This week saw a number of earnings reports from home builders. Although still tryng to paint a rosy picture, they all fessed up to what we already knew: either profits are already down or orders for the current quarter are down significantly while inventory levels are rising:
- Toll Brothers (TOL) Orders down 32%
- Hovnanian (HOV) Full year earnings lowered to $7.20 to $7.40 per share, down from $8.05 to $8.40
- Beazer Homes (BZH) Orders down 19%
- St. Joe (JOE) Profits down to 3.7 mil from $15.4 mil
One important internet resource is the Housing Tracker which monitors the asking price and inventory levels from the MLS data base. In addition, I check the following blogs daily:
- Mish's Global Economic Analysis Mish covers global economic trends in depth. There is an excellent article on why the most recent mortgage application showed a month-to-month increase. He has been making arguments for a deflationary scenario as a consequence of the collapse of the housing bubble. I can't say I fully agree because the outcome depends largely on the Fed's and global central banks' collective response, but I always hold his views in high esteem.
- Calculated Risk This is another excellent blog which keeps track of the new and existing home sales figure, as well as the mortgage application index.
My wife and I don't own a house. We are currently "house-sitting" for my mother-in-law. The house is paid for so we are only responsible for the upkeep and property taxes. I have largely missed the real estate boom since I have had a "real" job for only five years, but I have no regrets. There is always a bull market somewhere, they say. I'm blessed with a wife who doesn't want one of those 4000 sq ft homes, so we will be more than able to afford our own place when the time comes. We live in an area where plenty of "McMansions" had gone up in the past five years. There has been appreciation but it was nothing like California or Florida. So far there is no obvious decrease in prices either. Toll Brothers reported 45% lower orders in this region so there may be some bargains in the coming months/years. More than anything else, our buy decision will be determined by when my mother-in-law comes back. How's this for a change: housing demand driven by actual need rather than speculative fervor?