Wednesday, June 4, 2008

Bit's and pieces from the news desk.

Bit’s and Pieces from the news desk…..

Homebuilder Hovnanian Enterprises Inc. on Tuesday evening said second-quarter losses grew tenfold from a year earlier as it reported its seventh consecutive negative quarter.

"We expect to persevere through the current downturn and we will be in position to thrive again once the housing markets begin to recover," President and CEO Ara K. Hovnanian said in a statement.
After paying preferred stock dividends, the company reported a net loss of $340.7 million, or $5.29 per share, for the quarter that ended April 30. This compared with a loss of $30.7 million, or 49 cents per share, for the same period a year ago.
Analysts surveyed by Thomson Financial expected Hovnanian to lose $2.64 per share in the quarter on revenue of $759.6 million.

The company said its net contracts for the second quarter, excluding joint ventures, declined 29 percent to 2,226 homes. Its average home price fell nearly 17 percent to $290,556 from the same period of 2007.

Here’s Johnny, and he’s got a foreclosure notice. ReconTrust, a unit of mortgage lender Countrywide Financial, on Feb. 28 filed a notice of default on a $4.8 million Countrywide loan backed by Mr. McMahon's home. ... According to the filing, Mr. McMahon was then about $644,000 in arrears on the loan. It isn't clear whether Countrywide still owns the loan or is acting on behalf of investors who acquired it.Mr. McMahon broke his neck in a fall about 18 months ago and hasn't been able to work, [Howard Bragman, a spokesman for Mr. McMahon] said.

Fewer new cars.
In May, GM sales of cars and light trucks totaled 268,892, down from 371,056 a year earlier. There were 27 selling days in May, compared with 26 a year ago. General Motors said Tuesday that it would stop making pickup trucks and big S.U.V.s at four North American assembly plants and would consider selling its Hummer brand.

Ford reported May sales of 217,268 light vehicles, compared with 258,123 a year earlier. Sales of Ford trucks and sport-utility vehicles were down 26% to 126,364, with F-series truck sales tumbling 31%.

Toyota sold 257,404 vehicles in May, compared with 269,023 a year earlier. Toyota's passenger car sales inched up 0.4% to 168,942 while light-truck sales slid 12% to 88,462.

Toll Brothers Inc., the largest U.S. luxury-home builder, reported its third straight quarterly loss as tumbling demand forced the company to write down land values.
The net loss for the fiscal second quarter ended April 30 was $93.7 million, or 59 cents a share. In the year-earlier second quarter, Toll had net income of $36.7 million, or 22 cents a share. The shares rose 3.1 percent after Toll recorded its lowest cancellation rate in a year and the loss was smaller than analysts' estimates.

New-home sales in April were the second-lowest since 1991 as tighter lending standards made it harder for potential buyers to finance purchases. The five largest U.S. builders have reported a combined $3.4 billion in losses in their most recent quarters, hurt by what Chief Executive Officer Robert Toll described today as a ``downward spiral'' of home prices.

New Home Sales,
Sales of new homes increased 3.3 percent in April after readings for the prior month were revised lower, the Commerce Department said on May 27. The April sales pace was an annual 526,000 homes, compared with an annual rate of 509,000 in March, the lowest in 17 years.
U.S. foreclosure filings climbed 65 percent and bank seizures more than doubled in April from a year earlier as mortgage industry efforts to modify loans fell short.
More than 243,300 properties were in some stage of foreclosure, the highest monthly total since RealtyTrac Inc., a seller of default data, began in January 2005. One in every 519 households received a filing and Nevada, California and Florida had the highest rates. Filings rose 4 percent from March.


bigdog76 said...

Good article. New home builder is now offer a two for one on people that buy his homes starting at 1.6 million he will throw in a $400,000 house.
How about he drop the price $400,000?

bigdog76 said...


Sorry this is the complete link

golfer_X said...

