Housing Giants - May 23, 2008 - (Page 24)

builders were on the move.) Still Weekley’s revenues were off 13 percent. “We’re holding up better than any other market in the country,” says Mike Inselmann, president of Houston-based research firm Metrostudy, of Texas. “But we’re not immune. Texas will be off 35 percent this year in housing starts. I’m surprised it’s that much because Dallas and Houston lead the country in job creation. But builders are now very conservative about spec starts, and that’s always been a big part of these markets because of Realtors and relo buyers. It’s hurt sales that we have so few specs.” Inselmann believes the Texas markets will rebound faster than any other, maybe this year. Prices never got out of hand in Texas, and there was never a huge inventory of unsold homes, new or used. “By the end of this summer, I expect we’ll see Texas markets go from moderately supply-rich to moderately supplyrestricted,” he predicts. The Carolinas are also in better shape than other Eastern Seaboard markets. “The inland markets in both states — primary housing, not second homes — never had the price run-ups that occurred elsewhere,” says Charlotte-based consultant Chuck Graham, who tracks these markets closely. “We didn’t have a lot of investor buying or subprime mortgage lending. Charlotte new homes still showed a 2 percent appreciation rate in prices over the last 12 months. Today, what builders say is selling is perhaps 8 percent below the price of a year ago. The publics are doing a lot of discounting here, just like everywhere else.” Graham endorses No. 7 NVR’s model among the publics. “They’re still chugging along here. Everybody else in the public sector looks like crap compared to them.” LAND IMPAIRMENTS MAKE TRUE PERFORMANCE ELUSIVE The huge public builders at the top of the rankings hold vast amounts of land and lots bought at inflated prices in a rising market. As a result, they’ve been forced to write down the value of those assets — sometimes more than once. These land impairments, measuring into billions of dollars each for the Top 5 builders, have destroyed their profitability, a fact they often obfuscate by reporting margins before impairments rather than after. 24 HOUSING GIANTS.5.23.08 WWW.HOUSINGGIANTS.COM http://www.metrostudy.com/ http://www.nvrinc.com/ http://WWW.HOUSINGGIANTS.COM

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Housing Giants - May 23, 2008 Contents Viewpoint & Letters News & Moves Process The Top 25

Housing Giants - May 23, 2008

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