Los Angeles Times
The pace of new home sales in March was up 7.5 percent from a year earlier, the Census Bureau and the Dept. of Housing and Urban Development reported this week.
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http://www.latimes.com/business/money/la-fi-mo-new-home-sales-20120424,0,1201517.story?track=rss
San Diego Union Tribune
California may finally have turned the corner into recovery, with the job market slated for slow but steady growth over the next two years, according to a report released by UCLA’s Anderson Forecast.
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http://www.signonsandiego.com/news/2011/dec/07/ucla-state-job-market-stay-upward-track/
FILE – In this Feb. 3, 2011 file photograph, a Beazer home is shown under construction in Gilbert, Ariz. Beazer Homes USA Inc. moved to a loss in its fiscal second quarter, weighed down by inventory impairment charges and absent a lofty gain recorded in the year-ago period. The company also said Tuesday, May 3, 2011, it cut about 130 jobs and reported a decline in new orders and closings.(AP Photo/Matt York, file)
LOS ANGELES (AP) — Beazer Homes USA Inc. slid to a loss in the first three months of the year, hurt by falling home values and rising foreclosures in the Las Vegas market.
The homebuilder also reported sharp drops in new home orders and closings for the quarter, reflecting the lack of federal tax credits that helped boost home sales industry wide a year ago.
The lackluster sales trends in the midst of the spring home-selling season and relatively weak sales in April prompted the Atlanta-based company to cut about 130 full-time jobs as part of a cost-saving effort expected to save more than $20 million annually.
Ian McCarthy, Beazer’s president and CEO, said new home orders improved every month from December to February, but declined in March, even as customer traffic rose.
“Sales patterns continue to be erratic and do not indicate real evidence of a sustained improvement,” McCarthy said.
Beazer’s new orders dropped 26.7 percent to 1,194 homes, while closings fell 31.1 percent to 573 homes. Several large homebuilders reported similar declines for the period last week.
Builders saw sales surge last spring thanks to federal tax credits. That incentive expired at the end of last April, however, and new home sales ended up dropping last year to the lowest level on records going back nearly a half century.
New home sales rose 11 percent in March from February to a seasonally adjusted rate of 300,000 homes, the first monthly increase since December. That sales pace is still well below what economists consider healthy, however.
Homebuilders had been hoping for a sales lift during this year’s spring home-selling season, traditionally a peak time for home sales. But many would-be homebuyers remain deterred by high unemployment, strict lending standards and concerns that home values could drop further.
McCarthy said that, despite modest job growth in most of the builder’s markets, there is still no sign of a significant market turnaround.
New home sales are a bellwether for the economy. As demand grows, more homes are built. And each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes paid to local and federal authorities, by some estimates.
Between fiscal 2006, at the end of the housing boom, and last fall, Beazer slashed 80 percent of its work force.
In adapting to current market conditions, Beazer created a new division to buy, upgrade and rent previously owned homes to consumers who aren’t ready to purchase a house or who can’t qualify for a mortgage.
Through the end of April, Beazer had bought or placed under contract roughly 40 homes in the Phoenix area, where it expects to buy at least 100 homes by the end of the fiscal year.
The builder has also said it may expand the rentals initiative to Las Vegas and parts of California.
Beazer reported a loss of $54.6 million, or 74 cents a share, for its fiscal second quarter ended March 31. That compares with net income of $5.3 million, or 9 cents a share, a year earlier.
The latest results included $17.9 million in charges related to further cuts in new home prices in Las Vegas and an increased amount of foreclosures. The prior-year period had a $52.9 million gain tied to the partial exchange of junior subordinated notes.
Analysts surveyed by FactSet forecast a loss of 50 cents a share for the latest quarter.
Revenue dropped 34 percent to $127.5 million from $192.5 million. That fell short of the $149.5 million in revenue that Wall Street expected.
The average sale price of a Beazer home fell 6.5 percent to $215,700 for the quarter.
Beazer shares fell 23 cents, or 5 percent, to close at $4.33.
By Frank Michael Russell
As home prices fall and rents climb, it could make sense to buy in the Bay Area’s three largest cities, according to a report from San Francisco real estate website Trulia.
