awgee writes:
first?
awgee | 03.27.08 - 9:55 am | #

Outsider writes:
Price, price, price, price, price. It all boils down to price. The avg. family cannot afford the avg. house. Hellooo......
Outsider | 03.27.08 - 9:57 am | #

barely writes:
Wow! What an encouraging commentary from the CEO. I guess investors think he's either lying or hedging, based on the stock price action.
barely | 03.27.08 - 9:57 am | #

AllanF writes:
LEN has the cash to attempt to wait out the down turn. They are not taking write-offs like the other builders, probably because they are not dropping prices that much -- their revenues were far below expectations. Like so many other heavily shorted names, they are up because many folks were betting for the worst and this report was not the worst. However, nothing's changed. They just kicked the can down the road a bit. Eventually, they are going to have to move their inventory at much lower prices. I don't see their wait-it-out strategy coming to fruition, but then that's what makes a market... other people clearly do.
AllanF | 03.27.08 - 10:01 am | #

Geoff writes:
Didnt we just call a bottom yesterday?
Geoff | 03.27.08 - 10:05 am | #

barely writes:
AllanF, Last I checked, LEN won't need to roll any financing soon. However, IMO LEN can go POOF on any given day. They are stretched thin on OBS arrangements and obligations. That will be the coup de grace for LEN.

Timing it? Impossible.
barely | 03.27.08 - 10:08 am | #

hc writes:
Homebuilders up, Financials up, Commodities down, Emerging Market Up.

Seems like the ultimate Goldilocks stock market.

Buy everyone!
hc | 03.27.08 - 10:08 am | #

Nighseneasy writes:
I own a NW burbs home built by an ex-MN builder known as Lundgren, who by the way built nice homes/neighborhoods. Lundgren was somehow incorporated into Lennar a year or two ago. I am not sure if Lundgren was bought out, but I assume so. Lennar kept some of the projects moving, inclouding the final-phase build out of a nearby neighborhood consisting of homes in the 7-9 range. I visited their sales home in this new neighborhood last Dec and things seem to be moving, but the gal admitted she was nervous about the next several months.

Assuming Lundgren was bough out, I have to think Lennar "bought high," on this smaller HB, and is now left holding the bag on their projects.

dryfly, you're a MN sort, any info you can bring on this?
Nighseneasy | 03.27.08 - 10:09 am | #

rich writes:
>Outsider writes:
Price, price, price, price, price. It all boils down to price. The avg. family cannot afford the avg. house.


It's not just price and affordability.

It's also about momentum and confidence.

When people think they are moving forward economically and feel confident about keeping their job and getting promotions or raises, they become more willing to buy or upgrade houses.

If you are unsure about what the future holds, it's better to wait or rent.

The message is trickling down that the economy is in trouble, and a lot of people are hunkering down. This is when and why recessions gather momentum.
rich | 03.27.08 - 10:09 am | #

blackhat writes:
The problem with the price correction to move the inventory down the road is that it's likely down the road we'll be facing real layoffs, and a real explosion of FCs and for sale RE. Do you bleed a lot now and hope you survive, or do you bleed slowly with no end in sight? It's intriguing that CEOs who are very quarter driven aren't realizing financial Armageddon now just to focus on next quarters numbers...they clearly have calculated that they won't survive realizing market losses now verses later...maybe they'll get ponies later...maybe...
blackhat | Homepage | 03.27.08 - 10:11 am | #

Rob Dawg writes:
AllanF writes:
LEN has the cash to attempt to wait out the down turn.

Where did you get this? I'll trust Reggie:

http://boombustblog.com/componen....html/Itemid,0/

I hope that links but the money quote:
"Thus, not only is Lennar currently insolvent, but according to Alman's Z score analysis, they are nearly assured to be heading into bankruptcy, sporting a score considerably below what it would take to consider them a bankruptcy candidate, and trending considerably lower the next 8 quarters..."
Rob Dawg | Homepage | 03.27.08 - 10:13 am | #

Bob_in_MA writes:
Yeah, LEN had a crap-load of joint ventures, which were the homebuilders' equivalent of SIVs: no need to put them on the balance sheet, unless things go bad....

Remember back more than a year ago, the Shanghai exchange fell a ton and other exchanges around the world fell on the news? The Shanghai Composite fell 5.4% yesterday. It is now down 44% from its October high. No one is even alluding to this. About $1.1T in equity lost from the peak.

Just for the fun of it, I checked what the equivalent fall in the Dow was from its September 1929 high the same number of days (162) out. The Dow had fallen 29% to that point.

