Friday, May 18, 2007

'They Can't Hold on Forever'

From the Sacramento Bee:

[M]ost big public firms are now facing Wall Street pressure to scale back their operations and abandon plans to buy new land. More may also end up selling land if the downturn continues through the rest of this year, [Roseville-based land broker James S.] Radler said. "I think time will tell as we go through this adjustment. The publics have a lot of assets around town they will end up dumping," he said. "The privates, they can't hold on forever, either."
Radler said builders believe about 30 percent of their buyers are gone because of tighter credit rules in the wake of rising mortgage defaults and a meltdown in the subprime lending business. And that shakeout is hitting both public and private companies. "Subprime is similar to a cold," [Hanley Wood analyst Kathryn] Boyce said. "It doesn't pick and choose." "We're all in the same boat," added [Sid] Dunmore.

Other brokers, including Greg Ocasek of Irvine-based O'Donnell Atkins, said private builders now have an advantage in long-term land buying. Public builders have stopped bidding up prices and created an opening for private firms to make bigger land buys.
So far that isn't by buying new-home lots from their publicly traded competitors, Ocasek said. Like the mass of homeowners across metropolitan Sacramento, the public firms are sticking to the highest possible price as long as they can, he said. "The publics are saying, 'We don't have to sell right now,' " said Ocasek. That could change, added Radler. "Call me at the end of the year," he said.
From the Sacramento Business Journal:
City of Sacramento officials are preparing to ask the City Council on Tuesday to approve another 60-day extension on a $10 million market-rate loan to BCN Development, the developer of the $175 million Aura condominium project downtown. The deadline on the loan has been extended several times to allow BCN founder Craig Nassi to secure financing.
From the Manteca Bulletin:
Foreclosures - which are sinking the housing market just across the San Joaquin River in Mossdale Landing - are having just a small ripple effect on River Islands at Lathrop.
Three years ago they envisioned building 500 homes the first year...A little over a year ago that was scaled back to 350 homes. Now they expect to only allow 200 homes to be built in 2008 - the first year of actually pouring foundations.
From the Merced Sun-Star
Partying like it's 2005 ... Merced's once blazing hot housing market is now colder than a bowl of icicle soup, but that doesn't mean that Ranchwood Homes president Greg Hostetler is feeling the chill.

Loose Lips has learned that Hostetler -- the self-made Los Banos native who builds subdivisions with swanky names like Tuscany and La Paloma -- has been laying low for the past couple of months, but burst back onto the jet-set scene recently when he attended the title fight between Oscar De La Hoya and Floyd Mayweather, Jr. at Las Vegas' MGM Grand hotel.

Hostetler joined celebrities including Eva Longoria, Jennifer Lopez, Tobey Maguire, Jack Nicholson, Snoop Dogg, and Denzel Washington to watch Mayweather defeat De La Hoya in 12 rounds.

Lips wonders why Hostetler seems untouched by the recent "correction" (read: screeching halt) in the housing market. Maybe it's all those almond trees he has up his sleeve ...

1 comment:

norcaljeff said...

This article makes sense, the publicly traded home builders are hurting. I just received FOUR emails from four different builders about the "best sale ever" today alone. That's the most I've ever received in one day/weekend. DRH even had the b@lls to say "Rock Bottom Pricing" and "Hurry Before Prices Go Up" in their email. Yea yea yea, I remember the exact same ad last March and last August only to see prices fall even futher. Can anyone spell F-R-A-U-D? We can tell our grandkids one day about the RE Scam of 2007 and the efforts these guys went through to lie their butts off to move homes. It's no longer the American Dream to own a home, it's the American Lie.