The site compared rents and list prices for two-bedroom apartments, condominiums and townhomes in the nation’s 50 largest cities. Trulia calculated a “rent-to-buy” ratio of 12 for San Jose, based on rents for two-bedroom apartments of $1,500 to $2,000 a month and listing prices of $200,000 to $300,000 for two-bedroom condos. According to Trulia, a rent-to-buy ratio of 15 or less means the costs of ownership are less than the expense of renting.
San Francisco and Oakland, meanwhile, are cities where renting is less expensive, but buying might be a better option depending on individual financial circumstances.
San Francisco has a rent-to-buy ratio of 19, based on rents of $3,000 to $3,500 a month and listing prices at $700,000 to $800,000. Oakland has a rent-to-buy ratio of 16, based on $1,000 to $1,500 monthly rents and listing prices at $200,000 to $300,000.
Among other West Coast cities, Trulia says buying is better in Fresno, Long Beach, Sacramento and San Diego; buying might make sense in Portland, Ore., and Seattle; and renting is more affordable in Los Angeles.
The Trulia report — including information on other big cities nationwide — can be found at http://explore.trulia.com/datavis/rentvsbuy/Q2-2011/.
Contact Frank Russell at 408-920-5876. Follow him at Twitter.com/mercspike.
LOS ANGELES (AP) — The success of a housing tax credit that helped spur home sales is haunting homebuilders a year later.
KB Home is the latest builder to report a sharp drop in home orders for the December-to-February quarter, against year-ago results that were bolstered by the government incentive. Rival Lennar Corp. saw its orders drop 12 percent during the period.
The trend underscores a persistent obstacle to a housing turnaround: Absent a compelling incentive, many would-be homebuyers are not in any hurry to commit, deterred by concerns that home values could drop further, as well as by high unemployment, strict lending standards and a slow economic recovery.
KB said its new home orders fell 32 percent from a year earlier, while the number of homes it delivered sank 28 percent. The weak sales figures and several one-time charges led to a bigger quarterly loss for the Los Angeles-based company and prompted management to say it doesn’t expect the builder will turn a profit for the year.
“While the economy is improving, it is unclear whether the broader housing market is bouncing along the bottom, stabilizing or improving,” said KB Home President and CEO Jeffrey Mezger.
He noted that buyers remain cautious and are taking significant time scouting the market, visiting the builder’s home developments several times before making up their minds. Still, Mezger said traffic by prospective buyers rose during the quarter versus a year earlier, on a per community basis. And while down overall, the pace of new home orders improved as the quarter progressed, a trend echoed in March.
The average sales price of homes delivered during the quarter rose to $206,000 from $198,000.
The improving sales pace and price is encouraging in light of the so-far lackluster spring home-selling season, the traditional peak period for home sales. Even so, KB doesn’t expect its March or April home orders will eclipse those months’ prior-year totals, which got a boost from the tax credit.
New home sales plummeted last year after the tax incentive expired at the end of April and remained weak throughout the summer and much of the fall. Even with the tax credit, new home sales in 2010 fell to the lowest level on records going back 47 years. The weak sales trends have continued this year, with sales falling in January and February. Winter weather received some of the blame, but other signs also point to a soft start to this spring’s home sales.
KB expects it will post annual sales increases beginning in May and through the rest of the year, when the builder will have easier benchmarks and it opens up additional new communities.
“This should also set us up with a larger backlog and momentum as we enter 2012,” Mezger said.
KB Home builds homes to order for entry-level and move-up buyers and seniors in 12 states.
The company reported a loss of $114.5 million, or $1.49 a share, for the three months ended Feb. 28. That compares with a loss of $54.7 million, or 71 cents a share, a year ago. In addition to charges on land and inventory, the results included a $53.7 million charge and a loss on a loan guaranty of $22.8 million related to the company’s investment in a homebuilding joint venture in Las Vegas.
Revenue dropped 25 percent to $196.9 million from $264 million.
Analysts expected a loss of 26 cents a share on $225 million in revenue, according to FactSet .
The builder’s net home orders fell to 1,302 from 1,913, while homes delivered dropped to 949 from 1,326 in the prior-year quarter.
KB, which offers mortgages to customers through a joint venture with Bank of America Corp., also said that the lender has given informal notice that it wants to move away from participating in joint ventures. While there are still more than nine years left on the companies’ venture contract, they are exploring options to possibly restructure their partnership.
KB Home shares fell 51 cents, or 4.2 percent, to close at $11.69.