Two big caveats, the Shanghai Composite went up much faster in 2007 than the Dow did in 1929, and about half the loss in equity will be born by the government, which still owns huge chunks of the market.
Bob_in_MA | 03.27.08 - 10:17 am | #

Bob_in_MA writes:
Actually, both the Economist and CR have noted it recently. About the only solid sources around...
Bob_in_MA | 03.27.08 - 10:19 am | #

jm writes:
I see surprisingly litle commentary even in the blogosphere about the accelerating decline of stock prices in the nation that has done so much to support US private and public borrowing, and its implications for our future.

http://finance.yahoo.com/q/bc?s=...=off&z=m&q=l& c=

We must be nearing the point at which the many newbie speculators in China will run for the exits.

I expect China will disintegrate politically in the same manner as the Soviet Union and Eastern Europe.

What will be the consequences here?
jm | 03.27.08 - 10:20 am | #

blackhat writes:
Bob_in_MA,

You hit the nail on the head with the government backing the losses...most of the stuff is SOE or State backed, or indirectly state financed. On the other hand, you'd think that investors knowing this wouldn't spook with the down turn, but then again, investors tend to leverage that much more knowing that they are explicitly backed by the state...so speculation was rampant...
blackhat | Homepage | 03.27.08 - 10:22 am | #

eh writes:
...they become more willing to buy or upgrade houses.

The desire to 'own' (if you can call a mortgage that) a house is still very strong in most people -- it's been inculcated in them, i.e. vs the undesirability (even stigma) of paying a landlord ('money down a rent-hole'). But the attraction of homeownership as a surefire investment (we've all seen, practically forever, the 'get rich via investing in real estate infomercials) has seriously diminished. People are now more aware of the economics of a decision to buy -- how it might affect their own personal balance sheet. Which influence will predominate?

I agree largely with AllanF's take on LEN.
eh | 03.27.08 - 10:24 am | #

Marcus Aurelius writes:
The consequences here will be the restructuring of our society and our culture.
Marcus Aurelius | 03.27.08 - 10:24 am | #

gravy writes:
Bob_in_MA: A lot of investing in China is simply gambling. No TA, no fundamentals - feng shui and lucky numbers. Not all of it, but a fair proportion.

And I'm not really sure what role a stock exchange has in a controlled economy anyway.
gravy | 03.27.08 - 10:25 am | #

blackhat writes:
jm,

Interesting hypothesis, but China has a much longer history of not disintegrating, and when in turmoil it has a geophraphic, linguistic, and cultural homogony on it's side. USSR was an amalgate of disparate geophraphy, language, and culture. Don't think they will disintegrate this century. Yes the Chinese counryside could rise up and assert itself, just like they did last time, and replace authoritarian central rule with...authortitarian central rule.
blackhat | Homepage | 03.27.08 - 10:26 am | #

Yoringe writes:
and didnt the chinese stock market rocket up about 600% in 3 years??
And didnt the Chinese Gov. explicit expressed warnings and said it isnt sustainable the last months and they want to see a plunge????

I wouldnt put it past me that Peking cashed out and left Foreigners take the losses.. Ben must be green with envy at that possibility..
Yoringe | 03.27.08 - 10:30 am | #

Pondering the Mess writes:
Well, let's see... real salaries haven't grown much at all since the late 1990's or 2000. Maybe rolling housing back to those prices would work to move inventory? Oh, but wait - some executives would have to sell their weekend yachts if that happened, and countless home-moaners who are upside down on their liar-loans would be hosed! They'd have to give up the Hummer or something! The horror!

If they want to sell houses, try lowering the price!
Pondering the Mess | 03.27.08 - 10:32 am | #

blackhat writes:
sorry about spelling above...think I just invented a new science geo-phraphy, the study of earth phraphy...

...builders are dragging this out as long as possible in any case hoping for fed bailout...

...anyone remember the 1960s tax brackets of 70+ percent, well get ready to be punished for this nonesense, because that's how we are going to pay our way out of this bailout and continue to offer services that our governement has agreed through our social contract to perform...or else.
blackhat | Homepage | 03.27.08 - 10:34 am | #

Yoringe writes:
Pondering the Mess :

with a mind set like this lady expressed i am itching to see wich kind of socialism you guys will come up.. well the popcorn is ready :-)))
Yoringe | 03.27.08 - 10:35 am | #

Yoringe writes:
sorry was related to post before... :-((
Yoringe | 03.27.08 - 10:36 am | #

blackhat writes:
Yoringe,

Free markets work until they don't, like republics and democracies and socialist governments. They work until they don't. That's what is at stake. USSR worked until it didn't. Weimar worked until it didn't. I prefer democratic free-markets and schools and roads and health care, and first world living...financial meltdown threatens all of that...IMO.
blackhat | Homepage | 03.27.08 - 10:40 am | #

Average Citizen writes:
Too funny. Our realtor offered to check on the negotiability of a house that we like here. His response came back "No, they aren't negotiable, they've already sold it at that price twice!" Apparently 'lower consumer confidence' cancelled the sale the first time, and 'availability of credit' got it the second time.
Average Citizen | 03.27.08 - 10:41 am | #

Anonymous writes:
markets diving. call the ppt
Anonymous | 03.27.08 - 10:42 am | #

blackhat writes:
o.k. so we're heading back to below 12000...time to get ready for 50bps cut, opening the fed borrowing windows to home-owners, and double-down on that stimulus check with vouchers to buy hooch at your local liquor store...that should buy us another month...

