trends in the Triangle, said there are fewer new homes on the market than a year ago. Closings are running almost equal with housing starts, which indicates that the market is in balance, he said.
But Helm said problems in the national housing market will continue to reverberate in the Triangle for months as builders reduce their inventory amid slowing demand. Residential building permits -- an indicator of future construction -- were down 24 percent in the third quarter.
"I don't see much to get negative about for next year," Helm said. "I just don't see much robustness, either."
Did they? Where?
Why not point out where you claim I said that? BECAUSE YOU CAN'T.
You're a pitiful lying coward.
Have you ever noticed that people have a tendency to make stuff up more often on economics-related threads over others? Or is it just an impression that I have?
Why not? Professional economists with PhD's do the same thing.
You'll have to identify one Ph.D economist for me, even a lib, who attributes entirely-fictitious positions to his or her opponents along the lines of our colleague here.
Yeah, over the long term TOL has been a real dog. Just look at that split adjusted price. Why would anyone invest in a company like this?
I suppose you think that, going forward in the long term, Toll Brothers is doomed just like our national economy.
Between 98 and 2000 it would not have been very good. There are a few other blips. Like most stocks, if you stay in for a hundred years or so you will probably do well.
Looks like splitting tends to hurt them as well.
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