Home Builders List

One of the nation’s largest home builders reported weaker than expected quarterly results and orders for future home sales, tempering the budding optimism that the housing market has been experiencing.

KB Home’s sales were down more than 8%, their shares are down too, with competitors’ shares slipping as well. The results for KB Home are partly due to strategic decisions that didn’t pan out for the builder. Recent data collected by the Commerce Department showed that sales of all new homes were weaker than expected in February. The data demonstrates a key difference between the markets for new homes compared to existing homes.

The market for existing homes has been boosted by investors who are purchasing distressed homes at bargain prices and renovating with the purpose of resale or renting. The new-home market, on the other hand, continues to struggle to compete on price against foreclosures and short sales. The market for new homes is way off from its peak, much more so than the existing-home market. The difference is investors.

KB Home, which is based in Los Angeles, reported a fiscal, first-quarter loss of over $45 million. Although this was an improvement from the more than $110 million loss it posted the year before, many industry watchers had expected much more progress toward profitability from the company.

The area of most concern, however, centers on orders. Instead of an increase in orders, which analysts see as an indicator of a builder’s future performance, they fell 8%, with the steepest declines seen in the Southwest.

We see that consumers are not in pace with builders. While builders are out purchasing land and preparing to sell homes, buyers are reluctant to close on homes. It’s this lack of consumer confidence that is negatively impacting builders.

Perhaps, some say, that KB’s issues are theirs only. Some of the decisions the company has made have kept them from making more progress toward returning to profitability. Some builders have made significant strides toward rebounding.

See Also:
KB Home’s Sales Slump 8%, Shares Drop

People have been looking for signs that home builders were going to turn things around for the last five years. Unfortunately, this has not been the case.

Perhaps this will be the year, however. Last year, only about a quarter of a million homes were sold in the country. This is down from over one million six years ago. Builders continued to hold back on constructing single-family homes and stocks haven’t fared very well.

Underneath it all, however, there have been positive signs. Households formed in the U.S. has picked up with slight economic recovery, and with a large inventory of homes falling to disaster and demolition yearly, the housing backlog that has been harming the new-home market is gradually easing up.

This does not mean that there isn’t a large inventory of housing to speak of, but the bulk of it remains in busted bubble markets. Most home builders have begun to reduce their exposure to these areas and look to do well in markets that have improved in many areas of the country.

According to one home model that measures population, income, financing, construction costs, and other factors – home prices are approaching equilibrium. In many metropolitan areas, prices are undervalued by at least 5%.

Home builders’ stocks are inexpensive and most are trading at about one and a half times book value. The one with the best geography, however, is difficult to determine.

Home builders that do most of their business in areas with tighter lending regulations is advisable because where standards were more stringent, the housing market was shielded from the bubble and bust. Also, take note of places that were bolstered economically by the strength of the energy sector.

For information on Texas home builder LGI Homes, including their new homes for sale in Austin, San Antonio, Dallas-Ft. Worth, Houston, and Phoenix, visit them online.

See also:
Homebuilders Profits Adversely Affected By Housing Market
Signs Pointing To Buy Time?
Mortgage Payments Are Now Lower Than Rent Payments

Back in 2009, when the housing market seemed to really take a tumble, many analysts said that they believed the housing market would be in bad shape through the end of 2011. That sounded pretty bad, and even now that still sounds pretty bad since we’re halfway through the year.

Unfortunately, overall things haven’t improved all that much. Some states are showing a bit of recovery from problems, like California, but others are still struggling, and even those markets that weren’t affected as much by the housing distress are now having issues as their sales are fairly flat.

It begs this question; is this really the best time to buy a new home? That answer is “yes”, emphatically, and I’m going to give 4 reasons why.

1. Interest rates are very low. In many states mortgage lenders have rates as low as 3.99%; that’s phenomenal! Sure, many of them have tightened standards for giving out loans based off the crisis but if you can qualify for one you’ll be sitting pretty.

2. Even though 51% of all home sales nationally are of foreclosed homes, that’s not really such a bad thing. Some of the foreclosed homes were never lived in, while some of them were lived in for only a short period of time. Also, it means that in many states home sales are starting to outpace the rate of foreclosures, and that means that there will be a bigger demand for new homes at some point.

3. Home builders are still building new communities. We’ve read about homes being built in Texas, New York, California and many other states with the expectation that there will be buyers for those homes, and there seems to be. Those buyers that qualify for the low mortgage rates are finding that they’re able to get great deals on new homes as opposed to buying pre-existing homes, as well as negotiate for options and amenities that might have cost too much in the past.