...oh, and glod and paltinum...buy.
blackhat | Homepage | 03.27.08 - 10:45 am | #

Nate writes:
Mr. Miller is telling me that when excess supply and little demand result in falling prices, it's called an "unfavorable supply and demand relationship".

I'm sorry, I thought that WAS the supply and demand relationship.

I love it when I wade through a mess of unnecessary adjectives, caveats, metaphors, subordinate clauses, run on sentences, etc, only to find a meaningless statement on the other side. Seems like it's all that happens to me nowadays...

Overall housing inventory growth exceeding overall "absorption" (demand growth?) is way scarier to me than overall housing inventory exceeding current demand.
Nate | 03.27.08 - 10:46 am | #

Bob_in_MA writes:
Bob_in_MA: A lot of investing in China is simply gambling. No TA, no fundamentals - feng shui and lucky numbers.

Exactly. Kind of like here in 1929, huh?

That was my point. It's estimated about half the shares are owned by the government, I believe. So private parties have lost more than $500B, or about 20% of GDP, more than housing losses here.

How much of the big growth in retail sales in China was fueled by asset price gains? Who knows...
Bob_in_MA | 03.27.08 - 10:47 am | #

blackhat writes:
I think if we just fill all the excess capacity of houses with garbage, maybe we can give some kind of carbon-sequestration credit, look good to the EU, and solve our land-fill problem temporarily...
blackhat | Homepage | 03.27.08 - 10:49 am | #

ac writes:

Homebuilders up, Financials up, Commodities down, Emerging Market Up.

Seems like the ultimate Goldilocks stock market.

Buy everyone!

If various governments start strong-arming commodity traders so they won't gear up prices then hedgies might be relegated to bear blasting and gearing up emerging markets.

An industry that makes its living by artificially leveraging up asset prices needs to artificially leverage up asset prices to survive.

ac | 03.27.08 - 10:50 am | #

lunatic fringe writes:
You haven't been paying attention to current events if you expect a homebuilder stock to fall on bad news. Even on the numerous occasions where analyst expectations were missed by a mile did the "all the bad news is out" crowd not bid up the stock. Give it a few days though.

I gotta agree that LEN's joint ventures will be what brings these guys down. I believe they have a very decent chance of going TU, depending on the financial state of their partners.
lunatic fringe | 03.27.08 - 10:51 am | #

blackhat writes:
ac,

I wonder when the hedgies will be viewed as counterproductive by the congressional class?...and that's when they'll be reigned in...or not. Volatility is volatility. It has a price above stability. If you can generate it, you can profit from it...
blackhat | Homepage | 03.27.08 - 10:53 am | #

w writes:
Average Citizen, same story here. The seller had dropped the price of the house like 6 times over the last year. Supposedly sold it once. We offered less and they raised the price 5% the next day. DENIAL.
w | 03.27.08 - 10:54 am | #

eh writes:
Give it a few days though.

Yes, this has been the pattern. Bottom fishers and impatient short covering holds it up for a while.
eh | 03.27.08 - 10:54 am | #

Yoringe writes:
Blackhat

you are right, so we have to find a society wich offers both then?? but then you have to pay taxes...
Yoringe | 03.27.08 - 10:56 am | #

rob writes:
Marcus Aurelius writes:
The consequences here will be the restructuring of our society and our culture.
Marcus Aurelius | 03.27.08 - 10:24 am |


Welcome to the Socialist Republic of the United States!

AND

Let the world unwinding begin!

http://wallstreetexaminer.com/bl.../winter/? p=1517
rob | 03.27.08 - 10:57 am | #

ac writes:

I wonder when the hedgies will be viewed as counterproductive by the congressional class?...

Well, the hedgies have such deep roots in the financial system now that it's difficult to shut them down without taking down the entire financial system.

Such is the price of making a pact with the devil.

