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Houston Builder
Dyn-o-mite!


Joined: 09 Jan 2009
Posts: 351

Home Builder Death Spiral.............
PostPosted: Wed Apr 21, 2010 12:45 am Reply with quoteBack to top

I think we are seeing the beginning of the end for several publics w/ the tax credits ending and foreclosures and job losses still prevelant in most markets.......

Pultex - have they bought anything in any market in the last 24 months?
Too big to fail, or maybe too big to survive......

KB - their 27% SG&A makes it impossible to break even, much less be profitable - plus they are reducing prices by cheapening their homes which slashes margins as they try to compete with foreclosures. This downward spiral/cycle just makes it more difficult to ever climb back to profitability.

By comparison, Lennar's SG&A is 15.8%.........

But, Lennar hasn't bought a new deal here in years and they don't appear to have any strategy going forward.

Meritage is dummying down their product and reducing prices - that makes future profitability a pipe dream - they are also headed down the death spiral

(For a good read on MTH, go see FloridaBuilder's blog on Motley Fool)

http://caps.fool.com/Blogs/Vie.....9045326844

KHOV/Ryl - they are propped up by tax credit clawbacks.
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Crow
Cherry Bomb


Joined: 04 Nov 2008
Posts: 154
Location: U.S.A.

Re: Home Builder Death Spiral.............
PostPosted: Wed Apr 21, 2010 2:51 am Reply with quoteBack to top

I agree, some of the big publicly traded builders are probably going under in the next year or two. People just can't afford to buy much now, and are afraid of losing their jobs or having to uproot the family for a job elsewhere. More are also catching on to the massive mortgage fraud that was going on (and IMO still is). Some can't sell the house they're in so they can't buy new. The tax break builders got was immediately washed to look like profit, which should've fooled no one, least of all investors who you would THINK by now might be doing their "homework" too.
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EmelioTextevez
Flash in the pan


Joined: 09 Dec 2009
Posts: 37

Del Webb
PostPosted: Wed Apr 21, 2010 2:36 pm Reply with quoteBack to top

I don't know if it means anything, maybe some of the owners/managers on this site that are in the loop could fill us in. But Pulte is going full steam on the 1500 or so homes planned for their new Del Webb community on FM 762 and 59S in Richmond Tx.

It was stagnant for a while, but development is going full steam, cutting streets, scraping lots, building walls by the streets...etc.

Any inside info on this one?
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mikestrong
Cherry Bomb


Joined: 07 Oct 2008
Posts: 118

Re: Home Builder Death Spiral.............
PostPosted: Wed Apr 21, 2010 3:49 pm Reply with quoteBack to top

Houston Builder wrote:
I think we are seeing the beginning of the end for several publics w/ the tax credits ending and foreclosures and job losses still prevelant in most markets.......

Pultex - have they bought anything in any market in the last 24 months?
Too big to fail, or maybe too big to survive......

KB - their 27% SG&A makes it impossible to break even, much less be profitable - plus they are reducing prices by cheapening their homes which slashes margins as they try to compete with foreclosures. This downward spiral/cycle just makes it more difficult to ever climb back to profitability.

By comparison, Lennar's SG&A is 15.8%.........

But, Lennar hasn't bought a new deal here in years and they don't appear to have any strategy going forward.

Meritage is dummying down their product and reducing prices - that makes future profitability a pipe dream - they are also headed down the death spiral

(For a good read on MTH, go see FloridaBuilder's blog on Motley Fool)

http://caps.fool.com/Blogs/Vie.....9045326844

KHOV/Ryl - they are propped up by tax credit clawbacks.


Here you go again. Pultex(ha) is buying land. Up in Mckinney, and now in North Richland Hills, as well as Ft. Worth. They have LI's on 6 other pieces as we speak in the metro plex. Pulte has been averaging approx. 100 sales a month in the metroplex. They also made a profit last quarter.
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Houston Builder
Dyn-o-mite!


Joined: 09 Jan 2009
Posts: 351

Re: Home Builder Death Spiral.............
PostPosted: Wed Apr 21, 2010 5:19 pm Reply with quoteBack to top

Quote:

Here you go again. Pultex(ha) is buying land. Up in Mckinney, and now in North Richland Hills, as well as Ft. Worth. They have LI's on 6 other pieces as we speak in the metro plex. Pulte has been averaging approx. 100 sales a month in the metroplex. They also made a profit last quarter


That's good intel, maybe Pultex will make it........interesting that no builders are the Fortune 500 list which supports the point about the death spiral......

http://money.cnn.com/video/for.....a.fortune/

And this news will only hasten the death spiral for KaratzBruce Homes.....

http://finance.yahoo.com/news/.....0&.v=8
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NewHomeDallas
Dyn-o-mite!


Joined: 05 Jan 2009
Posts: 404

Re: Home Builder Death Spiral.............
PostPosted: Wed Apr 21, 2010 11:55 pm Reply with quoteBack to top

There is no doubt that Pulte will survive and probably dominate, no matter how the private builder lovers feel.

However, 100 houses for the Pulte-Centex combo with about 30 locations means only 3 sales per location. Also, between them they sold an average of 200 houses per month in 2008, which wasn't a particullarly good year.
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TX Homebuilder
Dyn-o-mite!


Joined: 09 Feb 2009
Posts: 276
Location: Houston Metro

Making $$
PostPosted: Thu Apr 22, 2010 9:48 am Reply with quoteBack to top

Nearly every builder will tell you ... two sales per month per community is just above break even.

If they are selling 3.3 per commmunity per month they are probably making money.
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Houston Builder
Dyn-o-mite!


Joined: 09 Jan 2009
Posts: 351

Re: Home Builder Death Spiral.............
PostPosted: Sun Apr 25, 2010 3:37 pm Reply with quoteBack to top

Interesting note, good for Toll, KB and MHI -

http://www.bigbuilderonline.co.....ID=1259949

The qoute at the end about KB is funny - East Fort Worth is not A+ - Colleyville where Toll is buying is A+, so is Collin County where MHI is buying........

KB is probably picking up the cheapest lots in crappy neighborhoods like they are in ...when they start buying in places like Frisco, then I will believe that KB is for real and not just trying to survive

Calling east Fort Worth A+ is a misrepresentation by KB - you would think with Karatz going to the big house they would think twice about issuing misleading statements like this.
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Houston Builder
Dyn-o-mite!


Joined: 09 Jan 2009
Posts: 351

Solid $$s for MTH, Ryl
PostPosted: Thu Apr 29, 2010 3:17 pm Reply with quoteBack to top

Meritage - interesting that over 50% of their business is in Texas, and very little in Vegas and Florida - they are better positioned geographically then the other publics......

Ryl - their SGA is under 14%, compare to Lennar (just under 16%) and KB (over 27%!!!).

Its a lot easier to make money when your overhead as a percentage of sales is lower than your competitors......that's how Walmart does it...
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Houston Builder
Dyn-o-mite!


Joined: 09 Jan 2009
Posts: 351

Horton's #s impressive....
PostPosted: Fri Apr 30, 2010 1:15 pm Reply with quoteBack to top

No question that DR will make it - 15% revenue growth and 55% sales growth is real impressive - that means that they are growing by buying new deals at discounted land prices and building cheap houses on cheap, but well located land positions.

I predict they will be bigger than the Pulte-Centex combo by the end of 2010 - who would ever have thought that???

Who will implode first, someone that's profitable like Horton, or Lennar or KB who are still losing money and have 15% and 27% SGA????

http://www.reuters.com/article.....430?rpc=44
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