4. Home builders are also offering deals you’ve never imagined before. For instance, Toll Brothers is offering up to $4,000 in airfare and vacation accommodations if you purchase a home in one of their communities in Florida. Other home builders are offering major discounts and free upgrades as enticements. Frankly, this is probably one of the best times in history for a buyer to feel special.

Ryland Homes is a national home builder based in Calabasas, California and builds homes in 14 states. Not only do they build homes, but they provide financing and other services to potential home buyers as well. They are listed at one of the top 10 national home builders in the country.

Ryland claims that they’ve built more than 285,000 thousand homes over the course of 30 years, starting with a master planned community in Maryland and growing from there. The name came about because the creator of the company saw a sign in Maryland with the M and A missing and liked the way the name looked.

Ryland has over 1,200 employees across its building area and has revenues of $1.2 billion in 2009. The present leadership includes CEO Larry Nicholson and president Yoshitsugu Motoda.

They have had a tough beginning to 2011. Home orders declined 17% in the first quarter of the year and their share price was down more than $19 million, nearly $5 million less than last year at the same time. Revenues dropped 30% from last year, although March started showing some signs of recovery. Yet they continue building new home communities, up to 218 from 177 at this time last year.

Ryland Homes is known for its customer service and its attention to detail, and they will work with potential home owners to try to give them what they want while also building communities with homes that are ready to move into.

Last year there was talk that Taylor Morrison might be thinking about leaving its North American division in the hands of another company while they were also in the process of building new homes and communities in Texas. At the end of March the rumor finally came true.

Under its corporate name of Taylor Wimpey, the organization sold off all of its operations, which include Taylor Woodrow Holdings and Taylor Wimpey Holdings of Canada Corp., to TMM Holdings Ltd. Partnership, which is the investment side of JH Investments and a couple of other companies for $957 million. That includes Taylor Morrison, which has more than 280 communities throughout six states and is based in Scottsdale AZ.

Suffice it to say this is a big deal, and it highlights just how rough the housing industry had it over the past few years. When the original companies of Taylor Woodrow and Morrison Homes merged in 2008, they became one of the largest home building companies in the world at a time when the yearning for new homes was on the way down. Taylor Wimpey borrowed heavily to get into the deal, and will use proceeds from the sale to help pay down their debt. They will also concentrate more on their holdings in the United Kingdom, where housing has also suffered, but not to the degree it has in the U.S., and where even before the sale they were listed as only the #3 home builder in their country.

What this does for Taylor Morrison is gives them the reserves needed to ride out the worst of the housing debacle while still being able to provide more new homes in communities they believe are ready to sustain them in both the United States and Canada. It seems that both entities are extremely happy with the move, and in our opinion it was probably a life sustaining move beneficial to the American housing market long term.

The first quarter didn’t bring the kind of relief to the housing industry that some people had hoped for. As a matter of fact, things got worse for many, and some analysts came out and said that the industry might not recover until 2013; that’s scary.

Home builders didn’t do well either. Here’s a brief recap of some home builders that ran into problems in the first quarter.

Pasquinelli Homebuilding LLC, based in the Chicago area, filed for bankruptcy protection after a horrible 1st quarter. They started building homes in 1956 on the Chicago South Side and eventually expanded to building homes in 7 states. They filed stating they have liabilities of between $10 and $50 million.

KB Homes suffered a 1st quarter loss based on the fact that they’re building fewer homes and had a much lower net orders. The loss was $114 million, as compared to $55 million last year. They believe they’re ready to turn the corner in the 2nd quarter as they state there’s been more interest from consumers for new homes; we’ll see.

Lennar Corp also suffered a major loss from the first quarter of its share price after its profits dropped from the previous quarter. Overall they still made a profit of around $27 million, and compared to their loss of around $6 million from last year at the same time that’s not bad. However, their revenue dropped 3% from the previous quarter, which led their stock price to drop 5%.

D.R. Horton has been fined more than $70,000 for hazardous conditions at a work site in the Denver, CO area. Supposedly, workers were subjected to the possibility of falling hazards and inadequate training on how to use forklifts.

And after two reports, the first coming from the Standard & Poor’s/Case-Shiller index showing home prices dropped in 19 cities from December to January, along with a report from the Commerce Department that new-home sales plunged in February for the third month in a row, most major home builders saw a drop in their stock price. Some of those were:

D.R. Horton Inc. dropped 2%;

MDC Holdings Inc. dropped 2%;

KB Home dropped 2%;

Ryland Group Inc. dropped 2%.

