Posted on 07/10/2006 7:43:50 AM PDT by toaster
Mega homebuilder KB Home, in its most recent filing with the SEC, provides a good field report as to what is really going on in the housing market right now: declining sales, inventory build-up and higher cancellation rates
(Excerpt) Read more at nizenotes.com ...
Most of the earnings reports for the big homebuilders will be in the last week of July. This warning seems to have been some kind of a bear trap -- the homebuilders dropped maybe a percent over the first 45 minutes but have since rallied hard for no reason whatsoever starting in the always-baffling 10:30 timeframe.
"In truth, no one knows how bad the housing market will get. It has been in a multi-decade Federal Reserve inspired boom. Now that the Fed is raising interest rates, the key question will be how much damage have the rate hikes to date already done to the real estate market. Remember, it may take months before all the problems show up. And once they do, we don't believe the Fed will reverse and lower rates until a major obvious crisis hits the economy and/or financial markets. By that time, the real estate market could be on life support."
California is beginning to plummet. Kennedy-Wilson Real Estate Auctioneers in Santa Monica, Ca. is gearing up for a good run.
I am a homebuiler, and that rally is BS : )
Well, if my home is any indication, KB will continue to see declining sales and cancellations. I don't think it's representative of the market as a whole, they (KB) build CRAP!!!
I am the second owner of my home and the things that I've found and seen in mine and my neighbors' homes just amaze me. Such shoddy workmanship and shortcuts that I kick myself for not looking a bit closer at what I was buying. I'll fix it, learn from it and move on.
I will never look at a KB (KaufmanBroad) home again.
Cheers,
SZ
builder that is : )
They were quality builders years ago. Some of the big builders are using so many illegals now, that the quality is questionable at best, and lawsuits abound!
Yeah I figure today will be like Friday was -- high of the day in the first half hour then close at the lows. I'm seeing too many reports just this weekend of sales being down 20-40% from the same quarter of 2005.
We haven't even gotten to lower EPS's compared to the previous year yet, and I figure negative EPS's and a bankruptcy or takeover or two is necessary before it's all said and done.
So I curse at the ticker for a while but I ain't sweating it long-term. (I'm short one of the builders.)
Simple things, like a range hood that actually vents outside, an exhaust fan in a bathroom, light switches you can reach without having to walk halfway into a room, etc. would be nice.
I truly want my next home to be built according to my now enlightened standards. Tract homes are not the way to go that's for sure.
Cheers,
SZ
The final responsibility goes to the builders and not the illegals.
"Our outlook is tempered with caution, however, as conditions in many of the markets we serve across the United States have become more challenging in recent months. A number of our markets have been affected by a build-up of new and resale home inventories, higher interest rates and higher cancellation rates, particularly markets that have experienced rapid price appreciation or substantial investor activity, or both, in the past few years. As a result, our sales have been adversely affected. During the quarter ended May 31, 2006, for example, we generated 9,908 net orders, a decrease of 19% from the 12,290 net orders posted in the same quarter last year. Second quarter 2006 net orders from our French operations increased 16% on a year-over-year basis, while our U.S. net orders decreased 27% during the same period."Source: KBHomes SEC form 10-Q
I was talking to my neighbor who bought new and he was saying that they were building the homes so fast that the stucco barely had time to dry before they were painting it and moving on.
I was contacted by a lawyer about getting into a warranty lawsuit against KB, but I didn't feel that my problems were that great. Others, however, did get some $'s because of a lot of problems with theirs.
I still needed a house, so I probably would have bought regardless and now that the values are up, I'm glad I did. Now I just need to make it worth the so-called "market value" they claim it to be.
Cheers,
SZ
While the article seems to present the obvious, how good of an authority is the author? Just curious if you know this guy's background.
Although there was a downward trend for a period in California, Zillow.com is now showing an upward tick in the housing there, at least in those that I have been monitoring.
Wouldn't a reputable realtor have encouraged you to get a home inspection before purchase?
I have been following Nize's commentary for awhile. Though you have to read Vietnamese, it's clear that he nailed the current bull market in gold here: http://www.vnn.vn/kinhte/toancanh/2003/4/8835/
It basically says that gold, at the time around $325, was going much higher. He seems to generally take unquestioned facts like the KB report--no non-sourced material--and comment from there.
Very good. Mr. Internet bubble cost me some money.
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