Hovnanian: October sales pace "significantly deteriorated"
Submitted by
CalculatedRisk on Tue, 11/06/2007 - 12:36pm (18 comments)
![Syndicate content](/misc/feed.png "Comments for \"Hovnanian: October sales pace "significantly deteriorated"\""){kind=small}
Shopping at Amazon?
Wait! If you click on the Amazon banner link at the top of the page first, HCN will get a percentage of anything you purchase for 24 hours!
Open predictions
Our local book authors
User login
Who's online
There are currently 9 members and 133 guests online.
Recent Recommendations
I'm going to go out on a limb and predict November California sales will come in just a bit higher than expected, because the weather has been awesome.
Enjoy the sunshine while it lasts!
No one could have predicted this unexpected decline, as expected.
I was shocked at the cancelation rates. No I was taken aback. No I was expecting some adjustment.
I am watching to see how long the "value investors" will keeping buying home builders. Evidently, the famously successful fund manager Bill Miller is selling positions in other sectors to have more money to buy builders and financials. Some investors seem to reason that if a sector is hitting new lows, it must be near the bottom. I think that these "value" investors are at least one year early. At least they don't seem to believe that some of the major HB's will go under.
and of course Beazer..said on Monday said it cut 25 percent of its staff, would suspend its dividend and sees at least $230 million in noncash impairment charges in its fiscal fourth quarter. So, I guess housing is a laggng sector?
Bill,
I doubt they will be buying much BZH ... kinda hard to get any value out of a company that just suspended its dividend and is 50/50 to make it to the end of next year.
I posted on another thread that RYL is offering up to 30%+ price cuts on some models in bubble-icious markets this weekend. Must be really great to be the schmuck who bought near the top and watches 30% of his equity vaporized overnight ... assuming that he had any equity to begin with.
And therein lies the problem for the banks, will furious market mistimers keep making their payments when the new neighbors buy the same house for 2/3rds of the price, or will they walk away and leave the keys in the mailbox? With little skin in the game and declining ethics in this country, I see lots of work for foreclosure specialists in the next 5 years.
Wait, weren't these the dopes with that "once in a lifetime" sale a little while back? If so, doesn't appear to have found too many warm bodies. Would this mean that most potential homebuyers' lives are now over? Because you know there will be another one. Im really worried now.
Now... can I get a house for cheap, please?
O-Joe
"And therein lies the problem for the banks, will furious market mistimers keep making their payments when the new neighbors buy the same house for 2/3rds of the price, or will they walk away and leave the keys in the mailbox?"
Have to admit, I have been considering this myself. Shouldn't I just think of my family and my future, rent instead and stash some cash while I still have a good income? It's the most logical move for recent purchasers who don't have 10 years+ to wait and see if they ever recover equity. Another Great Depression coming up? Is there any way to avoid it?
exactly central_scru!
for me it was surprising that during Indymac's conference call it was taken for granted that only speculators will walk away.
come on! even if you bought for the long run and love the house, you will NOT be willing to work 3 to 5 years extra just to pay for what you are under.
Another Great Depression coming up? Is there any way to avoid it?
Nope, no way. Position yourself properly and you'll be fine, though. People keep trying to paint it like the apocalypse (e.g., banker's "dogs and cats sleeping together"), but it just sucks for those who are unprepared.
In fact, for those that are ready it'll be the opportunity of a lifetime.
Some competitve shopping from the High Desert of Southern California reveals:
KB Home - 1,300 to 2,500 square foot homes, very low spec. level (formica counters), 199K to 250K
DR Horton - 1,900 to 2,500 square feet, high spec level, 250 to 299K.
Both these projects are selling 2 per week.
The key in this market is low price. I understand that buyer quality is improving and that legitimate first time buyers are buying these homes. Builders are undercutting resale and resale home prices still need to drop considerably.
TJ:
Another Great Depression coming up? Is there any way to avoid it?
Nope, no way.
May I ask how and when we are supposed to have a Great Depression, now? - Recently, I had a book in my hands called "The Great Depression of 1990". Actually, we had a bank crisis (more serious than now) then, too. We all know what happened after 1990 - certainly no Great Depression. Without starting a big discussion, I'm just interested how bears can think/imagine a G.D. is imminent against all odds/reality. I'm still completely puzzled. Also, is this a conviction that just came now or are you convinced already for a long time and just think your timing was off (like in the case of the book author at least 28 years now). Is there a time frame when you think you're wrong and then there will be no more G.P. or is it always "just 6 months from now"?
Thanks!
O-Joe
The difference between a Friedman (6 mo) and 6 mo in the US economy is called a 180. Every 6 mo that Friedman gave, things got worse, even though he was saying it will be better. In the economy, the optimists keep saying everything if fine, the bears say we are slowly sinking, and every 6 months, things look better than the bears thought, but still are worse than 6 months previous.
Got it?
TJ,
The word "depression" is so loaded as to be useless. The truth is, the U.S. economy was vastly more volatile in the pre-war period than the post-war one. A "depression" occurred with some frequency, and to expect one did not necessarily label one a tin-foil hat-wearing looney-tunes.
Of course the bulls believe the decline in economic volatility is permanent. The reasons: globalization, productivity growth, the Fed, etc.
In reality, there's one change that was probably key, and has now been reversed. That is the existence of deposit insurance for the bulk of financial intermediary funding. It's been reversed by securitization, and by the advent of econometric/financial models that flash the green light for unprecedented leverage.
A depression could happen because we have a debt bubble that hasn't deflated yet. Massive debt bubbles are what make economies vulnerable to long economic downturns. We didn't have a depression in the early nineties because the economy found a way to load up on even more debt. There was a second phase to the debt bubble that started in the mid 90s. It has progressed to a point of beyond reason. We have a debt to GDP ratio of over 300%. Many of these banks could have avoided their current problems if they paid attention to the amount of leverage in the system. This is a Minsky event. Excessive leverage is dangerous and makes the economy vulnerable.
But then again maybe the powers that be will find a way to lever up even more and keep this ponzi debt based economy going even longer. Who knows?
As Geoff noted, this horrendously bad quarter included the three day "Deal of the Century," event.
From NJBiz after the sale:
NJBIZ.com - New Jersey Business, Construction, Real Estate NJ, Technology & Education New Jersey, news ebusiness research journal NJBIZ
K. Hovnanian Homes and Matzel & Mumford, divisions of Hovnanian Enterprises, had more than 2,100 gross sales, which include contracts and deposits, in 19 states from Sept. 14 through Sept. 16 ...
"The preliminary results exceeded our expectations," said Ara K. Hovnanian, president and CEO of Hovnanian Enterprises.
Early returns,apparently, are not indicative of long-term success. I'm guessing there were a lot of cancellations by those "buyers."
And therein lies the problem for the banks, will furious market mistimers keep making their payments when the new neighbors buy the same house for 2/3rds of the price, or will they walk away and leave the keys in the mailbox? With little skin in the game and declining ethics in this country, I see lots of work for foreclosure specialists in the next 5 years.
central_scrutinizer | 11.06.07 - 4:14 pm | (emphasis mine)
That's rich... corporations are expected to avoid ethics and simply profit-maximize, yet people are supposed to be "ethical" in this system? If the law says they can walk, with whatever the specified penalty is, I see no "ethical" reason why not.
To have "ethics" invoked at this stage seems a dodge to make one of the players of this musical-chairs game pause, and lose their chair, while the highly-optimized, less ethically-constrained corporation/CEO/investor thanks their lucky stars there is still a free seat.