Our economy is being cannibalized by institutional speculators, yet our financial system is dependent on these institutional speculators for survival.

ac | 03.27.08 - 10:58 am | #

nades writes:
Too funny. Our realtor offered to check on the negotiability of a house that we like here. His response came back "No, they aren't negotiable, they've already sold it at that price twice!" Apparently 'lower consumer confidence' cancelled the sale the first time, and 'availability of credit' got it the second time.


HA hahahaha.... Thats rich...

_____________________
nades | 03.27.08 - 11:05 am | #

Turbo writes:
LEH -9% today. The rumor mill is starting to build again. Interbank money markets are an absolute mess today, but that's more a product of March quarter-end funding issues.
Turbo | 03.27.08 - 11:05 am | #

blackhat writes:
Yoringe,

It's pragmatism, so you get the pendulum swing between the various extremes, and you try to stay somewhere in the middle, democratic republic capitlistic, but you intervene to smooth the excesses and gaps, which is itself imperfect...but I'll take a 50% tax rate over a 70% tax rate any day...I'd prefer 1% rate if we can fulfill our obligations...
blackhat | Homepage | 03.27.08 - 11:07 am | #

a writes:
"China has a much longer history of not disintegrating."

Really? It disintegrated a few times in the 20th Century, although unlike Humpty Dumpty it was put back together again. As the Japanese say, China has a long history of not living up to its potential. I wouldn't bet on it.
a | 03.27.08 - 11:11 am | #

energyecon writes:
Total commercial paper outstanding was flat on a seasonally adjusted basis, while ABCP was down marginally for the fourth week in a row putting us back below YE 2007 for ABCP outstanding.

The 30 day spread was at 89 bps, which is within a whisker of the peak spread of the first wave back in August 2007 (but well below the levels of the year end dash for cash).
energyecon | 03.27.08 - 11:12 am | #

ac writes:

"China has a much longer history of not disintegrating."

Really? It disintegrated a few times in the 20th Century, although unlike Humpty Dumpty it was put back together again. As the Japanese say, China has a long history of not living up to its potential. I wouldn't bet on it.

Also, that $100/year per capita income they had last century ain't exactly worth writing home about.

ac | 03.27.08 - 11:14 am | #

Marcus Aurelius writes:
Historically, China has been non-expansionist (although its borders have always been disputed). China tends to look inward.
Marcus Aurelius | 03.27.08 - 11:17 am | #

Anonymous writes:
Gorbachev, for whatever reason, was the first Soviet ruler who was unwilling (unable?) to use the military to squash the always-present desire for autonomy by the non-Russian republics. The dissolution of the USSR would have been horribly bloody if he had responded the way that Kruschev did in 1956 to Hungary or Brezhnev did in 1968 to Czechoslovakia.

Chinese actions in Tibet show that there's no way the central authorities in Beijing are going to allow a breakup of modern-day China to happen without a fight.
Anonymous | 03.27.08 - 11:18 am | #

NoVa writes:
Really, Really off topic. Yet germane in the sense that anyone who expects the current administration to do anything about anything and not screw it up is dreaming.

from the NY Times:

Supplier Under Scrutiny on Aging Arms for Afghans
By C. J. CHIVERS
This article was reported by C. J. Chivers, Eric Schmitt and Nicholas Wood and written by Mr. Chivers.

Since 2006, when the insurgency in Afghanistan sharply intensified, the Afghan government has been dependent on American logistics and military support in the war against Al Qaeda and the Taliban.

But to arm the Afghan forces that it hopes will lead this fight, the American military has relied since early last year on a fledgling company led by a 22-year-old man whose vice president was a licensed masseur.

With the award last January of a federal contract worth as much as nearly $300 million, the company, AEY Inc., which operates out of an unmarked office in Miami Beach, became the main supplier of munitions to Afghanistan’s army and police forces.

Since then, the company has provided ammunition that is more than 40 years old and in decomposing packaging, according to an examination of the munitions by The New York Times and interviews with American and Afghan officials. Much of the ammunition comes from the aging stockpiles of the old Communist bloc, including stockpiles that the State Department and NATO have determined to be unreliable and obsolete, and have spent millions of dollars to have destroyed.

In purchasing munitions, the contractor has also worked with middlemen and a shell company on a federal list of entities suspected of illegal arms trafficking.

Moreover, tens of millions of the rifle and machine-gun cartridges were manufactured in China, making their procurement a possible violation of American law. The company’s president, Efraim E. Diveroli, was also secretly recorded in a conversation that suggested corruption in his company’s purchase of more than 100 million aging rounds in Albania, according to audio files of the conversation.

snip


But problems with the ammunition were evident last fall in places like Nawa, Afghanistan, an outpost near the Pakistani border, where an Afghan lieutenant colonel surveyed the rifle cartridges on his police station’s dirty floor. Soon after arriving there, the cardboard boxes had split open and their contents spilled out, revealing ammunition manufactured in China in 1966.

