The Housing Chronicles Blog: What say the public homebuilders? Part 1.

Wednesday, November 28, 2007

What say the public homebuilders? Part 1.

November 28, 2007

Today and yesterday JP Morgan hosted a Homebuilding and Building Products Conference in Las Vegas which featured presentations by the various public homebuilders on the state of the market for them, how they're adjusting and their respective plans moving forward.

Some highlights and links to webcasts of their presentations:

Joel Rassman, Toll Brothers:

As builders sell off their inventory overhangs, relatively few new homes are going through the approval process. Consequently, the industry could find itself with a shortage of homes "when the customer is less resistant." This shortage will lead to a "flight to quality," especially among affluent buyers that Toll targets as its primary customer. (John Caulfield, Builder Online News Service)

Ara Hovnanian, K. Hovnanian:

The "steep correction" that the housing industry is going through currently "is not unprecedented" and shouldn't obscure positive economic and demographic trends that will contribute to strong and consistent housing formation over the next two decades.
(John Caulfield, Builder Online News Service)

Tim Eller, Centex Homes:

Eller, a veteran of six housing sector corrections beginning in 1974-1975, said this downturn may be the "deepest, longest, and most excessive" he has ever seen...There is no way to predict when this thing will bottom. Looks like this is going to be the deepest correction since World War II," he noted. (Robb Crocker, Builder Online News Service)

Steven Scarborough, Standard Pacific:

Standard Pacific Corp. will not file Chapter 11 bankruptcy protection according to CEO Stephen J. Scarborough...In fact, Scarborough called the recent mumblings about the builder's future as "speculation"...Despite the swirling rumors, the builder says it is focused on managing its starts, curtailing expenditures, and restricting land development. "We think the worse is behind us," Scarborough noted. (Robb Crocker, Builder Online News Service)

Richard Dugas, Pulte Homes:

...he doesn't expect the housing downturn to end anytime soon-in fact, he doesn't expect the downturn to end until 2009...being a bigger builder gives Pulte a better advantage because it can withstand a lengthy downturn by better managing contractor resources and controlling land resources. Part of controlling the company's land involves not falling into a price reduction trap.
(Robb Crocker, Builder Online News Service)

Donald Tomnitz, D.R. Horton:

Home builders beware: Expect 2008 to be worse than 2007. That's the latest word from D.R. Horton CEO Don Tomnitz, who believes that the wave of foreclosures that will hit the market in 2008 when a million-plus subprime mortgages readjust will make for a very tough year. (Steve Zurier, Builder Online News Service)

More to follow...

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