There’s a nice new trend that’s starting to grow across the United States. There have always been local home builders that concentrated on making energy efficient homes. Now it seems that national home builders are getting into the act, and this isn’t a bad thing.

KB Homes is now starting to rate their homes using symbols that make people think of MPG (miles per gallon) and setting up a rating system for consumers to understand. The idea is to let people know what their energy rates might be on homes throughout certain areas. They’ve been working on creating newer energy efficient homes that can attain Energy Star ratings and certifications.

And they’re not alone Beazer Homes, one of the top 10 home builders in the country, has made it their mission to make every single home they build hie Energy Star certification as well. They had already created their eStart program, but now they’re going further in taking away the option for buyers to have energy efficiency or not by adding these standards at no extra cost to their consumers.

Of course it’s not just national home builders going this route. Recently McGuyer Homebuilders of Dallas announced that they were building 300 LEED (Leadership in Energy and Environmental Design) green homes that would easily attain an Energy Star efficiency rating. LEED standards are actually higher than Energy Star, so this commitment is outstanding and will be cost efficient on the back end for its owners.

Across the board these are great moves by home builders because they’ll help the environment and help buyers save money in the long run. I’m only waiting for this same type of thing to start happening more in the northeast and northwest, where winters can be costly.

Has housing finally turned the corner? That question is still up in the air depending on who you ask, but if you believe investors, good times have come again.

Last week showed that many of the national home builder stocks increased nicely, ending a long negative trend that threatened to collapse the industry. Signs such as home starts rising and home prices stabilizing after falling, in some instances, more than 50% over the past two years, are indications that things might be moving in a better direction. Foreclosures are still higher than rates 5 years ago, but they’re finally slowing down, although it’s unsure if they’re slowing down because people have more money or because there just aren’t enough homes out there to be foreclosed upon at this juncture to keep the rate high.

In any case stock prices are up. Here’s a look at 5 of our favorite national home builders:

* D.R. Horton Inc. rose 1.4% percent, to $12.49

* Hovnanian Enterprises Inc. rose 2.5%, to $4.47

* KB Home rose 2.4%, to $14.68

* Lennar Corp. rose 1.9%, to $20.85

* Toll Brothers rose 2.1% percent, to $21.91

It’s no wonder that national home builders feel that the time has come to start building again. Many of them are coming back into the market building smaller homes than before 3 years ago, and that means home buyers should be able to afford new homes if that’s what they want. Everyone is ready for housing to come back, and it looks like it might be on its way.

Last week we talked about Richmond American building many new homes in northeast Virginia, even though the Virginia housing market doesn’t seem to be all that great. It seems that they’re not the only ones who see great things coming in 2011.

It seems that there are predictions coming from entities such as the National Association of Home Builders, Barclays, and Moody’s Analytics Inc of new home sales increasing by 10% to 15% over last year. National home builders such as Toll Brothers and Lennar aren’t sitting by waiting for all housing markets to go back to peak conditions of 2006 either. Because of their size they’ve been able to hold out longer than smaller home builders and are getting financing and starting to build home communities throughout the country.

Their stock prices are continuing to rise as well. As bad as housing was throughout 2008 and 2009, a turnaround began at some point in 2010, and the S&P Supercomposite Homebuilding Index shows a 30% growth since Nov. 30. The S&P Index shows a 9.7% in the same period.

Something else that’s happened is that the large home builders have been able to step in and buy up properties that were owned by smaller home builders and thus were able to build up their portfolios with minimal cost, since they were able to get great deals in states like Nevada and Florida, where housing really took a tumble, and continues to suffer in large parts.

A growing home building season would solve a lot of woes for the housing industry, and as long as the big boys are building, it means there will be plenty of choices for potential homebuyers.

Is the Virginia housing market getting better? Maybe not according to many indicators, but if Richmond American has anything to say about it, things are looking up.

The national home builder has recently requested permits and is getting ready to start building in a few communities within Virginia. One of those communities is in the Spotsylvania County area where they recently applied for permits to build 6 homes.

Another community is in Loudoun County, where they will be building 16 homes that will each have at least 1/3rd of an acre of land. It’s already been announced that these will be luxury homes starting around $540,000, with 6 floor plans for buyers to choose from.

And this isn’t all. They’ve also applied for permits to build homes in Fredricksburg and Stafford Counties as well. All of these areas are in the northeastern part of the state, close enough to Washington D.C. to make them very attractive for commuters.

Richmond American may be hedging their bet on a recovery in this area, and it seems investors are following along with them, as Deutsche Bank, which recently lowered their price target for shares of the main holding company for their company, has listed them as a stock worthy of a “buy” rating. That’s good news no matter how you look at it.