“This is what they give us for the fighting,” said the colonel, Amanuddin, who like many Afghans has only one name. “It makes us worried, because too much of it is junk.” Ammunition as it ages over decades often becomes less powerful, reliable and accurate.

snip

Public records show that AEY’s contracts since 2004 have potentially been worth more than a third of a billion dollars. Mr. Diveroli set the value higher: he claimed to do $200 million in business each year.

snip

When the police searched Mr. Diveroli, they found he had a forged driver’s license that added four years to his age and made him appear old enough to buy alcohol as a minor. His birthday had been the day before.

“I don’t even need that any more,” he told the police, the report said. “I’m 21 years old.”
NoVa | 03.27.08 - 11:20 am | #

jin writes:
I thought it is about U.S. economy, not about Chinese politics. Anyway, what happened to today's gas price, jumped overnight?
jin | 03.27.08 - 11:22 am | #

ghostwriter writes:
It is rumored that Larry Kudlow enjoys auto-erotic asphyxiation as an alternative to speaking rubbish.
ghostwriter | 03.27.08 - 11:22 am | #

wally writes:
Nighseneasy,
In the corner opposite you (SE of the TC area), I know that Lennar has slowed a lot, to the point of letting some people go and trying to deal away some land.
wally | 03.27.08 - 11:25 am | #

rob writes:
Let the world unwinding begin!

http://wallstreetexaminer.com/bl.../winter/? p=1517
rob | 03.27.08 - 11:28 am | #

rich writes:
OT

>The seizure of up to 66 pounds of low-grade uranium linked to the FARC rebels adds weight to the evidence found in a captured rebel laptop that the guerrillas were interested in buying and selling the material, according to the Colombian Defense Ministry.


Adding to global fears and anxiety is apprehension about why so many terrorist groups are trafficking in large quantities of low-grade uranium.

The answer is because it's profitable and lethal.

Scientists claim that only advanced nations have the skill to process low-grade uranium into a dirty bomb.

Really?

A dirty bomb has only a limited range of several miles of destructive power, such as, for example, lower Manhattan.

But within that range, it would create contamination that could take years to clean up.
rich | 03.27.08 - 11:36 am | #

232@1037 writes:
Free markets work until they don't, like republics and democracies and socialist governments.

blackhat, I believe it was Cheney or some other neocon who stated that "this experiment with democracy has pretty much run its course" so they've already moved on.
232@1037 | 03.27.08 - 11:43 am | #

cd writes:
Rich,
That's why we need to get our troops out of a civil war and on our borders, then double thier pay and eliminate taxes for for every military family. We'll save billions!!! It amazes me till no end that congress hasn't done anything!

rant off
cd | 03.27.08 - 11:43 am | #

m writes:
Look at this article on CNN

http://money.cnn.com/2008/03/26/ ...sion=2008032614

This is the next step of whats coming, they are slowly preparing the sheeple.
Looks like USSA is becoming reality more and more each day.
It is only a matter of time until debt is monetized (under the excuse that the system is too big to fail).
All of this is very inflationary
m | 03.27.08 - 11:44 am | #

232@1037 writes:
markets diving. call the ppt.

No crashes allowed until after quarter-end! Then, everything's up for grabs.
232@1037 | 03.27.08 - 11:46 am | #

Broker writes:
As a builder Lennar should know better not to compete with the banks.(bank repos) The last phase of this RE debacle is banks vs banks. Never a good ideea to get cought in the crossfire.
Broker | 03.27.08 - 11:49 am | #

VennData writes:
Why don't they buy Beazer, then they'd be too big to fail?

In fact, pass the pot roast, I wanna be too big to fail.
VennData | 03.27.08 - 11:49 am | #

232@1037 writes:
I love it when I wade through a mess of unnecessary adjectives, caveats, metaphors, subordinate clauses, run on sentences, etc, only to find a meaningless statement on the other side.

They're paid to obfuscate; to render obscure, unclear and unintelligible; but you knew that.
232@1037 | 03.27.08 - 11:50 am | #

m writes:
232@1037

Many times I end up staying up all night, and I get to watch the CNBC Europe Squawk Box, and if you haven't ever seen it, try it sometime. Night and day. The level of intelligence, seriousness, thoughtfulness in the questions and responses, etc. is astonishing. You can actually see ISSUES being discusses and explored rather than pumped and puffed and hyped and bulls-hitted. The women reporters and analysts are well-spoken and just as pretty, without that "retired from a strip- bar" look that is the only thing that matters over here.
m | 03.27.08 - 11:52 am | #

Yoringe writes:
Rich

i heard in case of a Dirty bomb 2 ppl die instantly( from blast) the rest possible over 30 years from Cancer..
boh F...ing hoo. lots of scaremongering with this...
better stop breathing , air is poisoned in most citys...
Yoringe | 03.27.08 - 11:53 am | #

barely writes:
*IF* you had to scour the report for a bullish sign, you could point to a substantial drop in cancellations. Sales off over 60% so they are probably demanding more of a commitment.

