Public Homebuilders Look to Build in 2010
Real Estate Issues › Vol. 34 Nbr. 3, January 2009
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Summary
Publicly traded homebuilders, many of which were "sellers" of production housing lots in 2007 and 2008, have again become "buyers" in certain markets around the US. Residential development land was often characterized as an investor/speculator acquisition market as late as the winter of 2009. In many of these markets, profit margins, expressed as a percentage of sale revenues, must be below 10% to consummate a transaction that has multiple bids from builder competitors. The NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales, prospective buyer traffic and sales expectations for the next six months. According to US Census Bureau statistics, the US new home median price reached an all-time high in March 2007, followed by the most severe price decline in more than 50 years. Public homebuilders buying highly discounted lots hope to build and sell product while navigating erratic and often conflicting economic and housing metrics.
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Extract
Public Homebuilders Look to Build in 2010
PUBLICLY TRADED HOMEBUILDERS, many of which were "sellers" of production housing lots in 2007 and 2008, have again become "buyers" in certain markets around the country. Residential development land was often characterized as an investor/speculator acquisition market as late as the winter of 2009. Publicly traded homebuilders have since re-entered some markets, often with very aggressive purchasing strategies that have left investors and non-publicly traded private builders (those few with the financial horsepower) unable to compete.
In many of these markets, pr...See the full content of this document
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