Yea, I saw that a few days ago. That's about one of the dumbest promotions I'v seen yet. What person buying a 1.6M house in an uppity part of town is gonna want some townhouse in the ghetto? Eh, hello, Mr. Builder, how about just lowering the price of that 1.6M house by a few hundered K. I'd bet a nickel no one goes for that deal.

Sunny said...

I am thinking about moving to the inland empire. Sierra Lakes in fontana maybe. I am not sure at all. I work in Downtown L.A and so does my husband. I know its a tough commute, but I can not afford a nice home in L.A...we have been waiting and waiting. We dont want to have to use both our incomes to afford housing. We want to live on one income. We make approx 150k per year combined. I am trying to figure out where we can get the nicest home in the nicest subdivision, for the cheapest price. Also I notice there are mello roos in these areas and it seems the property taxes are higher. Is this true for most of the subdivisions. We would like at least 4 bedrooms

golfer_X said...

Nearly everything built in the last 10 years out in the IE has mello roos. The developments that don't are usually the custom homes or high end large lot type tracts. But if you want something. Property taxes vary from city to city and zone to zone but usually that is not a lot (.1% to .2%). The Mellos Roos can add another .6 to .8% to your total tax. Most of the newer tracts are aroun 1.8% when you add it all up. Then HOA fees are on top of that.

I'm not all that familiar with Fontana but I do know that anything east of the 15 fwy gets sandblasted by the Santa Ana's every winter and spring. I'd try to stay west of the 15 (the more west the better).

The commute is UGLY on the 10fwy although the 215 hasn't been too terrible when I've used it. I did that for a short while 15 years ago and it drove me crazy (the I-10). I would think with $150k income you could find something closer to work (Factor in saving a few hundred a month in gas too).

Sunny said...

Thanks for the response!

Paige said...

So can anyone give an opinion as to what you think will happen to the Orangecrest/92508 area? There are a lot of people looking and while I realize sales pick up in the spring and summer, this is making me wonder what's going to happen in the fall and winter. There are multiple offers . If people would just wait or offer less they could get a deal. Very surprised.

golfer_X said...

The prices are still dropping in Orangecrest. The low ones are getting multiple offers but the rest are just sitting there. More and more are hitting the market at the lower prices. The sales of these (even though many are selling over asking) is bringing the comps down. That means that the new homes hitting the market need to be priced accordingly. As more homes get priced accordingly there will be less competition and the prices should start to come down a little quicker. That plus once the fall and winter hits there will be less buyers so that should also continue to bring the prices down.

I've definately noticed more homes hitting the market at more reasonable prices. In the Bridle Creek tract that I watch the average low prices have fallen over $50k in the last few weeks. A month ago there was nothing under $520k in that tract. Now there are a half dozen under $500k, short sale listed for $400k and 4 or 5 REOs in the mid to high $400s. So the prices are still falling.

oakhillsgirl said...

We are thinking about buying a custom home in Oak Hills (High Desert, Hesperia area) The price right now is under $100 per sq. ft in the zip code area but that is due to the tremendous amounts of newer track homes up for sale. This home is on 2.3 acres and is completely custom. Wells Fargo is asking $134 per sq. ft. I can't find any comparable sales. Basically nothing is selling.. Anybody have any idea how to price a custom property like this. I think the bank is asking way too much.

golfer_X said...

I'm familiar with the Oak hills area. There are some sweet homes up there. When nothing is selling it's very hard to convince the bank that your offer is a good one. They have no comps with which to compare. You can try to estimate based on the stuff that is selling using a time frame. If the current crop of REO's are selling at early 2003 prices then you can estimate what homes in Oak Hills were selling for in that time frame. They may agree with your logic or they may not. Another thing that has worked for some people is to submit a second offer a month or two later that is 10% less than your first offer. Let them know that the market is falling 5% per month or what ever it is falling (figure your offers accordingly). This has worked for some. It sorta shocks the banks back to reality.

Custom homes are always hard to value. The location, the lot, the quality of the home all will affect the value, much more than on a tract home.