Either way - Not looking pretty IMO. It'll be a NEW or BSC type meltdown...
barely | 03.27.08 - 12:00 pm | #

232@1037 writes:
The level of intelligence, seriousness, thoughtfulness in the questions and responses, etc. is astonishing.

m, CNBC Europe is competing with the BBC over there. Enough said.

Incidentally, is Mark Haines on vacation from Squawk on the Street? Haven't seen him much since he commented "something's wrong here" with the market activity (manipulated? heaven forbid!) on the Monday after Bear Stearns weekend.
232@1037 | 03.27.08 - 12:02 pm | #

Anonymous writes:
Yoringe -
In the words of Joe Jackson "Everything gives you cancer, everything gives you cancer, there's no cure, there's no answer, everything give you cancer...."
I'm with you, boo f---ing hoo. We're all going to die and there are "dirty bombs" all over the place already.
Anonymous | 03.27.08 - 12:03 pm | #

Yoringe writes:
Anonymous

but there is a upside too: i know some who got rid of cancer and nobody knows why :-))

All said we really know nothing...
Yoringe | 03.27.08 - 12:06 pm | #

scotty Ex nihilo writes:
Money-Market Rates Rise; Banks Fail to Quell Concern (Update4)

http://www.bloomberg.com/apps/ne...buso& refer=home

``Money markets have seized up again and by some measures the funding crisis is more acute then ever before,'' Christoph Rieger, a fixed-income strategist in Frankfurt at Dresdner Kleinwort, the investment bank owned by the insurer Allianz SE, wrote in a note to clients today.

The difference between the rate banks charge for three- month euro loans relative to the overnight indexed swap rate showed a decline in the availability of cash today. The so- called Libor-OIS spread widened 3 basis points to 73 basis points, within 1 basis point of its widest this year. It averaged 6 basis points in the first half of 2007.


“An optimist may see a light where there is none, but why must the pessimist always run to blow it out?”

Rene Descartes
scotty Ex nihilo | Homepage | 03.27.08 - 12:08 pm | #

Yoringe writes:
As a pessimist there are just pleasant surprises :-))

Yoringe 2008 AD
Yoringe | 03.27.08 - 12:11 pm | #

Average Joe writes:
Lennar has a huge developement in the workings for several years called Skyranch. It is a huge mountain top community with a very large, $300+, HOA. The lower end condo community is selling albeit slowly. The highend has sold a few also. The middle price zone (high 700 to low 900's) has only sold 3 homes in the six months that sales have been open. All are single-story homes. None are occuppied yet. They have poured a ton of money into this develpment as they had to shave the top of a mountain off and there are huge walls everywhere keeping it from sliding down the hill.

The homes are way overpriced to other new communities and really overpriced compared to existing and foreclosed homes.

A 3,400 sq ft single story is for sale with minimal upgrades for $833,000. Brand new homes in nearby Chula Vista are selling for the low $200 sq ft. That would put this home in the mid $600's.

If they lower the price to actually sell these home they will likely lose money on every house as this development had to cost a ton of money to build.

Lennar will go bankrupt.
Average Joe | 03.27.08 - 12:13 pm | #

Yoringe writes:
they will rename it " Meet God Ranch" and up the price!! sold out in a Month i guess...
Yoringe | 03.27.08 - 12:17 pm | #

Average Joe writes:
Here is the link to the community.

http://www.skyranchliving.com/

Notice the "Exclusive Online Savings" button...I suppose it's exclusive only to those with internet access?

When you click on it it gives you a "Spotlight Homesite" which is actually a single home at a price that is relatively reasonable (less unreasonable). This is a common tactic I mentioned before at offering homes one or two at a time that presumably can't mess up the comps of the neighborhood since I can imagine the complaining past buyers might hear something like this: "That was a special case, a home on sale, and shouldn't be seen as reflective of the actual sales price".
Average Joe | 03.27.08 - 12:21 pm | #

Anonymous writes:
oody's Investors Service on Thursday said it may cut its debt rating for Toll Brothers Inc to junk status because of the home builder's troubles unloading unsold homes and other factors.

The rating review was prompted by Toll's "lower than industry average inventory reduction to date and its substantially greater than industry average exposure to the high density mid-rise and high-rise tower business," Moody's said in a statement.

http://www.reuters.com/article/ b...735154620080327

Gee, Ya think?
Anonymous | 03.27.08 - 12:22 pm | #

scotty Ex nihilo writes:
Looming quarter-end intensifies money market strain

http://www.guardian.co.uk/feedar...icle? id=7413425

Some analysts also cited the approach of the annual U.S. tax account deadline of April 15 as an additional drain on spare cash. While accounting deadlines have seen banks hold onto liquid cash, the approach of U.S. and European banks' first quarter earnings reports through April -- and the resultant fear of further debt writedowns -- has kept banks wary of lending.
scotty Ex nihilo | Homepage | 03.27.08 - 12:23 pm | #

m writes:
off topic but most of us know this already. If you dont, you will now

http://www.cnn.com/2008/US/03/ 26...=rss_topstories
m | 03.27.08 - 12:25 pm | #

scotty Ex nihilo writes:
Ot Tid Bits:

traders focused on increased put volumes in the shares of Lehman Brothers. The weakness in LEH re-kindled the liquidity rumors that have been pervasive since the Bear Stearns debacle. At one point LEH traded down more than 8% pressuring the entire group and sending the major indices into negative territory. A Lehman spokesperson subsequently came out and called the market rumors untrue

Additionally, comments from a vague G7 "source" noted that Europe has little room to make any maneuvers on the USD's decline.

"There is a great irritation growing among Europeans towards Americans," ahead of the next meeting of the Group of Seven leading industrial nations next month, the source said. Europeans, however, see little room for maneuver as the U.S. authorities don't seem keen to even "talk up" their currency, the person said.

"On the whole, the U.S. authorities don't seem to be doing what is necessary. The Fed has been carrying too much of a burden and has been put too much in the forefront, while the U.S. Treasury should have been more active, with targeted measures - to help households for instance," the person said.


In fixed-income, US T-bond futures were tempered by comments from a S. Korea pension fund official who commented overnight that it would stop buying US Treasuries, citing diversification purposes. (that is old news)
scotty Ex nihilo | Homepage | 03.27.08 - 12:35 pm | #

Bill Melater writes:
Hardly relevant.

Glenn Beck: The economic asteroid will first hit America when the Medicaid trust fund becomes insolvent in 2019.

2019? 2019? That's like... 43 quarters from now. We can hardly see 2 quarters ahead. You might as well be talking about the death of the sun.

But maybe Glenn Beck will have his own asteroid encounter before then.
Bill Melater | 03.27.08 - 12:44 pm | #

m writes:
Moody's may cut Toll Brothers' debt rating to junk
Thu Mar 27, 2008 12:09pm

http://www.reuters.com/article/ m...735154620080327
m | 03.27.08 - 12:45 pm | #

paul tyson writes:
I am an Australian. I read this blog because there are obviously some very intelligent people here. But there seem to be precious few of you.

Can you please tell me what in God's name is going on in your country?

Lennar has just come out with a terrible report which is entirely what you'd expect given the diabolical state of the home building sector in the United States.
Their shares are currently up over 4% on the market. You would have to be certifiably insane to invest in an American homebuilder today.
paul tyson | 03.27.08 - 12:46 pm | #

Yoringe writes:
paul tyson

My complette uneducated guess:
1. Buy on bad news ( some golden investment rules supposedly)

2. everyone may expect a bailout so its a save gov backed investment

3.2There are 2 things wich are infinite, the Universum and the stupidity of Humankind. I am not sure about the Universe" Albert Einstein
Yoringe | 03.27.08 - 12:49 pm | #

m writes:
paul tyson

we are certifiably insane. come visit and see for yourself.


read my post above yours about the luxury homebuilder Toll Brothers. Their stock is up 5% today after the bad news was released.
m | 03.27.08 - 12:50 pm | #

Yoringe writes:
4. may be longterm investment after all the class-action-lawsuits are settlet...
Yoringe | 03.27.08 - 12:53 pm | #

burnside writes:
In contrast to their exposure at Skyranch, LEN is behaving very conservatively in SW Florida.

In two subdivisions I'm familiar with here, they have sold their spec homes. They'll build you a house if you contract for one.

They've cut the number of subcontractors to a minimum, and the subs are running lean as well. Construction continues at a modest pace.

A purchaser today will wait about four or five months before the builder breaks ground for their new house.

So at least locally, they're in survival mode.
burnside | 03.27.08 - 1:27 pm | #

Ralph Cramdown writes:
Paul:

*Everyone* knows that the homebuilders are doing terribly.

The market is efficient. Therefore, all the bad news is priced in.

Market conditions appear to be not necessarily in a momentum investor's favor.

It could be argued that, among all the HB CEOs, the most bearish is the most realistic, ergo the smartest.

So if you're a contrarian ("smarter than your average bear!"), there's only one thing to do!

I leave it to smarter minds than mine to reconcile the conflicting axioms of efficient market theory and contrarian investment strategy, but Lennar buyers have obviously done that today. Besides, how bad can it get? These people are building real things everyone can understand, not like that nasty NASDAQ thing a few years back... THOSE companies were the NINAs. Shipping dogfood across the country for free, at a loss, and making it up on volume? What were they thinking?
Ralph Cramdown | 03.27.08 - 1:37 pm | #

Kicker writes:
In contrast to their exposure at Skyranch, LEN is behaving very conservatively in SW Florida.

Doesn't change the fact that the lots are all specs. Who owns them? How much do they owe on them?
Kicker | 03.27.08 - 1:43 pm | #

Searching for solutions writes:
Americans do not invest they speculate.... Until the government taxes the short term trades of hedge funds, private equity funds, and investment banks nothing will change. That is until the speculators and short term profittors drive our economy and country into the ground.

Quarterly earnings and spiraling demand for ever increasing profits has brought our country to its knees. Calm will never be restored to the markets until 20,000 daytraders loose their job. Unfortunately I am very concerned about loosing mine in the process.
Searching for solutions | 03.27.08 - 2:01 pm | #

deuces wild writes:
----------------------------------------------
For What It's Worth, LEN Call Was Upbeat
By Scott Rothbort
RealMoney Contributor
3/27/2008 1:14 PM EDT
URL: http://www.thestreet.com/p/rmone...s/ 10409392.html

Updated from 3:57 p.m. EDT on March 26.

After opening slightly lower, Lennar (LEN) rallied right through the conference call and is up about 6% on the day as the conference call ended. This was the most upbeat conference call that I have heard from a homebuilder in many quarters.

No kidding.

It was not giddy, but there were some data points that indicated that a bottom may have been reached and that a turn may be at hand. We certainly got that "glimmer of hope" that Robert Toll of Toll Brothers (TOL) was talking about.

Lennar's balance sheet is in fine shape, and it appears that impairments may be slowing down or perhaps ending. The company works off its inventories in a smoother basis than Hovnanian (HOV) , which had a tough first quarter because of the front-loading of sales in the fourth quarter when it ran its big sales.

Lennar reported a first quarter loss of 56 cents per share, which includes 38 cents in charges related to writedowns and impairments. Revenue for the quarter was $1.1 billion.

Some other homebuilding metrics include the following:
deliveries of 3.596 homes (down 60% year over year);

new home orders of 3,045 homes (down 57% year over year);

backlogs of $1.2 billion (down 67%);

and cancellation rate of 26%.
CEO Stuart Miller, at the beginning of the conference call, had these observations and statements:
"The only real bright spot today is that, when the news has become particularly dire and has been confirmed in some way, the government and other market forces have acted quickly and decisively. And while we might argue or suggest that actions are late, they do nonetheless suggest that there is a floor out there where enough negative news confirmed will result in enough action to bring on sustainable stabilization, and it seems that we are now nearing that point of confirmation."

After noting the improvement in margins, Miller added that the company expects it "will see, in coming quarters, a stabilization and hopefully improvement in margins that begin to mark trends."

Standing inventory levels are extremely low. Current new construction costs are defining the cost structure of most deliveries, particularly as Lennar enters the third quarter.

The balance sheet has been fortified, and Lennar has a substantial cash position.

Lennar has done the heavy lifting on impairments and is now situated with assets that can and will produce improving markets when the rate of decline and market pricing subsides. Miller believes that, even with continued degradation of market conditions, the stated asset base will not suffer nearly the level of impairment that Lennar has taken to date.
Inventory and balance sheet management have greatly helped to navigate the troubled market. Cash of $1.1 billion was held on the balance sheet, and there were no outstanding balances on revolving credit lines. Inclusive of impairments, debt-to-capital declined year over year to 24.5% from 28.6%. Inventory levels declined from $8.3 billion to $4.6 billion (down 45% year over year). Finished homes and construction in progress inventory was reduced from $4.2 billion to $2.3 billion (down 46% year over year). Land under development was reduced from $3.6 billion to $1.5 billion (down 57%). Finally, unsold inventory was reduced by 58% year over year.

ASPs by region:

East was down 14%, to 271,000.

Central was down 1%, to 206,000.

West was down 6%, to 389,000.

Other regions were down 13%, to 289,000.
--------------------------------------------

Based on recent reports, looks like the east/northeast is now playing catch-up with respect to the national home price declines.
deuces wild | 03.27.08 - 2:10 pm | #